California Chapter 13 Bankruptcy Attorney

Chapter 13 bankruptcy is an avenue of bankruptcy law that allows an individual to reorganize their debts and repay them over time. The debtor seeking relief must have a regular source of income to qualify for chapter 13 bankruptcy, demonstrating a steady cash flow to be able to repay the debts on a set schedule.

Chapter 13 bankruptcy is also known as “reorganization” bankruptcy because it reorganizes your debts into a repayment plan. The bankruptcy court oversees the repayment plan, and it lasts for a pre-determined period, usually three to five years. During the repayment period, you are required to make payments to a bankruptcy trustee, who then distributes the payments to your creditors. This can be an excellent way to catch up on past-due payments, such as back taxes, mortgage payments, or car payments, and to pay off debts without incurring any more interest or late fees.

However, some people are under the inaccurate perception that chapter 13 bankruptcy is “easier” than other types of bankruptcy. This couldn’t be further from the truth. Although it may be a better option for some people, it is still a very serious decision with long-lasting implications. No one should jump into an important decision like this lightly without working with an experienced bankruptcy attorney.

How Do People File for Chapter 13 Bankruptcy?

When you have decided to file for chapter 13 bankruptcy, there are several steps in the process.

  1. Take a Credit Counseling Course
    The first step is to take a credit counseling course from an approved provider. This must be done within 180 days before filing for bankruptcy. These courses typically include an evaluation of your personal financial situation, education on alternatives to bankruptcy, and a budgeting course. The intent is to make sure no one advances through the bankruptcy process without being fully aware of all their options and their implications.
  2. Choose a Legal Professional
    After successfully completing the credit counseling course, the next step is to choose what legal professional to partner with to help you through the bankruptcy process. You want to connect with this person before even collecting all the required documents. That way, they can give you direction on what needs to be collected and ensure all evidence is legally acquired.
  3. Complete the Required Bankruptcy Paperwork
    Next, a few different forms must be completed and filed with the court for your chapter 13 bankruptcy to be accepted. These forms ask for detailed information about your debts, assets, income, and expenses. All information submitted on these forms must be accurate and truthful. If any information is found to be intentionally false, your bankruptcy case could be dismissed, or you could face criminal charges.
    Along with the completed forms, you may also need to submit documents such as your most recent tax return, pay stubs, bank statements, and a list of your creditors. This fills out the bankruptcy petition and helps the court understand your current financial situation.
  4. Attend a Meeting of Creditors
    Once your bankruptcy petition has been filed, you will be required to attend a meeting of creditors. This is also called a “341 meeting” because it is governed by section 341 of the bankruptcy code. At this meeting, you will be sworn in and asked questions by the bankruptcy trustee about your case. Your creditors may also be in attendance, and they will have the opportunity to ask you questions as well.
  5. Attend a Hearing on Your Repayment Plan
    After the meeting of creditors, there will be a hearing on confirmation of your chapter 13 repayment plan. This is where the court will either approve or deny your plan. If the court approves your plan, you must make payments to the trustee, who will then distribute the money to your creditors.
  6. Make Payments to the Trustee
    Once your repayment plan is approved, you must make monthly payments to the trustee. These payments are based on your income and expenses. You need to make these payments for the duration of your repayment plan, which is typically three to five years.
  7. Receive a Discharge After Required Payments Are Made
    Once you have made all the required payments under your repayment plan, you will be eligible to receive a discharge. This means your remaining unsecured debts will be wiped out, and you will no longer be liable for them.

Chapter 13 bankruptcy can be a complex process, but working with an experienced legal professional can help you complete everything properly and give you a better chance of obtaining a discharge.

Who Qualifies for Chapter 13 Bankruptcy?

While the entirety of chapter 13 bankruptcy might sound like a compelling option for those struggling with debt, only some qualify for this type of bankruptcy. To qualify, an individual must:

  • Have a regular source of income. Chapter 13 is only available to those with a regular income source. This could be from a job, self-employment, alimony, child support, or even government benefits. There needs to be a strong indication that you have enough of an income to meet these obligations while still being able to cover your necessary living expenses.
  • Have unsecured debts below a certain amount. To qualify for chapter 13, your unsecured debts (such as credit card debt or medical bills) must be below $419,275. The U.S. government currently sets this amount, and it is subject to change over time. Unsecured debt includes any debt not backed by collateral, such as a car or house.
  • Must be up to date on your tax filings. You must also be current on your tax filings to qualify for chapter 13 bankruptcy. This means you must have filed your taxes for the past four years. If you still need to do so, you will likely need to file them before you can qualify.
  • Cannot have applied for chapter 13 bankruptcy in the past two years. This strict rule is in place to prevent individuals from taking advantage of the bankruptcy system. If you have filed for chapter 13 in the past two years and been discharged, you will likely not be able to file again.

What Motivates Individuals to File for Chapter 13 Bankruptcy?

There are many reasons that people may opt to file for chapter 13 bankruptcy as opposed to other types of bankruptcy. Some of the main motivations include:

  • The ability to keep your property. One of the biggest motivations for people filing for chapter 13 is that it allows them to keep their property. In chapter 7 bankruptcy, your property may be sold to pay off your debts. However, in chapter 13, you can keep your property as long as you can make the required payments.
  • Catching up on past-due payments. Another motivation for people to file for chapter 13 bankruptcy is that it gives them a way to catch up on past-due payments. This is especially beneficial for those who have fallen behind on their mortgage or car payments. By catching up on these payments, you can avoid foreclosure or repossession.
  • The ability to discharge certain types of debt. In chapter 13 bankruptcy, you can discharge debts that cannot be discharged in other types of bankruptcy. This includes debts from alimony, child support, and some types of taxes.
  • Stopping wage garnishment. When you file for chapter 13 bankruptcy, you can also stop wage garnishment. Wage garnishment is when a pre-determined amount of your wages are taken directly out of your paycheck to pay off your debts. This can be a very difficult thing to deal with, especially if it is a large portion of your wages. Filing for chapter 13 can help stop wage garnishment and give you some much-needed financial relief.

Tips for Filing for Chapter 13 Bankruptcy

If you are going to file for chapter 13 bankruptcy, there are a few considerations to keep in mind. These tips can help you navigate the process and make sure you are successful in your bankruptcy case:

  • Get professional help. Filing for bankruptcy is a very complicated process, and it is not something you should try to do on your own. You must have a thorough understanding of the bankruptcy process and the laws to be successful. It is best to get professional help from a bankruptcy attorney.
  • Create a budget. Before you file for bankruptcy, you are going to need to create a budget. This budget should include all of your income and expenses. It is important to be as accurate as possible when creating your budget, as this will be used to determine your repayment plan.
  • Gather all of your financial documents. When you file for bankruptcy, you have to provide financial documents, such as bank statements, tax returns, pay stubs, and bills. These documents are going to determine your assets, liabilities, and income.
  • Understand your repayment plan. One of the most important things to understand when filing for chapter 13 bankruptcy is your repayment plan. This plan outlines how much you need to pay monthly and over what period of time. It is important to ensure you can afford the payments in your repayment plan.

Contact Coggins Law Today

Get in touch with us at Coggins Law when you are considering filing for chapter 13 bankruptcy. Our experienced bankruptcy attorneys can help you navigate the bankruptcy process and give you the guidance needed for you to be successful in your case. We look forward to helping you get the financial relief you need.