Reduce Loans with Chapter 13

Chapter 13 Bankruptcy Proceedings are now being used by many of our clients to reduce their loans. While flied under the federal bankruptcy code Chapter 13 plans are payment plans as opposed to complete liquidations. Under a Chapter 13 plan the debtor does agrees to pay a certain percentage of his debt over a 3-5 year period. Depending on how classified some of the debt can be reduced or almost completely eliminated.

A client bought a home for her parents a few years ago. The home has a value now of $ 400,000 but the loan is $ 500,000. Under the Chapter 13 rules we are allowed to classify the portion of the debt that exceeds the fair market value as unsecured debt, here $ 100,000. That debt is lumped with other unsecured debt that is paid in small increments to then end of the plan when it is written off.

Here our client was able to reduce the loan on the house to $ 400,000 with corresponding lower payments. The $ 100,000 that is now unsecured is paid in small amounts to the end of the plan when the balance is written off. This reduces the loan to $ 400,000 and results in substantial sayings in cash and interest. This type of classification can also work on car loans in certain situations.

Call us for a free consultation at 877-602-6869 or send us an email for a free analysis of how Chapter 13 might benefit your particular situation. Send details for your real estate assets and loans to dglil@pacbell.net.

Call us for a free consultation at
877-602-6869.