Will a Chapter 13 lower my monthly payments?

Recently, I spoke with a man who felt like he was constantly on the edge.  Each month he would wonder if he was paying the right company, responding correctly to telephone calls, and doing the responsible thing.

He said, “I work hard each month, and it just keeps getting tighter and tighter.  I’ve always paid my bills.”

Chapter 13 is a designed as a solution for people with good jobs, but who are having trouble keeping up with monthly payments on their cars, credit cards or mortgages.  It is a repayment plan designed by lawmakers to offer solutions to “wage earners.”

Here are a couple ways a Chapter 13 can reduce the amount owed each month:

-Reduces the principal owed on unsecured debt down to as little as 10 percent (minimum in WNC), and eliminates interest charges

For this client, he was able to reduce his monthly credit card payments from $1000/month, down to $50/month in Chapter 13.  Each $50 payment went exclusively to paying off the credit card debt, instead of paying only interest as he had been doing previously.

-Can lower interest rates, principal owed, and length of time to make car payments

For this client, he was able to reduce his car payment from $545/month to $90/month.

-Can spread missed mortgage payments out, allowing time for homeowners to catch up

For this client, he was about to spread out 2 missed mortgage payments out over 5 years.  Instead of owing $3000 immediately, he could pay $50 a month in his Chapter 13 Plan.

-Attorney fees are paid over time, reducing up front costs

I agreed to file his case for $500 up front, which covered his filing fee with the court and $219 of my fee.

Each case is unique.  You should consult with a bankruptcy attorney to discover what a plan would look like for you.  But this case illustrates how Chapter 13 can help a client ‘reorganize’ their debts, and provide breathing room each month.

*The information contained on this website is not intended and does not constitute the providing of any legal advice or any legal opinions or services to any user thereof. The information available on or through this web page is not intended and shall not be used as a substitute for the advice and consultation provided by an attorney.  Any factual examples used to illustrate concepts are hypothetical and do not depict actual events or real persons.