If you are behind on your house or car payments, Chapter 13 allows you to pay back the missed payments over time (typically 36 to 60 months). As long as you have sufficient income to make your current house or car payments as they come due and make the Chapter 13 plan payments, Chapter 13 can enable you to keep your property.

Example 1: Let’s say that John and Marie’s mortgage payment is $1,000 per month, and they are 8 months behind on their payments. How do they get caught up on the $8,000 in back payments? If John and Mary file for Chapter 13 bankruptcy, they can pay the arrearage over time through the Chapter 13 bankruptcy plan over 36 to 60 months. In the meantime, they will begin making their regular mortgage payment to the bank as if they were current. This will enable them to keep their house.

Example 2: Let’s say Bob owns a car that is worth $20,000, but he owes $17,000 on his auto loan. Bob is 5 months behind on his auto payments of $300 per month, leaving him with an arrearage of $1,500. If Bob files for Chapter 13, and begins making his regular car payment, he can pay back the $1,500 through the Chapter 13 plan.

Quick Note: In Chapter 13 cases in the Eastern District of Pennsylvania, you continue to make your house payments directly to the lender. However, your car payments may be made through the plan. You may even be able to reduce the balance, interest, and payment on your car loan or some other secured loans through a bankruptcy cramdown. >>More