Articles Posted in Chapter 13 Bankruptcy

mortgage-interest-paid-tax-credit-150x150Is your Chapter 13 plan paying mortgage payments that were delinquent when you filed bankruptcy?  Is your Chapter 13 plan paying the current mortgage payments through the bankruptcy?  If so, you are missing out on your mortgage interest tax deduction.

Your mortgage company often won’t send the IRS or the trustee the Mortgage Interest statement each year for what you paid through the plan.

So you don’t have any proof that mortgage interest was paid, and neither does the IRS.

Here is how you can claim the credit for mortgage interest: Continue reading

I’m sure you are coming across a great deal of unfamiliar terms and phrases while researching the process of filing bankruptcy. This jumble of information may make references to getting a “bankruptcy discharge,” for example. So what is a “bankruptcy discharge”? If your debts are “discharged” through your bankruptcy case, then you are no longer obligated to pay them and your creditors are prohibited from ever making any effort to collect the debt.  So receiving a “bankruptcy discharge” is a good thing – it’s what you want to happen – what you want your final result to be.

It’s important to note that if the debt has property that is collateral for the loan, the creditor may still be able to repossess the property if you do not pay.  In other words, filing bankruptcy won’t give you a free car.  You will either pay for the car or you will surrender it back to the creditor with all responsibility for any difference in amount owed, etc being gone.  Any debt of yours that is cosigned or guaranteed by someone else can still be collected from that person (your cosigner or guarantor), but not from you.  Your legal obligation to pay has been “discharged”.

Will all debts be discharged?  Most of the debts you owe at the time you file your case will be discharged, but certain types of debt cannot be discharged no matter what.  These non-dischargeable debts include: income taxes that are less than 3 yrs old, child support, alimony, government fines and restitution, and student loans.  Other debts that you may not be able to discharge include debts you may have incurred by fraud or willful or malicious actions.

A Chapter 13 bankruptcy will work wonders on your debts and help to place you in control of the creditors.  Chapter 13’s help manage your debt obligations for a period of 3-5 yrs by a repayment plan.  You work with your bankruptcy attorney to submit a plan on restructuring your debt; making it easier for you to pay.  In addition, the Chapter 13 Plan addresses whether or not you pay anything towards unsecured debts.  Depending on your situation and desire, you could pay anywhere from 0% to 100%. Debts and bills overpowering you are now under control and reduced to an affordable amount.  This is an option available to you that offers a lot of benefits and puts you in the driver’s seat.

There are many benefits and advantages of filing a Chapter 13 in MS. Here are a few:

  1. If you have become behind on your mortgage payments, you can get caught up on the missed payments and stop the foreclosure.

Possibly, but first you need to understand that a Chapter 13 plan is not based on your income.  It does not fluctuate depending upon how much you make.  The Chapter 13 plan amount depends upon what you plan on keeping and/or what creditors you plan on paying through the bankruptcy.  For example, if you are paying for only your home through your plan, the amount of the payments will be based upon the mortgage amount then that amount spread out over the life of the plan to catch up your back notes.  This amount won’t change unless your mortgage note happens to change.

However, if you are paying for several things – such as a student loan, a vehicle, a home, and a furniture note – through your Chapter 13 plan, the payments could become lower if you decide to stop paying toward the student loan or decide to surrender a vehicle, or the home, etc.

Since a Chapter 13 plan is dependent upon who you plan to pay and what you plan to keep – you can decide to change (with some exceptions) who you are paying and/or what you are keeping in order to lower the note.

First you should understand that when we talk about “cramming down” a debt, it is referring to a secured debt (such as debts for vehicles, furniture, household goods and appliances).  Referring to a debt as secured means there is some type of collateral attached, which you would lose if you defaulted on the debt.

All secured debts can be stretched out in a Chapter 13 up to the 5 year max period.  This is often helpful by lowering the note.  However, you may find even more benefit within a Chapter 13 regarding secured debts through a “cram down”.

“Cram down” of debt means that you can reduce the amount you must pay to be equal to the current value of the collateral rather than the current amount owed if certain criteria is met.

First of all, discuss your situation with a competent and knowledgeable bankruptcy attorney, preferably one who only represents consumers.  Do it before you do anything thing else, before you pay any creditors or relatives, before you give any property away, before you let the house go, before you take on new credit or sell any of your property.

There are numerous differences between a Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy in Mississippi and many reasons to choose one over the other.   Here is a list of reasons why a Mississippi Chapter 13 Bankruptcy might be the best option for you:

A Chapter 13 will save a house from foreclosure.

There is a provision of the bankruptcy law that allows Mississippi homeowners to eliminate second mortgages.   Not widely known, this section of the bankruptcy code is becoming increasingly popular to bring the mortgage debt closer to the real value of the home.

Bankruptcy law prevents a homeowner from getting rid of the first mortgage if they want to keep the home, but the rules don’t apply to second mortgages.  The second mortgage can be stripped off (canceled)  if there is no equity to cover the debt, which is the case for thousands of Mississippi homes that are worth a lot less now.

The law has been in effect for years, but during the housing boom houses were worth much more and there was not much occasion to use it.  This is only available in Chapter 13 bankruptcy.

There are many types of bankruptcy, but only two types that most Mississippi residents would be interested in.  Chapter 13 is what people refer to as bill consolidation, debt relief plan and bill repayment plan.

Where a Chapter 7 wipes out or discharges your debts without any payment, a Chapter 13 proposes a plan to repay your creditors over set period of time.   The repayment plan can help you save your house by catching up the mortgage payments and paying off your vehicles at a lower monthly payment.

The unsecured creditors, such as credit cards and medical bills can be paid anything ranging from zero to a percentage of what you owe.  The payment plan must be at least 36 months and no more than 60 months and this length is based on upon your ability to pay.