Understand The Intricacies Of Chapters Of Bankruptcy With Tulsa Bankruptcy Attorney

Chapters Of Bankruptcy

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One of the unfortunate circumstances that causes people to file chapter 13 bankruptcy lawyers in Tulsa is the prospect of a foreclosure. Many mistakenly assume that if they get behind on their mortgage there is nothing they can do. This is especially true if they receive a foreclosure notice. Fortunately, for some in that situation, Chapter 13 bankruptcy can solve their problem.

Forms of Bankruptcy

Chapter 13 is one of the two common forms of bankruptcy that individuals or families file. The other, Chapter 7, wipes away all of the debts of the filer, with the exception of things like student loans, back taxes, and child support. Chapter 7, however, cannot prevent a foreclosure. While it can discharge any amount you may owe after a foreclosure, it cannot keep the family in the home. Only Chapter 13 can accomplish that and for that you can call a Tulsa bankruptcy attorney.

When a family gets behind on their mortgage, the amount they owe is an “arrearage”. When an arrearage gets large enough, the bank files for foreclosure and takes the property. Chapter 13 bankruptcy can intervene in this process. That is because, unlike a Chapter 7 where debts simply wipe away, Chapter 13 has the debtor pay back a portion, if not all, of their debts, including the arrearage. In fact, it prioritizes paying back secured debts like the arrearage over unsecured debts like credit cards or medical bills. Secured debts are paid in full by the Chapter 13 plan before unsecured creditors are paid.

Chapter 13 Bankruptcy Requirements

There are two catches to this plan. First, the debtor has to have enough income to justify a Chapter 13. They must earn enough to both pay their normal monthly mortgage bill and pay a plan payment large enough to pay off the secured and priority creditors inside the 60-month plan. Some people in this situation simply will not have enough income to make this plan feasible. For them, the best option may well be to give up the house and file a Chapter 7 to eliminate any and all remaining debt by filing a Tulsa bankruptcy.

Second, the debtor must be willing to commit to a long process. A Chapter 13 can take as long as five years to complete. The debtor will need to make their monthly payments on time and in full each month. It is important for a debtor considering Chapter 13 to understand not only their present circumstances, but what their finances are likely to look like over the following few years.

Legal Support Filing Chapter 13 Bankruptcy

For debtors who earn enough to make the payments and commit to the process, a Chapter 13 may be just the thing to save their home from foreclosure. Every case is unique and in complicated situations like this, dedicated professionals can help you navigate the confusion. If you believe that Chapter 13 might be an option for you, contact your local bankruptcy attorney.