Can Chapter 13 Save My House or Car in Oklahoma?

Chapter 7 is fast and wipes out a lot of debt, but it has a blind spot. It does nothing to help you catch up on a mortgage or car loan you have fallen behind on. If you are three payments behind on the house when you file Chapter 7, you are still three payments behind when the case closes, and the lender can pick the foreclosure back up.

Chapter 13 exists for exactly that problem.

It stops the foreclosure or repossession now

A Chapter 13 filing puts the automatic stay in place immediately. 11 U.S.C. § 362(a). A pending foreclosure stops. A sheriff's sale stops. A repossession stops. Filing the morning of a scheduled sale still stops it, though nobody should want to cut it that close.

It lets you catch up over time

The Bankruptcy Code lets a Chapter 13 plan cure a default on a mortgage or other long-term debt within a reasonable time, while you keep making the regular payments. 11 U.S.C. § 1322(b)(5). In plain terms, you go back to your normal monthly payment, and the past-due amount gets spread across the life of the plan instead of coming due all at once. A lender that wanted $9,000 by Friday gets it over several years.

Plans run three to five years, depending on your income. 11 U.S.C. § 1322(d). You make one payment each month to the Chapter 13 trustee, who pays your creditors.

Cars

Chapter 13 can stop a repossession and let you catch up on a car loan. In some cases it can do more, including lowering the interest rate or, on an older loan, reducing what you owe to what the car is actually worth. Whether that is available depends on when you bought the vehicle and what you owe on it, so we work it out case by case.

If the car has already been repossessed, move fast. A prompt filing can sometimes get the vehicle back, but the window is short.

What else it handles

Chapter 13 also stops wage garnishments, lets you pay certain tax debts through the plan, and can protect property that might be at risk in a Chapter 7. It is also the path for people whose income is too high to qualify for Chapter 7. Sometimes banks or mortgage companies do not want to reaffirm your debt. A chapter 13 bankruptcy gives you the power back to bring them back to the table to negotiate.

The tradeoff

Chapter 13 takes commitment. Three to five years is a long time, and if you miss plan payments the case can be dismissed. It works best for people with steady income who fell behind for a reason, like a job loss, a medical problem, or a divorce, and who can now afford the regular payment plus something toward what they owe. Part of my job at the first meeting is telling you honestly whether your numbers work.

If you have a foreclosure notice or a repossession on the way, don't wait. Call (918) 221-6190 or request a consultation. The first consultation is free, and you will talk with me directly, not a screener.

Related: Tulsa bankruptcy attorney; How to Stop a Wage Garnishment in Oklahoma; What Happens at the 341 Meeting in a Tulsa Bankruptcy?; Filing Bankruptcy Without a Lawyer: What the Court Records Show.

This article is general information about Oklahoma and federal bankruptcy law, not legal advice for your situation. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.