What is a Chapter 13 Bankruptcy in California?
Chapter 13 bankruptcy is commonly known as Reorganization. This is the bankruptcy provision is most often pursued by those consumers who are unable to qualify for Chapter 7 and who wish to keep their assets. In Chapter 13, the debtor must make monthly payments over three to five years to repay all or some of their debt. Once all payments are made under the repayment plan, the debtor is entitled to a discharge of their debts.
How does a Chapter 13 Work?
Within 15 days after filing a Chapter 13 petition, the debtor must file a proposed repayment plan. A summary of it is mailed to every creditor. Once the plan is confirmed, the debtor makes payments to the trustee for the benefit of the creditors.
Who Qualifies for a Chapter 13?
This section of the Bankruptcy Code typically helps qualified individuals who don’t qualify for Chapter 7, qualified individuals who want to retain his/her property, or small proprietary business owners. Only an individual with regular income whose debt is under $1,000,000 ($250,000 unsecured debt; $750,000 secured debts.) A qualified individual must have a regular source of sufficient income to make Chapter 13 plan payments and stay current on secured debt obligations (mortgage) and living expenses.
Disadvantages of Chapter 13
- Your repayment plan last for years – 36 to 60 months.
- Higher legal fees for filing this chapter.
- If you miss any payments due under your Repayment Plan, your case will be dismissed by the Court.
- You must stay current on your Chapter 13 Plan payments and payments to secured creditors (i.e. mortgage).
- Secured debts (mortgage) must be repaid in full, but Chapter 13 Plan payment allows you to cure the defaults by repaying any arrearages over the life of the Plan.
Advantages to Chapter 13
- You keep your real estate and personal property.
- You have protection against creditor collection efforts, lawsuits and garnishments.
- You have protection against foreclosure of your home.
- You have the opportunity to repay your debts through reduced payments.
Chapter 13 Bankruptcy Cost
Once you contact Brownstone Law Group and you and your personal lawyer decide that Chapter 13 Bankruptcy is the proper solution for you particular situation, your lawyer will discuss and disclose all Fees and Costs with you as well as providing a breakdown in writing. The Fees and Costs will consist of the following: filing fee for the attorney, the filing fee for court costs (currently $281), costs associated with required pre-filing credit counseling and costs associated with required post-filing course of financial management. All attorney fees for Chapter 13 Bankruptcies must be approved by a Judge and the majority of the fees are governed by applicable Standing Orders or Local Rules applicable in the jurisdiction. With these rules and regulations you can rest easy knowing that any fee charged for Chapter 13 service is approved by a Judge and reasonable.
If you are filing a joint petition with your spouse, only one attorney fee and one court cost is required to be paid. Brownstone Law Group will help you understand how and when the fees must be paid for a Chapter 13 Bankruptcy.
At The Brownstone Law Group we offer a choice of options for paying fees. You can pay a $100 retainer to the firm in addition to flexible payments for the remainder of the fees through automatic transfers from a checking or savings account. All these options will be discussed by your lawyer at the Brownstone Law Group and detailed in writing with no obligation to you. Once you have retained the Brownstone Law Group your harassing phone calls will stop once you tell them you have hired the Brownstone Law Group to represent you. When the payment plan is completed, the petition is drafted and sent for review, you will be provided with a convenient way to enable completion of your credit counseling classes as well as setting up the final step, a time to review and sign your paperwork and complete your filing.
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