What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy, also known as a reorganization or “wage earner plan”, is filed under Chapter 13 of the United States Bankruptcy Code. Individuals generally file bankruptcy under Chapter 13 for various reasons in comparison with a Chapter 7 bankruptcy. A knowledgeable San Diego chapter 13 bankruptcy attorney can inform you on the benefits and disadvantages of filing for Chapter 13 bankruptcy.
This type of bankruptcy involves a monthly payment plan that is paid to a trustee. The trustee administers the collected funds to creditors based on a priority scheme outlined in the bankruptcy code. Generally speaking, secured debts are paid before unsecured debts.
Some reasons to file for Chapter 13 Bankruptcy:
- Among the most common reasons to file a Chapter 13 bankruptcy is to take advantage of the lien stripping provisions in the bankruptcy code to eliminate junior liens from property
- Curing mortgage arrears on real estate
- Getting caught up on a delinquent automobile loan
- If you would otherwise lose assets by filing bankruptcy under Chapter 7
An individual’s eligibility for Chapter 7 or Chapter 13 is determined by his or her amount of debt, income and living expenses. If you’re uncertain about which type of bankruptcy you should file for then contact experienced San Diego chapter 13 bankruptcy attorney Jeffrey D. Larkin to help you determine the type of bankruptcy that will be best for your situation. Call the Larkin Law Firm today at 1-877-256-3946 to speak with your personal San Diego Chapter 13 Bankruptcy Attorney now!
Chapter 13 Bankruptcy Timeline
A Chapter 13 bankruptcy case can last anywhere from 3-5 years. In certain situations it can be completed sooner. Similar to a Chapter 7 bankruptcy, a “Meeting of Creditors” takes place in a Chapter 13 bankruptcy approximately 30-40 days after the bankruptcy filing. This meeting allows the trustee or parties in interest to question the debtor about his bankruptcy paperwork to ensure it is accurate and complete. At this meeting, the trustee may object to the case for a multitude of reasons, and a confirmation hearing will be scheduled by the bankruptcy court so a judge can rule on any contested issues in the case. The confirmation hearing usually takes place approximately 60-75 days after the meeting of creditors.
Once the repayment plan is approved, it takes effect for the length of the Chapter 13 bankruptcy. After all required payments have been made, a bankruptcy discharge is entered by the court, and the unpaid portion of most debts is eliminated.
Who can File a Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy can be filed by individuals with a regular source of income. The source of income can be from employment, retirement, social security or even unemployment. So long as the income source is consistent and sufficient to fund the bankruptcy plan, it will pass muster with the bankruptcy court.
There are also certain debt limits individuals must be under in order to be eligible to file a Chapter 13 bankruptcy. Secured debts include anything that is financed such as a home or automobile. Unsecured debts are debts that are not secured by collateral and include credit cards, most personal loans and medical bills among others.
How is my Chapter 13 Bankruptcy Payment Determined?
Similar to the “means test” in a Chapter 7 bankruptcy case, a statement of current monthly income and projected disposable income must be filed concurrently with the bankruptcy petition in a Chapter 13 bankruptcy. This statement takes into account your income and certain allowable expenses congress has determined are reasonably necessary for the support of the debtor. The amount of projected disposable income multiplied by 36 or 60 months depending on the circumstances is the amount debtors are required to repay during the life of their bankruptcy case. A competent bankruptcy attorney in this regard is of paramount importance in any Chapter 13 case because this formula will determine what percentage of your total unsecured debts must be repaid through the bankruptcy. A qualified bankruptcy lawyer should be familiar with the grey areas of the law and be able to take advantage of these for their clients benefit.
Is a Debtor Education Course Required as Part of my Chapter 13 Bankruptcy?
Yes. A debtor education course must be completed by the debtor before the bankruptcy court will enter your Chapter 13 discharge. The course attempts to provide debtors with practical advice and tips on budgeting and how to use credit responsibly in the future.
How Much Should I Expect to Pay a Bankruptcy Lawyer to File my Chapter 13?
In the Central and Southern Districts of California, bankruptcy attorney fees are set by the court in what are called “no look fees.” These are fees the bankruptcy courts have approved as being reasonable for the services provided in a typical Chapter 13 case. Complex cases are billed on an hourly basis and can exceed the “no look” fee provided a detailed fee application is filed with the court and an order granting those fees is signed by a bankruptcy judge. The current no look fee in the Southern District of California is $3,600 for a consumer Chapter 13 case and $4,350 for a business Chapter 13. In the Central District of California, the current no look fees are $4,000 for a consumer case and $4,500 for a business case.
Do I Need to Hire a Bankruptcy Attorney to File my Chapter 13 Case?
It is absolutely critical to hire a bankruptcy lawyer with Chapter 13 experience to assist you. A knowledgeable bankruptcy attorney can strategize with you to achieve the best possible results. More importantly, a bankruptcy attorney can help ensure you avoid the many pitfalls in a routine case, and reduce the stress and other emotions that inevitably arise during the life of the case. When you are dealing with your financial future, you should not do it without a qualified Chapter 13 Bankruptcy Attorney.
To find out additional information regarding Chapter 13 bankruptcy from the U.S. Bankruptcy Courts click here.