[John J. Scura III, Esq. explains how Chapter 13 bankruptcy can help you save your house in four minutes]
I wanted to go over some issues with respect to Chapter 13 bankruptcy.
Chapter 13 bankruptcy can help save a house from foreclosure:
Chapter 13 bankruptcy, primarily, is used for someone trying to save a house from foreclosure. It's probably the number one reason we use Chapter 13. I'd say, 70% to 80% of our cases are for that reason. The Chapter 13 is a powerful legal strategy. No matter what stage of foreclosure your house is in ... In New Jersey, you can file the Chapter 13 bankruptcy, file a plan of reorganization, and catch up on any amount you fell behind on the mortgage.
You can file that Chapter 13 bankruptcy anytime up to a sheriff sale:
So the foreclosure complaints file. And it takes New Jersey at least a year and a half to two years (generally) for the mortgage company to foreclose. It can be faster, it can be slower. As long as you file that Chapter 13 bankruptcy before that sheriff sale, you can save that house. But that is the critical thing to understand.
The way Chapter 13 works where you're behind on a mortgage:
I just wanted to go over those basics. I'm going to give you an example:
Let's say you're $60,000 behind on your mortgage. You can file a Chapter 13, you can take that $60,000 and pay it over a 60 month plan. You have 5 years or 60 months to catch up on those arrears. So you're $60,000 behind on the mortgage, you pay $1,000 a month, roughly, to catch up on that mortgage, and it reinstates the original mortgage. So you start making regular mortgage payments again. You can pay $1,000 a month to the Chapter 13 bankruptcy trustee who disperses it to the mortgage holder to help you catch up on the mortgage. The bank has no choice in that situation. They have to accept those payments, and you can save your house.
Chapter 13 can allow you to modify your mortgage and credit card or unsecured debt:
Another strategy, too, is to file the Chapter 13 and to have the whole mortgage modified. And in a Chapter 13, again, you can file this plan of reorganization to do that, as well as if you have unsecured debt such as credit cards, medical bills, or personal loans. You can pay those creditors on a much lower percentage basis. So Chapter 13, you file the plan of reorganization, catch up on what you felt had fallen behind on your mortgage, and you pay a low percentage to unsecured creditors depending on your situation, your income, and your assets. But for instance, you have $100,000 in credit card debt, you could pay that credit card debt, potentially, depending on your situation, only 5% or $5,000 on the $100,000 that you owe.
Chapter 13 can allow you to save other assets:
So those are some basic Chapter 13 strategies. You can also use a Chapter 13 ... so if you have some assets that may be liquidated in a bankruptcy, you can use the Chapter 13 to save those assets. We have to evaluate the term and what that payment is going to be, but you can propose a 5 year plan.
Chapter 13 can restructure your debt to allow you to pay it off over time:
Also, another thing you can do with a Chapter 13 bankruptcy plan is pay tax debt over 5 years. And what we do is we come up with a comprehensive plan to reorganize all this debt and to structure a way to deal with it. We help you save your house, or if you don't have a house and there's other issues, to pay your creditors through this point of reorganization. It would stop any lawsuits, stop any foreclosures, stop any collection activities, letters, threatening calls of creditors, and then it gives us the time as your attorney to restructure for you and put forward a point of reorganization to help you with all that debt.
John J. Scura III
Whether you need to completely eliminate your debt through Chapter 7 bankruptcy, or need to reorganize your credit payments through Chapter 13 or Chapter 11, we are well qualified as a full-service bankruptcy law firm for people in these and other New Jersey counties: Passaic County, Hudson County, Essex County, Bergen County, Morris County, and Sussex County. Call us today at 973-870-0434 or toll free 888-412-5091.