Detroit Chapter 13 Bankruptcy Attorneys

How Chapter 13 Restructures Car Loans

Your auto loan will be treated in one of two ways depending upon the age of the loan. If the loan is 2.5 years or less, you can reduce the interest to 5.25% and stretch the payments over the life of the repayment plan. If your loan is older than 2.5 years, the loan can be reduced to the actual value of the car and you can pay that amount through the plan. For instance, if your loan balance is $20,000, but your car is worth $15,000, you would only need to pay the $15,000 (the value of the vehicle).

Filing Can Eliminate Second Mortgages

If your first mortgage is upside-down and you have a second mortgage, Chapter 13 may allow you to eliminate the second mortgage through "lien stripping". If the house is worth less than your first mortgage, the court could convert your second mortgage into unsecured debt. While you may have to pay some of your second mortgages through the plan, it will be treated the same as other unsecured debt such as a credit card.

Back Taxes and the Chapter 13 Repayment Plan

Another advantage to Chapter 13 is that if you have back taxes, this option allows you to pay them off over 3 to 5 years rather than paying them all off at once. For example, with a first mortgage, your plan will likely include your normal monthly payment along with the amount needed each month to pay off your past-due balance.

Call (888) 822-6730to set up a free consultation with a Chapter 13 bankruptcy attorneys in Detroit at Law Offices of Marshall D. Schultz. We're backed by 50+ years of experience combined.

What Are The Requirements For Chapter 13?

There are several requirements for filing Chapter 13 bankruptcy. First, it is important to know that businesses cannot ever file for Chapter 13 bankruptcy. Stockbrokers and commodity brokers are also ineligible, even for personal debts.

Individuals with demonstratable means to repay their debts can file, as long as their unsecured debts fall under a maximum. This maximum changes periodically, so you should consult with an attorney if you have concerns about your unsecured debts before filing for Chapter 13.

Additionally, if you have filed a previous bankruptcy, you may need to wait a period of time before filing again. You need to wait two years after filing for Chapter 13 and four years after filing for Chapter 7 before a second bankruptcy filing with Chapter 13.

How are Chapters 7 and 13 Different?

Chapter 13 is more complex than a Chapter 7. While Chapter 7 is reserved for individuals with a low income, Chapter 13 is known as the "wage earners" bankruptcy. With a Chapter 13, the debtor pays off a portion or all of their debts over 3 to 5 years, whereas with a Chapter 7, qualifying unsecured debts are "wiped out." This means that certain non-dischargeable debts, like alimony and child support, can be paid off over the 3 to 5-year payment plan period.

In addition, different debts can be discharged in Chapter 13 vs Chapter 7 after the completion of the payment plan. These debts are variable according to state law, so it is best to consult with an attorney on your potential dischargeable debts with Chapter 13.

Have questions? Reach out to Chapter 13 lawyers in Detroit with decades of shared experience. 
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Is Chapter 13 the Same as Debt Consolidation?

The primary difference between debt consolidation and Chapter 13 is that in a Chapter 13, creditors are required by the court to follow the terms laid out in the debt settlement agreement and repayment plan. In standard debt consolidation, a creditor has no obligation to agree to the terms being proposed. Debt consolidation agreements can and will also include continually accruing interest, whereas no further interest will accrue during a Chapter 13 repayment plan.

Will I Lose My Assets and Property When I File?

Chapter 13 is the most feasible bankruptcy option for any individual wanting to retain possession of his or her assets and property. In Chapter 13 you do not discharge all of your qualifying debt; you simply restructure it so that it can be paid over a 3- to 5-year period. You will have a far greater chance of retaining your assets, avoiding foreclosure and maintaining your current lifestyle if you file for Chapter 13 rather than Chapter 7.

What Does an Automatic Stay Do in Chapter 13?

Once you file for bankruptcy, the "automatic stay" immediately goes into effect. The automatic stay stops all collection activity dead in its tracks. This means that creditors aren't allowed to call you, send you letters, continue a foreclosure action, or file any lawsuits.

What Happens After Chapter 13 Is Paid Off?

The Chapter 13 Trustee will conduct a thorough case completion audit by reviewing the payment history and whether any additional plan terms have been complied with (for example, the payment to the plan of of yearly bonuses or tax refunds). After the Trustee audit is complete the case will be forwarded to the Court for Discharge.

Once the Court enters a “Discharge Order”, you are no longer legally obligated to pay the listed Creditors with certain exceptions.

Call Our Chapter 13 Lawyers in Detroit at (888) 822-6730

Our Chapter 13 bankruptcy attorneys will teach you what you need to know and do everything we can to help you take full advantage of your rights so that you can begin life after bankruptcy in a position of financial stability. Do not hesitate to reach out and begin your journey to a fresh start today!

Contact the Law Offices of Marshall D. Schultz at so that we can work with you toward a brighter future! We have offices in both Southfield and Detroit.