Chapter 13 bankruptcy is designed to allow you to keep all of your property and to consolidate some portion of your debt into a payment you can afford, based on your ability to pay. It allows you to cure delinquent mortgage payments over time while you keep your home. In many cases Chapter 13 allows you to "cram down" secured obligations like car loans and furniture accounts, meaning that you would only have to pay the value of the property you financed, instead of the entire loan. Chapter 13 also allows you to pay back taxes and child support in reasonable monthly payments, while stopping garnishments and levies. Chapter 13 basically allows you to pay what you can afford to pay, while discharging what you cannot afford to pay. This is accomplished through a monthly payment plan that consolidates all of your debt (except ongoing mortgage payments) into one payment.
What about tax refunds?
In Utah, you may keep between $1000 and $2000 per year in tax refunds, while you must pay in to the bankruptcy case any amounts over that $1000-$2000 amount, for the first 3 years of your plan. Most Chapter 13 debtors adjust their withholding so that they get their pay in their checks, instead of in big refunds at the end of the year.
What if a job is lost, or other emergency happens, and the payment is missed?
If you miss payments in a Chapter 13, you can meet with your attorney and ask the Court to forgive the payment or adjust the length of your plan. The Court is flexible as long as the request is reasonable and for good cause.
Can it stop foreclosure?
Yes! Even up to the day before a foreclosure sale, a Chapter 13 may be filed, the back mortgage payments may be put in the bankruptcy, and the sale is stopped.
Can I get a vehicle back after a repossession?
Yes, as long as the vehicle hasn't been sold yet. If you file Chapter 13, the bank must return the vehicle, and you pay for the vehicle in your monthly payment plan.
How much does it cost?
In most cases, the attorneys' fees are between $3,000 and $3,500. However, most of that is paid in your monthly payment plan. Up front, you would need $200 for attorneys' fees, and $281 for a Court filing fee, and $50 for an internet credit counseling interview that must be completed prior to filing.