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Chapter 13 Bankruptcy

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Chapter 13 Bankruptcy

What is Chapter 13

Chapter 13 bankruptcy is debt reorganization and a consolidated repayment plan proposed by your San Fernando Valley bankruptcy attorney. Then, once the court confirms it, the payments are distributed monthly by the bankruptcy trustee to your creditors. In short, it’s a government-administered debt consolidation. And, it works.

Qualifying

To start with, if you can repay at least some of your debts, you’re probably eligible. There is no fancy test. Higher income helps. If your pay exceeds the California median income, that may make this the only option.

How much is the Chapter 13 Payment

The plan payment has a simple definition, and a tougher one.

Simple answer

First, the easy way to calculate it is what’s left when you take average monthly income and deduct reasonable and necessary expenses. In other words, it’s what you have left after living, and is by definition, affordable.

Somewhat more complicated one

Second, while the simple answer above is true for many cases, there are other factors that can increase what the plan payment needs to be. A partial list of these, in no particular order:

  • liquidation value
  • priority taxes
  • the B22 form’s monthly disposable income result
  • mortgage arrearages or lates
  • value of a cramdown car or vehicle

Chapter 13 bankruptcy attorneys who can say with any certainty what a plan payment is over the phone or at the initial consultation are either misleading or ignorant of what they don’t know. It’s quite possible the payment is “whatever you can afford.” But, maybe the payment amount is driven by something else.

IF YOU CAN REPAY AT LEAST SOME OF YOUR DEBTS, YOU’RE PROBABLY ELIGIBLE FOR CHAPTER 13 BANKRUPTCY.
Hale Andrew Antico, Bankruptcy Attorney

Advantages of Chapter 13 bankruptcy

There are a few reasons that Chapter 13 is the better option:

  • you keep all your things
  • it’s a way to catch up on house or car late payments.
  • it freezes interest and stops it from accruing
  • credit cards can’t sue you, unlike other debt consolidation alternatives
  • it’s reported on your credit report for just seven years
  • pays your back taxes
  • the payment is affordable (but see above)

People with higher income typically file Chapter 13. Due to higher average income, Encino, Woodland Hills, Sherman Oaks, West Hills, and Studio City bankruptcy cases in the San Fernando Valley lean towards Chapter 13. However, each situation is different. Your recent income history helps determine eligibility.

Contact us

We’ve successfully confirmed hundreds of Chapter 13 bankruptcy cases, many in the San Fernando Valley with Chapter 13 trustee Elizabeth Rojas. We have the experience and know-how. Let’s set up a free Zoom consultation to review your options.