There is no shame in filing bankruptcy. Sometimes life throws us a curveball or multiple curveballs. This past year has certainly proven that. If pandemic-related issues, job loss, medical problems, or poorly-managed finances have caused you to become overwhelmed by crushing debt, you may be considering bankruptcy.
At The Sands Law Group APLC, our experienced and highly-knowledgeable Los Angeles Chapter 13 bankruptcy lawyers will guide you through this complicated process in the most seamless, cost-effective manner possible. We have assisted countless individuals and families on their journey to financial freedom. Our LA bankruptcy attorneys offer unparalleled legal services, affordable fees, and a multilingual staff who can communicate with clients in five different languages: Hebrew, Spanish, Arabic, French, and English. Contact us today for a confidential consultation about your case.
What is Chapter 13 Bankruptcy in California?
Chapter 13 bankruptcy is a form of debt relief that allows you to reorganize your debts into a three-to-five-year repayment plan. Throughout this period, you will make a monthly payment to the bankruptcy trustee, who will then pay each creditor on your behalf. When the repayment period is over, any remaining debt should be discharged, allowing you to start rebuilding your financial future.
In Los Angeles, chapter 13 bankruptcies are often used to get a home out of foreclosure, catch up on missed vehicle or mortgage payments, pay back taxes, and hold onto important non-exempt property. As long as you can uphold the terms of your repayment plan, any remaining debt should be discharged at the end of the repayment period.
How Much Will I Need To Pay Each Month?
In a Chapter 13 bankruptcy, the debtor makes a monthly payment, which is then distributed to creditors, for a period of three to five years.
The amount to be repaid is based on multiple factors, such as your disposable income. You must have a “regular source of income” and at least some disposable income to qualify for a chapter 13 repayment plan.
The repayment amount, which is determined by the California means test, must be at least as much as your creditors would have received under a chapter 7 bankruptcy.
When calculating these payments, the court will consider the following factors:
- Your income and expenses;
- Your total debt;
- The types of debt you hold; and
- The value of your property.
In addition to wages from employment, income may also include business income, unemployment compensation, regular employment bonuses, Social Security or disability payments, and income from alimony and pensions.
Once your expenses are subtracted from your income, you are left with what is referred to as “disposable income.” In many cases, this becomes the debtor’s monthly payment. An experienced Los Angeles Chapter 13 bankruptcy attorney can help you better understand how a repayment plan might look in your unique situation.
Will I Lose My Car, House, or Personal Property If I File for Bankruptcy in California?
Certain creditors will be prioritized as debts that must be paid in full through your repayment plan. These include past-due child support and spousal support, and some types of income taxes, among others. Although vehicle and mortgage payments are not considered priority debts, you will need to pay enough to these creditors through your repayment plan if you want to retain ownership of them.
In a chapter 13 bankruptcy, you should be able to keep your car and your home as long as you keep making payments, or your equity is fully exempt. Even if the equity amount is not fully exempt, you should be able to pay the non-exempt value and keep the property.
Chapter 7 vs. Chapter 13 Bankruptcy
Where a chapter 7 bankruptcy essentially wipes out debts, a chapter 13 bankruptcy reorganizes debts under a three-to-five-year repayment plan. Once the repayment period has concluded, any remaining dischargeable debt should be released.
While completely wiping out debts may sound preferable to a repayment plan, there are many benefits to a chapter 13 bankruptcy, one of which is the ability to keep your home. Since you are still agreeing to pay your debts, albeit at a discount and on a schedule of your choosing, you don’t have to liquidate your assets as you would under a chapter 7. Los Angeles Chapter 13 lawyers understand the complex law surrounding bankruptcy and can help make filing for bankruptcy a more seamless process.
Before filing for either type of bankruptcy, it’s important to consider the types of debt that you owe. If, for example, your debt consists primarily of back child support or alimony, or certain income taxes, bankruptcy may not be the best option, as neither chapter 7 nor 11 let you discharge these debts.
Frequently Asked Questions
Do I Need a Lawyer To File Chapter 13?
Although it is possible to file bankruptcy without the help of an attorney, it is not advisable. Even minor misunderstandings or errors can severely impact your rights and prevent you from obtaining the debt relief you so desperately need. Los Angeles Chapter 13 bankruptcy lawyers can:
- Advise you about whether filing bankruptcy is in your best interest;
- Help you decide which form of bankruptcy to file;
- Ensure that you fully understand your rights and options;
- Ensure that you fully understand the potential consequences of filing, such as tax consequences and the loss of a home, vehicle, or other non-exempt property;
- Prepare and file forms; and
- Assist you with all aspects of the bankruptcy process.
Will Bankruptcy Protect Me From Repossession, Foreclosure, and Collection Suits?
As long as the equity in your home or vehicle is fully exempt, or you can make payments on the non-exempt portion, you should not be required to surrender property under a chapter 13 bankruptcy. Furthermore, at the end of your repayment plan, the remaining debt will be discharged, which means that those creditors cannot sue you for any remaining deficiency.
What is the Income Limit For Chapter 13?
There is no income limit for filing chapter 13, but there is a limit on the amount of debt you can have. Currently, the limit is $394,725 in unsecured debt, and $1,184,200 in secured debt.
Can Chapter 13 Stop Calls From Creditors?
Yes. In addition to temporarily stopping home foreclosure and/or vehicle repossession, filing bankruptcy should put a temporary end to harassing creditor calls, wage garnishments, evictions, and most lawsuits.
Contact Our Los Angeles Chapter 13 Bankruptcy Attorneys Today
If you have questions about filing Chapter 13 bankruptcy, the legal team at The Sands Law Group, APLC can help. Our highly-knowledgeable Los Angeles Chapter 13 bankruptcy attorneys have assisted countless individuals and families on their path to financial freedom. We will analyze your case to determine the most appropriate debt relief solution for your unique situation, and ensure that any legal strategy aligns with your goals and objectives. Contact us today for a confidential consultation about your case.