This Transcript was auto-populated
Transcript:
00:00:00 [Music] Hi, my name is Joe Pileleti with Pileleti, Pileleti and Nickels and today we are going to talk about chapter 13 bankruptcy. There are two main kinds of bankruptcies that consumers file and that’s opposed to businesses and those are chapter 7 and chapter 13. We have a video on chapter 7 on another video if you want to watch that one. Chapter 13 bankruptcy is another kind of bankruptcy that is used primarily for three reasons. The first reason people file Chapter 13. And probably the most common
00:00:28 is if you are behind on your mortgage and you’re facing a foreclosure. You haven’t paid your mortgage for some period of time. Maybe the mortgage company is not accepting payments anymore. Even if you do have the money, maybe the bank has hired an attorney to foreclose on your house. You can use Chapter 13 bankruptcy to catch up on your mortgage. Essentially, you can file it before a foreclosure or after a foreclosure has already started. What you’re doing with this type of bankruptcy is working out a payment plan
00:00:55 as opposed to a chapter 7, which is the more simple kind of bankruptcy where it’s over and done with quickly. Chapter 13 is a little different. It’s a repayment plan. It’s a reorganization. It’s a second chance after you’ve fallen behind for whatever reason. Maybe you lost a job. Maybe you got sick. Maybe you’re going through a divorce. Chapter 13 can allow you to get back on your feet and stay in your house. Once you file a chapter 13, it stops the foreclosure and you pay the money that you’re behind back over time. You make
00:01:24 monthly payments to a bankruptcy trustee and you pay it back over a 3 to 5year period of time depending on how much of that how much your debt is and how much money you make and maybe how much equity you have in your home. You can also address other things in a chapter 13. If you have unsecured debt like credit cards, medical bills, loans, uh you can address those as well. And typically what happens with those is you end up paying some of them back and it depends mainly on your income and and what you
00:01:53 can afford to pay back. Everyone’s situation is a little different. Usually within a with a short conversation with me or someone in my office, we can talk through your unique facts and give you a pretty good idea of what your chapter 13 would look like. So that is one of the main kinds of chapter 13. Another reason people file a chapter 13 is because they make too much money. There’s something in chapter in in any bankruptcy called a means test. And basically, it looks at your income and it’s compared to the
00:02:21 size of your household. And if you make below the means test, you can file a chapter 7. But if your income is too high, uh, then you may not have that as an option. And but you could do a chapter 13. This type of a chapter 13 bankruptcy is kind of like a consolidation loan. It’s generally much better than that because you are not going to pay any interest. you’re going to have a definite time period where you’re going to have to pay your debts back and you’re only going to have to pay back basically what you can afford
00:02:49 to pay back because it’s based on your income. The final kind of chapter 13 bankruptcy is even when you don’t make a lot of money and you aren’t facing a foreclosure, but you have a lot of property. For example, maybe you have $50,000 of equity in your house and in a chapter 7 you’re limited in the amount of property that you can retain. Uh so you know if you don’t want to lose your house you can file a chapter 13 where in a chapter 13 you don’t lose any assets. You’re going to pay back a certain
00:03:14 amount of debt based on what you can afford and based on how much equity you have in your home or the other things that you own. So those are the three main reasons why people file a chapter 13. You are allowed to file a chapter 13 often. Even if you’ve filed one before, it doesn’t mean you cannot file one again. There are some rules that do apply to filing multiple times and we can talk about that if that applies to you. But unlike a chapter 7 that you can only file once every eight years. That’s
00:03:41 much different for a chapter 13. So if you do have any questions about a chapter 13, if you’re facing foreclosure, if you have too much debt, you can’t afford to pay it back, you don’t qualify for a seven, give us a call. We’ll talk about it. You’re welcome to call me, email me, set up a free consultation in my office, and we’ll see if we can help. [Music]