Behind on secured payments. From time to time, there are some people get behind on payments on a mortgage payment, car payment, or some other secured item like furniture, computers, or jewelry. Eventually, they start receiving unwelcome letters from the creditors demanding they bring their account current. If they are unable to bring the account current, and have reason to believe the matter will be referred to an attorney for legal action, the debtor may choose to jump into a Chapter 13 bankruptcy to put a stop to any fees that may be associated with collection efforts, such as attorney fees, filing fees and process fees. If this involves real property, there may also be title search fees and inspection fees.
The filing of the bankruptcy puts a stop to collection efforts, so if the matter has not already been sent to an attorney, the debt may be able to be paid off, or brought current, during the course of the Chapter 13 bankruptcy. If the debtor was to wait to file the bankruptcy until after collection efforts are initiated, it could be much more difficult to become current because of the extra fees would have to be paid back to the creditor; if the debts are too much to be repaid, then he or she may be looking at having to file a Chapter 7 bankruptcy and surrender the property.
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