Chapter 13 Bankruptcy

Chapter 13 bankruptcy, also known as Wage Earner Bankruptcy, is the most common choice when you are earning an income and meet other requirements.  Under this plan, you establish a plan to repay all or part of your debt over a period of three to five years.  The benefit of Chapter 13 over Chapter 7 is that you get to keep more of the possessions you worked so hard to acquire.  Every day that you work through your plan moves you closer to the fresh start you need for a secure life.

Chapter 13 bankruptcy might be the right option for you under these circumstances:

• Your income, after reasonable monthly expenses, will permit you to put money toward your outstanding bills, including eventual full payment of priority claims such as back taxes and child support.
• You want to retain the equity in your home.
• You want to avoid repossession of your car.
• You want to keep more of your property and assets than would be permitted under Chapter 7 bankruptcy.
• You feel a moral obligation to pay down your debt.

The Chapter 13 process

Many steps are involved in filing for Chapter 13 bankruptcy, including the following:

• Determining qualification for Chapter 13
• Establishing and filing a repayment plan
• Beginning the court process

Determining qualification for Chapter 13

The details of determining whether you qualify for Chapter 13 can be daunting, so you need a law firm that is knows how to look at your financial situation and make this determination.  The Law Office of Alec Harshey is experienced in handling both Chapter 7 and Chapter 13 bankruptcy.  We will help you determine which bankruptcy process is the right choice for you.

When you file Chapter 13, you establish a repayment plan to pay off your debts over a three to five year period unlike a Chapter 7 where most debts are eliminated without repayment.  However, you are able to keep more of your property and assets under a Chapter 13 bankruptcy as compared to a Chapter 7.  In some instances, you can strip off a wholly unsecured second mortgage, and still keep your home.  After you have completed your three or five year repayment plan, only the first mortgage will remain.

Establishing a repayment plan

Once you have qualified for Chapter 13, your repayment plan must meet numerous requirements.  Just a few of the Chapter 13 requirements include:

• Specific limitations govern the amount of secured and unsecured debt that you can have to qualify for personal bankruptcy under Chapter 13.  These limitations change to adjust to the change in the consumer price index.
• If your monthly income is greater than your state's median income, you will have a five year repayment plan.
• Certain priority claims must be paid off first through your repayment plan.  For example, past due child support or tax bills must be paid off in full through your repayment plan.
• After the priority claims, the remaining available funds are to be divided between your unsecured creditors.  It’s possible that those unsecured debts can be paid off for as little as ten percent of the total balances.

The good news is that as soon as you file your paperwork with the bankruptcy court, an automatic stay goes into effect.  This stay immediately prevents creditors from contacting you directly or suing you or staking a claim on any of your property.

The Law Offices of Alec Harshey knows the details of California’s complex bankruptcy laws.  We help you create a repayment plan that meets all requirements and sets you up for success.

Beginning the court process

The court establishes many processes that need to occur as part of the Chapter 13 process, including the following:

• Appointment of a trustee who will review your paperwork and ensure that your creditors are paid as much as possible
• Setting up a meeting between you are your creditors, which the creditors may or may not attend, depending on the status of negotiations with them
• The plan confirmation hearing before a judge, who will either confirm or deny the repayment plan

Chapter 13 may be the best option

Chapter 7 may be a quick approach, but when you file Chapter 13 bankruptcy, you can look forward to a brighter future.  Chapter 13 is a good option for you if:

• You want to avoid foreclosure on your home.
• You do not want your car repossessed.
• You have significant equity in your home or other property that you want to keep.
• You have regular income for your monthly expenses, but you are unable to keep up with your scheduled payments.
• You are looking to protect co-signers.
• You have a moral desire to pay off your debts.

Call us

With Chapter 13 bankruptcy, if you miss any details your claim can be denied.  That is why you need a law firm that reviews every detail thoroughly and can lead your filing through to success.  Let The Law Offices of Alec Harshey work with you to determine which bankruptcy option is best for your financial circumstances. 

For more information about bankruptcy, refer to our Frequently Asked Questions.

Call the Law Office of Alec Harshey at 866-497-0982 from 9:00 am – 5:00 pm Mondays through Fridays for more information.