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Chapter 13

Chapter 13

Only an individual (or couple) can file Chapter 13. Corporations or other businesses cannot be a Chapter 13 Debtor. Most of the time, people file Chapter 13 because:

They are behind on their house payment and are facing foreclosure. Chapter 13 will stop the foreclosure sale and allow you to repay the amount you are behind over a three to five year period.
They owe a large amount of tax debt, which can be repaid interest free over a three to five year period.

They have assets that have too much equity that cannot be protected in a Chapter 7 filing.

Their income prevents them from filing a Chapter 7.

In a Chapter 13 you must pay recent tax debt and any past due mortgage payments in full through the repayment process. Other type of debt can be reduced by paying a discounted amount over time.

Currently, Chapter 13 allows individuals to reduce or eliminate second and other junior mortgages. The stripping of liens is not available in Chapter 7. If your first mortgage is equal to or greater than the value of your home, the Bankruptcy Court may issue an order whereby all junior liens are stripped or removed from your home, thus making it unsecured debt.

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