Chapter 13 Bankruptcy

Chapter 13 Bankruptcy

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The Legal Reality of Bankruptcy

Pay Off Your Mortgage Debt With Chapter 13

If you have a steady income but are being overwhelmed by creditors, filing for Chapter 13 bankruptcy is a way to reorganize your debts and repay all or part of them over a longer period. This period is usually between three and five years.


In order to qualify for Chapter 13, you must have enough regular income to cover all your monthly household expenses. You must also have enough income to cover an agreed-upon monthly payment to reduce your debts.


Chapter 13 bankruptcy might be the right option for you if:


  • You are facing foreclosure and you want to save your home
  • You have too much income to qualify for a Chapter 7 bankruptcy plan
  • You have fallen behind in your mortgage payments
  • You have fallen behind in your car payments
  • You owe more on your first mortgage than the market value of the home and you have a second mortgage that you want to eliminate
  • You have property that is not exempt from the Rhode Island bankruptcy code
  • You have filed for a Chapter 7 plan within the past eight years and are not eligible to file another Chapter 7


When you file for Chapter 13, a payment plan that addresses your specific needs is created. This plan will allow you to reorganize your finances, retain your property, and repay part or all of your debt over a specified period of time, which can be anywhere from three to five years. Debts that are determined to be non-dischargeable must be paid in full.


Chapter 13 is not a viable option for everyone. In order for a Chapter 13 bankruptcy plan to be approved, you must have enough income to cover all your monthly household expenses plus your Chapter 13 plan payments, which will be determined by your specific financial condition.

Chapter 13 to Avoid Foreclosure With Loan Modification

Home foreclosures are far too common. Unmanageable debt and mortgage arrears can spiral out of control, and the fear of losing your home often leads to paralysis instead of taking concrete steps to avoid foreclosure and stay in your home. Preventing foreclosure and maintaining homeownership is frequently the primary objective of clients.


In the state of Rhode Island, once foreclosure occurs, it cannot be reversed. Delaying action can have serious consequences. If you’re ready to take action and do everything you can to prevent an imminent foreclosure and stay in your home, it is time to get legal help.


Each individual’s circumstances are different, but there are several possible options to avoid foreclosure. With Chapter 7 filings, you can stop the foreclosure process for a short time, but this is not usually the most effective way to save your home. You may have more options with a Chapter 13 bankruptcy.


Just like with a Chapter 7 bankruptcy, a stay goes into effect as soon as a Chapter 13 bankruptcy filing is made with the court, and a lender or creditor has to stop all collection activity until the court indicates otherwise. For those Rhode Island homeowners seeking to avoid foreclosure, particularly those with mortgage arrears and/or high-interest rates, the best path is usually loss mitigation.


Rhode Island is one of the few states that has a loss mitigation program. Through this program, homeowners can pursue a loan modification. While you’re in the loss mitigation program, the foreclosure process is stopped. If you pursue a loan modification outside of this process, you don’t have the same protection that the Rhode Island bankruptcy court offers.


Each situation varies, but with a loan modification via Rhode Island’s loss mitigation program, you may be able to reduce your interest rate and reduce your monthly payment to the mortgage company. Your mortgage might be able to be rewritten with any past due amounts placed at the end of your mortgage note.


While filing for bankruptcy is perhaps the most well-known method of stopping foreclosure on a home, loan modifications are frequently a viable alternative to filing for bankruptcy. Goldman & Goldman has the experience and the knowledge to help you decide whether some type of loan modification is the best way for you to avoid foreclosure on your home.


With our help, you may be able to restructure your debt and create a repayment scenario that will work for you and for your creditors. Because there are so many legal options, it's important for you to get experienced legal advice as soon as possible. We'll look at your situation and make the best recommendations.

Chapter 13 Bankruptcy

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Frequently Asked Questions About Bankruptcy

  • If I file for Chapter 7 or Chapter 13, will I have to relinquish all of my property?

    In Rhode Island, you are allowed to keep all exempted property with a few specific limits. You may also keep household goods such as appliances, clothing, dishware, furniture, books, and wedding rings. If you are buying a car using monthly payments, you may keep the vehicle as long as you maintain your monthly payments.

  • What is the means test?

    The Chapter 7 bankruptcy means test is a way of determining whether you can afford to pay back at least a part of your unsecured debt. If your income is below the median income in your area, you automatically pass the means test. If your income is above the median, you’ll be required to apply the means test formula.

  • What happens if I don’t pass the means test?

    You may still qualify for bankruptcy protection under Chapter 13, which requires you to pay off some portion of your full debt using a prescribed five-year payment plan.

  • Can a student loan be discharged under Chapter 7 or Chapter 13?

    No. Student loan debt is not discharged under Chapter 7 or Chapter 13 bankruptcy in most cases.

  • Am I able to get rid of a second mortgage with Chapter 13 bankruptcy?

    You might be eligible. Contact us to learn more.

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