SOME OF THE SPECIAL FEATURES OF CHAPTER 13

Chapter 13 comes with many flexible and powerful tools. Here are just a few of the most important ones.

ALLOWS YOU TO PAY DEBTS THAT ARE IMPORTANT TO YOU FIRST

Chapter 13 provides many ways for you to pay important debts ahead of other creditors. Bankruptcy law favors certain classes of creditors for a variety of reasons. You can use these laws to your own benefit. For instance, if you fell behind on your home mortgage and want to bring it current, you are permitted to make monthly partial payments to gradually catch up. AND you can effectively take money away from your generic creditors in order to do so. Or as another example, if you are behind on your child support payments, you are allowed to pay that arrearage in full, even if that means paying little or nothing to your other creditors.

People understandably consider an income tax debt an important one to deal with. Imagine owing a number of years of taxes. In Chapter 13 you are both allowed to and required to pay in full those “priority” debts that would not be written off in either a Chapter 7 or Chapter 13 case. But you get to do so before paying anything to those tax debts that would be written off. So what often happens is that you pay the taxes that you would have had to pay outside of Chapter 13, but do so based on a sensible budget, and usually without paying any more interest or penalties, and often paying very little or even none of older taxes that would have been discharged under Chapter 7. And all this happens while being protected for years from the IRS, and from all your other creditors.

ENABLES YOU TO SAVE YOUR HOME FROM FORECLOSURE.

• Stop a foreclosure and then get 3 to 5 years to pay any mortgage arrears.
• “Strip” off any second and third mortgages not protected by equity.
• Get time to bring your property taxes current, while protecting your home from both the taxing authority and your mortgage lender.
• “Avoid” judgment liens, taking them off your title forever.
• Release other liens from your home’s title, by either paying off debts that can’t be discharged (support arrearage) or else discharging those that can be (old income tax liens).

“CRAM DOWN” ON VEHICLE AND OTHER SECURED DEBTS

Chapter 13 enables you to essentially re-write your vehicle loan, reducing the balance to the value of the vehicle, IF your vehicle loan is more than two and a half years old. The interest rate can also often be reduced and the term of the loan extended. These all work together usually to reduce both your monthly payment and the total you for the vehicle.

This same “cram down” works with debts secured by other types of collateral, such as furniture and appliances, if the loan is more than one year old.

These are just some of the special tools available under Chapter 13. If you are in the Dallas area, please contact us at The Law Offices of Roger Fuller to look at all your options. We provide a no-charge consultation. We have helped hundreds of Texans make good decisions about the best way to deal with their debts. So call The Law Offices of Roger Fuller at 214-516-6187.