A Chapter 13 Bankruptcy Plan allows a homeowner to submit a plan to get caught up on their debts, over a 3 to 5 year period. During this time they make their best efforts to pay; most debts which are not paid can be discharged when the plan is completed. A Bankruptcy Attorney will draft a plan tailored to your individual circumstances. If the plan meets the requirements of the bankruptcy code, and is submitted in good faith, it can be confirmed even without the agreement of the creditors.
One reason to file a Chapter 13 Plan is to get caught up on a mortgage. Normally, this would involve resuming regular payments, plus an additional amount which would allow the homeowner to get caught up over a 3 to 5 year period.
In other cases, Chapter 13 can be used to pay debts which cannot be discharged in other types of bankruptcy, including certain types of taxes. Chapter 13 is also used by some individuals whose incomes are too high to qualify for a Chapter 7.
A Chapter 13 plan includes provisions dealing various categories of debts, such as mortgages, taxes, car loans and unsecured debts. How much, if anything, needs to be paid on these items depends on many other factors, such as the individual’s income, the fair market value of the property, and the amount owed on the mortgages or liens on the property. Before filing a Chapter 13, you should review your financial situation in detail with a bankruptcy attorney.
In the Western District of Pennsylvania, the Bankruptcy Court has a loss mitigation program, which allows an interim Chapter 13 Plan to be filed while the parties attempt to negotiate a loan modification.