In Chapter 13 bankruptcy (also referred to as a “wage earners” bankruptcy), the debtor has regular income and debts will be reorganized. As a result, you will work with your creditors and the Bankruptcy Trustee to create a payment plan lasting 3 to 5 years. At the end of the plan, your remaining unsecured debts (regularly credit card debt or medical bills) are discharged. Most filers end up paying a fraction of their overall unsecured debt.
In Chapter 13, both secured and unsecured debts are assessed. You may have to choose whether you want to continue making payments on your secured debts (typically your mortgage or auto loans) or surrender the property to the Trustee. The unpaid portion of your unsecured debts, as mentioned above, will be discharged at the end of your plan.
Who can file for Chapter 13 bankruptcy?
In order to qualify for Chapter 13 bankruptcy, you must show that you will be unable to fulfill the Means Test. More specifically, you will have to show that you make above the California median income as well being sufficiently able to tackle your assessed payment plan under Chapter 13. If you don’t have enough income to support a plan, or if creditors won’t receive sufficient payment, you’ll be required to file under Chapter 7.
What debts aren’t discharged in Chapter 13 bankruptcy?
Under Chapter 13, just as in Chapter 7, you cannot discharge most student loan debts or spousal support debt. Personal injury debts, incurred while driving drunk, also are excluded from discharge.
What will I lose?
Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy does not require you to surrender any property. However, should you be unable to keep up with your payment plan, you can choose to surrender property to the Trustee. At the end of your Chapter 13 plan, your liability for those debts will be discharged forever.
Will bankruptcy protect me from foreclosure and repossession?
When you file for any type of bankruptcy, you are protected under the automatic stay. The automatic stay forces creditors to stop all collection actions. Once you file for bankruptcy, all of your creditors must work through the bankruptcy court. As a result, foreclosure or collection attempts are halted to ensure a fair bankruptcy process for all parties involved.
How much will I have to pay each month?
Your Chapter 13 plan payment is calculated and dependent primarily on what you earn, not on what you owe. The process is as follows:
- The Trustee will take your income and subtract certain expenses according to various standards.
- They will then subtract certain expenses such as mortgage payments, auto loan payments, child support payments, and tax debts. You will be required to make these throughout your plan.
- After allowable monthly expenses and required payments are calculated, you will be left with what is called your “disposable income”.
- Your disposable income is what you will have to contribute to your Chapter 13 plan each month. You will make these payments to the Bankruptcy Trustee every month, and they will distribute them among your creditors.
How Barm Law can help
Although these are general tips, everyone’s financial situation is different. If you are currently struggling with overwhelming, we can discuss your unique circumstances, what your goals are, and discuss every option you can utilize to make you financially solvent again.
Contact Barm Law For Your Chapter 13 Bankruptcy Now
If you or someone you know are interested in filing chapter 13 bankruptcy, you need to contact BARM LAW offices in Los Angeles for your free case evaluation. Our lawyers will advise you for the best compensation for your injuries. We will investigate your case thoroughly and negotiate with the insurance companies aggressively, we are not afraid of going to trials with the insurance companies.
Call us now at 1 (833) BARM-LAW or 1 (833) 227-6529 or email us by filling the contact form.