Chapter 13 Bankruptcy Attorneys in Los Angeles
Filing for Chapter 13 Bankruptcy
If you are drowning in debt, filing a Chapter 13 to re-organize and consolidate
your debts may be a good option. This is especially true when your second
mortgage can be eliminated and allow you to stop house foreclosure. In
California, filing for Chapter 13 debt consolidation is a powerful and
legal way to stop the foreclosure process immediately.
Additionally, there are certain debts that may be erasable under Chapter
13 that cannot be erased under Chapter 7. For example, Chapter 13 will
stop all interest and penalties being levied by the IRS, and might even
be able to
eliminate some IRS debts.
A Chapter 13 plan is designed to let you keep what you want and pay as
much as you can afford. After a period of 36-60 months, any unsecured
debts that you have not been able to pay off are completely eliminated.
Sometimes our clients reach us too late in the foreclosure process, and
we file a Chapter 13 in order to stop house foreclosure and buy time to
exercise any other options, including
Timing is everything during a financial crisis. The more time we have,
the better we can prepare, and the more options that are available.
Does Chapter 13 Bankruptcy Allow for Foreclosure Prevention?
Chapter 13 bankruptcy allows individuals to keep the majority of their
property. If you file bankruptcy, you will need to pay your creditors
as much as possible, and sometimes, personal property is used as a form
of payment. If your home is in the process of foreclosure, you must make
an effort to keep up with your secured debt payments (ex: car payments,
loans, etc.). Simply put, filing Chapter 13 can
delay the foreclosure process and allow you to remain in your home.
Does Chapter 13 Bankruptcy Protect Personal Property?
During Chapter 13, you will not be required to put your nonexempt assets
into a trust. Instead of liquidating your property, as you would in Chapter
7, you will work with your creditors to create a repayment plan. This
allows you to keep both your exempt and nonexempt property, as long as
you pay your debts. Despite this fact, the more nonexempt assets you possess,
the more you will have to pay your creditors back. To ensure that you
uphold your end of the payment plan, the court will require you to pay
your unsecured creditors in installments equal to or greater than the
value of your nonexempt assets.
When a creditor repossesses a property in order to settle a debt, the debt
is said to be "secured." These debts are treated differently
than unsecured debts, such as credit card bills, where the creditor cannot
repossess property to pay off the debt. If an individual misses any payments
during Chapter 13 bankruptcy, they will be required to make payment arrangements
in order to keep their property from being sold.
How Do You Qualify for Chapter 13 Bankruptcy?
You can only file Chapter 13 bankruptcy if you meet certain standards.
These standards are relatively straightforward, but you will need to fully
understand them before you file. To qualify for Chapter 13, the following
statements must apply to you. If you do not meet these standards, you
may want to consult a credit counseling company or consider debt negotiation.
You must have filed your federal and state taxes for the last four years.
If you are not current, the court may agree to delay bankruptcy proceedings
until you can catch up on your taxes. However, if you fail to provide
proof of tax payment, your case will be dismissed.
If your secured debts exceed a certain amount, you will not be able to
file Chapter 13. This amount fluctuates from year to year and is currently
$1,257,850. Most of the time, your debt will be secured if your property
can be repossessed, but there are times when it can be secured by having
a lien placed against the property. There is also a minimum amount that
the total value of your unsecured debt must exceed. This amount is $419,275,
and if you earn less, you will not be able to qualify.
Chapter 13 is essentially a repayment plan, and it will only work in your
favor if you have the funds to repay your creditors over time. During
proceedings, you will need to provide proof of income so the court knows
you are capable of paying off your debt.