When is Chapter 13 Bankruptcy a Good Option?

Chapter 13 is a good option for debtors who own a home and are behind on mortgage and tax payments.  The Chapter 13 plan allows debtors to catch up on the arrearage (late mortgage payments) by dividing the outstanding amount by 36-60 months.  This allows a debtor to avoid foreclosure.  The Trustee does add a 10% fee to the payment.  For example:  Debtor is behind $6,000 on mortgage payments.  The new Chapter 13 plan payment would include $100 per month plus $10 for the Trustee.

Another good reason to do a chapter 13 is because the second mortgage can be stripped when the value of the home is below the first mortgage.  This means that the entire second mortage becomes like an unsecured debt and does not have to be paid.

I would be happy to answer more questions.  My phone number is (888) 929-6882.  Attorney Greg Sletteland practicing California Statewide for Bk411.com