Under Chapter 13 you can make up arrears on your home over the 5 years of the plan. As long as you begin making your regular monthly mortgage payments, and make your payments towards arrears, the bank has to accept the plan. You, of course, must have the income to do this, but if you have the income, the bank cannot refuse.
There are other reasons you might want to file a Chapter 13 case, also known as a wage earner plan. You are allowed to keep certain items of property in all bankruptcy cases by making use of exemptions. The exemptions, however, are limited, and sometimes there is property you might lose in a Chapter 7 case, such as a car or other property. If you pay an amount at least equal to the value of the non-exempt property during your case, you will be able to keep the non-exempt property.
Sometimes clients might have trouble getting through a Chapter 7 case because their debts are very high. While there is no hard and fast rule, if your debts are over $100,000, you might face extra scrutiny in a Chapter 7 case. However, if you file a wage earner plan, you usually will not face this extra scrutiny because you are trying to pay some of your debts back.
While there may be other reasons you might want to file a wage earner plan, the final one I want to mention is that some clients just feel an obligation to pay something back, and for these clients, we usually set up a plan that lasts 36 months.
For more information on which chapter would be best, our staff can help.
Allan Bloomfield, 118-21 Queens Blvd., Suite 617, Forest Hills, NY 11375. Phone: 718-544-0500. http://bankruptcyqueens.com