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Chapter 13 bankruptcy is a payment plan for secured debt

The best way to keep one's home in Washington state when the mortgage payments have fallen behind is to file a Chapter 13 bankruptcy. No other program compels the mortgage holder to accept monthly payments to get the back amounts paid and the loan up-to-date and current. This can sometimes work even where the borrower has received a foreclosure action against the residential property. In such situations, there is an emergency need to consult with an experienced consumer bankruptcy attorney who is familiar with handling Chapter 13 cases.

The basic structure of the Chapter 13 is that it is a payment plan. Monthly payments are made to the Chapter 13 Trustee for a period of 36 to 60 months. The details are set forth in the debtor's Chapter 13 plan, which must be reviewed and approved by the bankruptcy court. The plan will show that all payments on a secured loan (one with collateral such as a house attached to it) will be up-to-date and current by the end of the 36 or 60-month payment plan.

If the Chapter 13 filer makes all payments and successfully is discharged at the end of the plan payments, the unsecured bills that still have a balance, such as credit cards or medical bills, will usually be completely discharged and wiped out. An individual or married couple are not always qualified to file a bankruptcy, whether it be a Chapter 7 or a Chapter 13. There are qualifications that are specified for each Chapter. For example, an individual must have regular income to qualify to file for a Chapter 13.

The regular income requirement attempts to assure the payments set forth in the Chapter 13 plan will be paid through the debtor's income flow. There are thus benefits to a Chapter 13 bankruptcy, but there are also benefits to selecting a Chapter 7 filing. For Washington state residents contemplating this relief, the best way to determine which way is best for one's particular situation is to obtain a consultation with an experienced consumer bankruptcy attorney.

Source: nerdwallet.com, "Bankruptcy Basics: How to File for Chapter 13", Sean Pyles, Nov. 29, 2017

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