Save My House Series Part 2- The Chapter 13 Plan

Video Transcribed:  Oklahoma City Bankruptcy Attorney Edward Kelley, again, 888 Debtline answering your bankruptcy questions. We’re just into a series on how do I save my car and or my house in bankruptcy through a chapter 13? So I gave you the basics in the last video as opposed to a liquidation, a chapter 13 can allow you to catch up on payments, on secured debt, meaning debt with collateral that you’re behind on such as your home. Lots of people come to me. I’ve been trying to, even if they have money, trying to pay my mortgage company, they won’t work with me. They’re dead set on foreclosure, often have filed it. One thing to bear in mind, you do have a lot of power to save your house, which is what we’re going to talk about in this video, particularly up to and beyond the moment that there’s a sheriff sale.

A lot of people understandably think that a Sheriff’s sale is your last moment to stop it and bear in mind whenever you file any kind of bankruptcy, in most cases, the federal, what’s called automatic stay goes into effect, which completely bars by law any creditors from taking any action, including in a foreclosure. So if you get that filing to the sheriffs before they hold the sale, they’ve got to call it off.

And what you may not know is even after the sheriff’s sale, there’s another step whereby the sale has to be confirmed by the judge in the foreclosure. It’s called an order of confirmation. If you can beat that, you can back it all up. So just because there’s been a sheriff sale, all is not lost. Check your case and if they haven’t confirmed the sale and you can get it filed, do it. And there are procedures for emergency filings, which make it a little easier. So even if you can’t get everything together in 10 seconds, call me or call an attorney. Even if it’s the last hour, there may still be a way to do it. Again, 1888 Debtline.

So how does it work? Chapter 13 we talked about you pay what you can pay. If you’re trying to save your house, despite you being allowed to pay only what you can, which may be very little, $100 a month, 150 a month, you’ve got to pay enough to pay off that arrearage. So let’s say you’re $10,000 behind… Well, let’s say you’re $60,000 behind just to make the math easier. So you’re doing a five year chapter 13 plan, and you may be doing a three year, which is 36 months. So you can just change the divider if that’s the case, but you had 60,000 in back.

You’ve got to propose a plan where you pay your regular mortgage payment. Let’s say that’s $1,000 a month through that plan every month to the trustee, who then gives it to your mortgage company plus at least $1,000 on that arrearage. So regardless of what you can pay, if you can’t come up with 2,000 a month in that plan to pay the regular mortgage and the minimum required payment to pay off the arrearage in 60 months, then you’re not going to save the house.

The creditor can file a motion to lift the stay and take it. So that’s basically how it works. You can do the math on your own house. How behind are you? You can go up to 60 months. Can’t go beyond that and you’ve got to pay off all of the arrearage. If you would have qualified for a seven, and you’re only filing this because you need to save your house, you can go as low as 36 months, possibly even less.

But if it pays off. But generally a 36 month plan of your disposable income. And of course you’re going to have to take into account your other creditors. If there’s anything leftover in your disposable income after paying the regular mortgage payment and what you owe back, then that’s got to be paid into the rest of the creditors to divide up. So basically what you’re doing… Well, what your attorney’s doing and what you’re providing the information and helping and agreeing to is coming up with a plan over a maximum of five years, a monthly payment that will pay off that arrearage, including the interest, which will be all rolled in.

Now, that’ll be a figure that’s rolled in, in the beginning in full. So that’s how that works and cars, basically the same thing. Got to make sure that it’s all paid off. There are some additional benefits. We’ll deal with that in a different series. It’s called a cramdown. You can cramdown what you owe to the fair market value of the collateral, and then the remainder becomes an unsecured debt, just like a credit card debt or medical bill. But again, we’ll deal with that in another series.

So that’s enough for today. Again, 188 Debtline for all your bankruptcy questions or email me at edward@wirthlawoffice, or on Facebook at our group called Oklahomans for Debt Relief. And next time we’re going to talk about the ramifications and consequences for your creditor of putting your foreclosure into a chapter 13. See you then.