When to File Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a repayment plan. The debtor (person filing bankruptcy) must have enough income to be able to make timely monthly payments.
The most common reason people file for Chapter 13 bankruptcy is because they do not qualify for a Chapter 7 bankruptcy. The stringent “Means Test” required to file for Chapter 7 bankruptcy can be a difficult barrier for many people. In certain situations, even a modest income will disqualify people from filing Chapter 7 bankruptcy.
Contact our office at (661) 485-3917 to speak directly with a Santa Clarita Chapter 13 bankruptcy lawyer who can help determine which form of bankruptcy would be most beneficial.
Chapter 13 bankruptcy can save your home from foreclosure as an alternative to filing for Chapter 7 bankruptcy.
Another reason people choose Chapter 13 bankruptcy is to stop the foreclosure of their house. Chapter 13 bankruptcy can immediately stop a foreclosure from taking place and allow the debtor to repay the deficiency through a Chapter 13 repayment plan.
A Chapter 13 bankruptcy can also stop any other kinds of property repossessions, such as a car, from being repossessed and allow the debtor to retain the property. There are many other reasons to file Chapter 13 bankruptcy. Getting a full bankruptcy consultation with an experienced Santa Clarita Chapter 13 bankruptcy lawyer is essential to exploring your full range of viable options.
Why Choose Chapter 13 Bankruptcy vs. Chapter 7?
Chapter 13 bankruptcy will let you keep your assets and pay your debt off over a period of time, generally three to five years.
A Chapter 13 payment plan is based upon a number of different factors. Some people pay a very minimal payment of around $100.00 a month or even lower, wherein they only pay back less than 5% of their debt. Others will be required to pay back 100% of what they owe to their creditors. And the vast majority of people will fall somewhere in the middle. The two main factors the bankruptcy court considers are the debtor’s disposable income and their non-exempt assets. Issues with non-exempt assets usually only arise if you own a home with a large amount of equity, over $100,000. If either the disposable income is high or the non-exempt assets have a high value, the result will be a higher repayment plan. A lower disposable income and having no non-exempt assets will typically result in a low repayment plan. Contact our office to discuss your options with a Santa Clarita Chapter 13 bankruptcy lawyer.
Will I Lose My Assets in Chapter 13 Bankruptcy?
You can keep and will have control over your property in Chapter 13 bankruptcy, but you'll have to keep up with secured debt payments and catch up on secured debt arrears.
Unlike a Chapter 7 bankruptcy, in a Chapter 13 bankruptcy you are in control of your assets, that means that you get to decide what to do with your property, that means that you do not place any of your property in danger of being seized. You will not lose any property when you file for Chapter 13 bankruptcy. Chapter 13 bankruptcy can help you keep your property and get back on your feet. Many of our clients who file bankruptcy come from failed debt consolidation plans. Chapter 13 bankruptcy takes the uncertainty of debt reorganization away and forces the trustee and the creditors to submit to the rules outlined in bankruptcy law, unlike chapter 7 where the bankruptcy trustee has control over your property.
What Are the Benefits of Filing for Chapter 13 Bankruptcy?
Chapter 13 bankruptcy has a number of benefits for individuals. Call our Santa Clarita Chapter 13 bankruptcy lawyer to determine if you are eligible.
Chapter 13 bankruptcy, also referred to as a “wage earner’s plan,” repayment plan over three to five years depending on whether your income is more or less than the state median income for a similar-sized household.
- Prevents creditors from beginning or continuing collection efforts.
- Enables individuals to reschedule secured debts.
- It can help lower payments on secured debts by extending them.
- Third-parties, co-debtors, and co-signers may be protected.
- Debts may be discharged in as little as 3 but no more than 5 years in accordance with 11 U.S.C. § 1322(d).
How Can Chapter 13 Bankruptcy Benefit Homeowners?
As discussed above, Chapter 13 bankruptcy can stop foreclosure proceedings and may be able to help cure delinquent mortgage payments. When you file, you are afforded certain protections that place an automatic stay on collection efforts, giving you time to sort out your affairs.
Given the complexities of state and federal bankruptcy laws, it is always recommended that you consult a Santa Clarita Chapter 13 bankruptcy lawyer prior to filing.
Should I File for Chapter 13 Bankruptcy?
Chapter 13 bankruptcy may be a good option for people with regular income that would benefit from debt consolidation and a structured repayment schedule.
When deciding whether filing Chapter 13 bankruptcy would help you to achieve financial freedom, you need to take several things into consideration.
Factors to consider when filing Chapter 13 bankruptcy include:
- Whether you have regular, sustainable income
- If you qualify for Chapter 7 bankruptcy and whether it would be more advantageous
- The total amount of your unsecured debts (if you exceed the maximum amount allowed under law, you may be ineligible to file)
- If you have enough disposable income to support the repayment plan.
- Whether you have previously filed for bankruptcy.
To discuss your legal options and determine which kind of bankruptcy would be most beneficial based on your financial situation, contact our office to speak to a Santa Clarita Chapter 13 bankruptcy lawyer.
Contact Alamdari Law to Learn How to Save Your Home and Other Assets
If you are facing foreclosure or have assets at risk of being repossessed, Chapter 13 bankruptcy may help you save your property and get out of debt. Chapter 13 bankruptcy helps you to consolidate your debts and restructure payments, making repayment more manageable.
The repayment of your debts will generally be structured over three to five years depending on your income level. If you are behind on mortgage payments and at risk of losing your home, Chapter 13 may be the right choice. Call (661) 485-3917 to speak to a Santa Clarita Chapter 13 bankruptcy lawyer and get started on a path to becoming debt free.