Although bankruptcy often carries negative associations, it serves as a legal tool that allows you to reorganize your finances and bring debts under control. Chapter 13 bankruptcy, in particular, could help prevent foreclosure or vehicle repossession in Minneapolis. If you are struggling with overwhelming debt and seeking options, a Chapter 13 bankruptcy filing may serve as a financial safety net.
If you’re curious and would like to know if saving your home or car in a Chapter 13 bankruptcy filing is possible, our Minneapolis Chapter 13 bankruptcy attorneys can help you. At Walker & Walker Law Offices, our legal team is committed to helping individuals who have made financial mistakes and are struggling with debts either manage or completely eliminate their debts. Contact us to speak to a lawyer today.
How Does a Chapter 13 Protect Your Home and Vehicle?
Missed payments are the primary reason foreclosures and vehicle repossessions occur. When lenders do not receive monthly payments for a period of time, they seek to recover their losses. To do so, they pursue legal measures to repossess a debtor’s home or vehicle.
When a borrower initiates a Chapter 13 petition, an automatic stay goes into effect and halts all recovery activities, which could prohibit creditors from continuing foreclosure or repossession efforts.
This also gives the debtor time to restructure debts into a more manageable repayment plan. As a result, debtors do not have to pay all missed payments in a single lump sum, as lenders often prefer.
Instead, through a debt reorganization plan, the person who owes the debt may commit to making regular mortgage or vehicle payments over a three-to-five-year period. In some cases, specific conditions could further reduce the total amount owed on the vehicle.
For example, if the car loan was taken out more than 910 days before the Chapter 13 filing, the loan may be subject to a “cramdown,” which lowers the secured balance to the vehicle’s current market value. Any remaining balance is classified as unsecured debt that may be discharged or repaid at a reduced amount.
Key Aspects of a Chapter 13 Bankruptcy Filing Process
In Minneapolis, the process of filing for a Chapter 13 bankruptcy is straightforward:
- After ensuring the debtor is qualified, a Minneapolis Chapter 13 bankruptcy lawyer files a petition on the debtor’s behalf, including all necessary details such as income, expenditure, assets, and properties
- Once filed, an automatic stay action on foreclosures or vehicle repossessions is activated
- The debtor and their attorney will then propose a repayment plan spanning three to five years
- The court reviews the terms. Once approved, the agreement becomes binding on both the debtor and lender
- Monthly payments are then made to a court-appointed trustee, who disburses the funds to creditors in keeping with prior arrangements
Get Help Saving Your Home and Car in a Chapter 13 Bankruptcy From a Minneapolis Bankruptcy Lawyer
Filing for a Chapter 13 bankruptcy is a complex process, especially when it involves saving your home or car in a Chapter 13 bankruptcy. At Walker & Walker Law Offices, our experienced Minneapolis Chapter 13 bankruptcy attorneys could help you navigate the issues, explore your options, and provide informed legal guidance based on your situation.
Contact us today to request a consultation.