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Bankruptcy can be a path to saving one’s home

| Dec 27, 2017 | Bankruptcy |

Chapter 13 bankruptcy can be a way for people in Kentucky who are drowning in debt to obtain protection that can save their home and their car while they work to regain financial stability. This kind of bankruptcy can be a good choice for people who have too high of an income to qualify for Chapter 7 bankruptcy and are struggling with mortgage debt or other major financial concerns. With Chapter 13 bankruptcy, filers can create a plan to repay their debts that stretches out over a period of three or five years.

One case in Georgia illustrates the help that can be provided by a Chapter 13 bankruptcy filing. In this case, a person’s property was sold under a tax sale, which transfers title to the new owner but the existing owner retains a right of redemption. By paying off the tax bill to the purchaser, the original owner can reclaim the home and property. The standard repayment period for Chapter 13 bankruptcy is three or five years, but in this case, the tax sale required payment of the redemption amount in a one-year period. The property owner sought to include the tax redemption amount in her full repayment plan.

The company that bought the property sought to reject the arrangement, requiring the full redemption amount to be paid in one year; however, the court found that legal title belonged to the original owner, giving the high bidder a secured interest in bankruptcy. This meant that the redemption fee could be properly scheduled for full repayment over the life of the payment plan.

People who are in over their heads due to high mortgage bills, tax issues or other debts despite making a high income can consider Chapter 13 bankruptcy as a way out of the financial crisis. A bankruptcy lawyer can often assist with the preparation of the plan and then submit it to the court for its approval.