WHY DO I OWE MORE ON MY CAR THAN IT IS WORTH?
If you have owned the car for more than 2.5 years you may be able to pay back the actual market value of the car and reduce your monthly payments.
If you owe $25,000 and your payments are $600 per month but the car is only worth $18,000 we can file a plan with the court in which you keep your car and pay $300 per month for 60 months. The remaining $7,000 is treated as unsecured debt.
WHAT IF I AM BEHIND ON MY HOUSE OR CAR PAYMENTS?
The Chapter 13 bankruptcy will allow you to take the back payments and pay those out over a period of time up to 60 months. An example would be if you are $6,000 behind on your house payments, the Bankruptcy Court would allow you to file a plan in which you could pay $100 per month for the 60 months. As long as you are able to make your regular house payments and pay the $100 each month the court would not allow the mortgage company to foreclose on your home.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows you to pay back your debts over a period of time up to 60 months. The total amount and monthly payment is based on your income and assets.
Let's say you have $60,000 in credit card debt and medical bills and you are eligible to pay back 10% of the debt. Your payment will be $100 per month for 60 months or 5 years. At the end of the 60 months you will have paid a total of $6,000 and the remaining $54,000 of your debt will be eliminated or discharged. You will not have to pay it.