What is Chapter 13?
Chapter 13 bankruptcy, often called “wage-earners bankruptcy”, provides a person with a way to achieve a new start, but requires the filer to pay off some of their outstanding debts. Chapter 13 is designed for individuals with a regular and stable source of income who are temporarily unable to pay their debts but who desire to use their best efforts and good faith to pay their debts in installments over a period of time subject to the protections afforded by the Bankruptcy Court. Under Chapter 13, you keep all of your property, as long as you continue to make payments required under the plan. An experienced Chapter 13 bankruptcy lawyer from Litchney Law Firm will help you create a plan that works for you.
Typically debts that you owe to the government are not dischargeable; but including them in your Chapter 13 plan can have many benefits. Chapter 13 bankruptcy freezes interest and penalties on taxes. This will allow your payments to go directly to the principle, greatly reducing your interest and penalty burden. Chapter 13 will stop the government from adding more penalties and interest to your back taxes.
Repayment of Debts with an Experienced Sacramento Chapter 13 Bankruptcy Attorneys
Chapter 13 bankruptcy is designed for individuals with a regular and stable source of income who are temporarily unable to pay their debts but who desire to use their best efforts and good faith to pay them in installments over a period of time subject to the protections afforded by the Chapter 13 bankruptcy rules. You are only eligible for Chapter 13 bankruptcy if your debts do not exceed certain dollar amounts set forth in the Bankruptcy Code.
Work with Experienced Sacramento Chapter 13 Bankruptcy Attorneys to Guide you Through the Process
Under Chapter 13 bankruptcy rules, you must file a plan with the Court to repay your creditors all or part of the money that you owe them, using your future earnings or by the disposition and/or surrender of certain collateral such as land and motor vehicles. You are protected from your creditors in most instances upon the filing of your case but your plan must be approved by the Court before it can take effect. An experienced bankruptcy attorney can help you through this process to ensure you achieve a favorable outcome that fits your lifestyle.
A chapter 13 Plan may allow you to bring the payments on your home current so you can keep your home, even if it is in foreclosure. You can also classify creditors and treat some of them differently than others, allowing you to pay for your vehicles over time or pay off past-due or unpaid income taxes, while in many cases paying your general creditors only a small percentage of what you owe them.
In some cases, Bankruptcy Law under Chapter 13 may allow you to “strip off” your second or third mortgage. If approved by the Court, the mortgage creditor is treated as an unsecured creditor. The creditor will get paid the same percentage as your other unsecured creditors and once your plan is completed, they must cancel, or “reconvey” the Deed of Trust back to you.
What the New Bankruptcy Laws Mean to You
The new bankruptcy laws require you to perform a means test to help determine your disposable income. A means test is a formula that provides a reporting and calculation of “current monthly income”. In chapter 13 bankruptcy cases, current monthly income is used to determine the disposable income that must be contributed to payment of unsecured creditors.
Under Chapter 13 bankruptcy, unlike Chapter 7 bankruptcy, you may keep all of your property, both exempt and non-exempt, as long as you continue to make payments under the plan. After completion of payments under the plan, your debts are discharged except for any domestic support obligations, student loans, and certain taxes, among others. At Morris Law Group, your attorney will be experienced in both Chapter 7 and Chapter 13 bankruptcy laws, and will advise you on the best path considering your unique circumstances.
Experienced Sacramento Chapter 13 Bankruptcy Attorneys Are Ready to Assist You
Having an experienced and knowledgeable attorney is especially important when calculating and preparing the Chapter 13 Plan. We are here to advise you about your particular situation and to guide you through the process of Chapter 13 bankruptcy. To find out if you qualify and meet the new standards for filing a bankruptcy, schedule an appointment to speak to a bankruptcy lawyer by calling us at 917-757-6000 or by filling out our contact form for a free and confidential debt analysis.
Many bankruptcy law firms only handle Chapter 7 bankruptcies, or if they do handle Chapter 13, they do not handle many of them and so are inexperienced. Our experienced bankruptcy attorneys have handled many Chapter 13 bankruptcies and are experienced in making and getting plans approved, that are affordable to you. Filing a Chapter 13 can be a great way to restructure your debt, and to get rid of your second mortgage and more!
An individual or business filing under Chapter 13 turns over his or her finances to the bankruptcy court and is then obliged to make payments at the court’s direction. Whereas Chapter 7 is characterized by full discharge of debt, Chapter 13 results in a repayment plan. Debtors prefer Chapter 7 because it usually allows them to hold on to their equity but, after a brief time, all obligations except such as listed above (child support, alimony, etc.) are eliminated.
Chapter 13 Requirements
If you are filing a Chapter 13 bankruptcy, a proposed repayment plan must also be submitted. Wes spend a lot of time pouring over your income and expenses, we draft this complicated plan for you and we look at your budget. We ask after reasonable monthly expenses have been paid, how much money will you have left over to put toward your outstanding bills? And how will this money be divvied up among those you owe? Priority claims (such as taxes and back child support) must be paid in full; unsecured debts (like credit card debt and medical bills) are usually paid in part. Depending upon the judgments of those involved with your case, unsecured debts can be paid off for as little as 10 cents on the dollar.
In addition to the general requirements listed above, the repayment plan must pass three tests:
- It must be delivered in good faith.
- Unsecured creditors must be paid at least as much as if a Chapter 7 bankruptcy had been filed. Generally, this is the value of all the nonexempt property you own (see California bankruptcy exemptions).
- All disposable income must be paid into the plan for at least three years (you may use up to five years in order to meet the second test that you pay at least as much as in a Chapter 7).
Plan payments will generally be withdrawn directly from your wages and you or your attorney should arrange with the court for these payments to be deducted from your wages.
Chapter 13 Plan Confirmation
If you filed a Chapter 13 plan you will need to attend a hearing before a bankruptcy judge who will either confirm or deny the repayment plan. An attorney from our firm will always be present at this meeting with you. If your plan is confirmed and you make good on it, the balance (if any) on the dischargeable debts you owe will be eliminated at the end of your term.
Types of bankruptcy are named after chapters of the bankruptcy code. Individuals may file under the provisions of Chapter 7 or Chapter 13.
Experienced Sacramento Chapter 13 Bankruptcy Attorneys
We are experienced Sacramento Chapter 13 Bankruptcy Attorneys. We have helped thousands of individuals and businesses get the relief they need from their creditors through the use bankruptcy by filing a Ch. 7, Ch. 13, credit card debt negotiation or debt settlement and have successfully dealt with adversary proceedings brought by difficult creditors. Our Sacramento chapter 13 bankruptcy attorneys have achieved proven results and can give you the great legal advice and strategy needed to get you the results you want. Contact us today to schedule your complimentary attorney consultation by clicking HERE or by calling 916-757-6000. We look forward to helping you with all of your Sacramento chapter 13 bankruptcy needs.
