We write frequently on our Wayne County bankruptcy law blog about the manageable payments that Chapter 13 offers. In fact, our last post briefly discussed Chapter 13 as a way to stop foreclosure on one's home and while making payments under Chapter 13 bankruptcy. Let's look a little closer at just how a payment plan is formulated for those who are wondering if filing for Chapter 13 is right for them.
A Chapter 13 payment plan divides your debts into three categories. Those associated with some kind of property that the creditor can potentially take back if the debt goes unpaid are called "secured" claims. A mortgage is a secured claim because the bank can foreclose on your house if you don't pay. Similarly, a car can be repossessed if you default on the loan. Unlike Chapter 7, Chapter 13 allows filers to keep the property securing these claims (assuming they want to) as long as the value is paid off in the repayment plan.