Bankruptcy Can Provide Major Benefits
Video Transcribed: I am Edward Kelley, a bankruptcy attorney in Oklahoma for Wirth Law Office. We are finishing up our series on how Chapter 13 can save your home when you’re coming out of COVID forbearance periods with a big bill, all of a sudden, that you didn’t understand. Used the example of a $500 mortgage you’ve had put on hold, hopefully through your bank for a year.
That’s going to mean you’re 6,000 behind. And lo and behold, when the forbearance year ends, you find out you owe the whole $6,000 immediately or you’re going into foreclosure.
So as I’ve talked about, you file a 13, I come up with a plan. That’s the central document, Chapter 13 is the plan. And basically, it’s a plan of how we’re going to pay your creditors. So what I didn’t talk about too much in the last one is, what about other debts that you have?
So we’ve got the 6,000. We need to pay in your plan 500, which is your regular monthly mortgage payment. Another 100, which is 1/60th of the 6,000 that you owe.
That’s 600. And your bank, as long as you pay that, has no say, they have to accept it. Don’t need to go through any loan modification. The only approval you need is from the court, and I handle that for you. You’re not really doing it yourself.
And what about the rest of your debts? Well, that depends on your disposable income. Your Chapter 13 payment is either what it has to be or what you can do. So when I say what it has to be, that depends on your secured debt. So in this case, you’re going to have to pay that 600 if you want to keep the house.
So if you don’t make enough money to do that, you’re going to need to find an outside contribution, a friend or relative who’s willing to gift it to you, and we put that in there. So your plan is what’s called feasible.
And if you have any other debt, because you don’t have any money left over, that’ll be discharged, completely gone, just like it would be in a 7, which usually is what you want.
Of course, if you have a car payment or other things you want to keep, you’ve got to have room in there for that as well. That’s the main point of this video. So one benefit, if you’re using it to save your house, probably you don’t have any income left over to pay other debts.
So, fortunately, those are going to be discharged. If you do have additional monies available on top of the 600 I just described, then that would be distributed to your creditors up to 100% of what you owe, obviously not beyond whatever you can monthly and distributed to them equally if they’re unsecured.
So again, we can save your house and possibly get rid of all your other debt with this Chapter 13 in Tulsa, which I know people know a lot less about than a 7. And this is coming up so much with forbearances ending due to COVID.
