Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a repayment plan that lets you catch up on payments you’ve not been able to make due to job loss, illness, or other unexpected life events. In most cases, you’ll only pay back a portion of the outstanding debt to creditors. This type of bankruptcy is available only to individuals and sole proprietorships (other business entities are not eligible). Here's an explanation of Chapter 13 bankruptcy in California:

1. Qualification: To file for Chapter 13 bankruptcy in California, you must have a regular source of income that allows you to make monthly payments under a court-approved repayment plan. Your debts must also fall within certain limits set by the bankruptcy code.

2. Repayment Plan: In Chapter 13 bankruptcy, you propose a repayment plan to the court, outlining how you will repay your debts over a period of three to five years. The plan typically prioritizes certain debts, such as mortgage arrears (unpaid mortgage payments) or car loans, while also providing for payments to other creditors.

3. Credit Counseling: Before filing for Chapter 13 bankruptcy in California, you must complete a credit counseling course from an approved agency within 180 days prior to filing.

4. Protection of Assets: Chapter 13 allows you to keep your property while catching up on missed home or car payments through the repayment plan.

5. Automatic Stay: Similar to Chapter 7 bankruptcy, filing for Chapter 13 triggers an automatic stay, halting most collection actions by creditors, such as foreclosure proceedings, wage garnishments, or lawsuits.

6. Discharge of Debts: At the completion of the repayment plan, any remaining eligible debts are discharged, meaning you are no longer legally obligated to repay them. This discharge can include unsecured debts like credit card balances and medical bills, as well as certain types of tax debts.

Navigating Chapter 13 bankruptcy in California requires careful consideration of state-specific laws and regulations. Consulting with a knowledgeable bankruptcy attorney in California is essential to ensure that you understand your rights and obligations under Chapter 13 and to develop a repayment plan that is feasible and sustainable for your financial situation. So do not hesitate and calls us for a FREE consultation!