Chapter 13 Bankruptcy Lawyers in Pasadena, California
Different from Chapter 7 Bankruptcy wherein the debtor can erase all their debts, Chapter 13 offers more possibilities and flexible payment arrangements for bankruptcy filers. According to California bankruptcy Law, Chapter 13 Bankruptcy, or mostly known as “wage earner’s plan” is a Bankruptcy alternative where you can submit a repayment plan with your outstanding creditors. In this way, the remaining balance can be paid off in a specific extended amount of time, mostly within three to five years and in an amount where you are comfortable paying the monthly dues.
If you are from Pasadena, California, facing a huge amount of debts, or looking for debt relief, it is very important to seek help from your experienced Chapter 13 bankruptcy lawyers. They can help you lay out all your possible debt-relief options, bankruptcy alternatives that suit you, and even help you with the needed legal papers during the process.
In the Daniela Romero Law office, the attorneys have long experience in guiding and helping debtors on their debt and bankruptcy journey. You can book a schedule now with our experienced Pasadena Chapter 13 bankruptcy lawyers to evaluate your case.
In this article, you’re going to know the basic information about Chapter 13 Bankruptcy and whether this is the best bankruptcy alternative for you. We will answer the following questions:
- What are the basic steps in a Chapter 13 bankruptcy case?
- Am I eligible for Chapter 13 bankruptcy?
- What is the process in a Chapter 13 bankruptcy filing?
- What is covered in a Chapter 13 repayment plan?
- How much do I need to pay during the course of the plan?
- What is the duration of my repayment plan?
- What will happen if I can’t make plan payments?
- How does a Chapter 13 case end?
What are the basic steps in a Chapter 13 bankruptcy case?
Chapter 13 bankruptcy, sometimes called reorganization bankruptcy, is quite different from Chapter 7 bankruptcy. In a Chapter 7 bankruptcy, most of your debts are wiped out; in exchange, you must relinquish any property that isn’t exempt from seizure by your creditors. In a Chapter 13 bankruptcy, you don’t have to hand over any property, but you must use your income to pay some or all of what you owe to your creditors over time — from three to five years, depending on the size of your debts and income.
In most Chapter 13 Bankruptcy payment programs, your remaining balance will be paid monthly, so a repayment plan will be very convenient and helpful for your financial situation. As for your disposable income, the bankruptcy court will often need you to use all of your disposable income to pay for the repayment plan.
By consulting your local Pasadena, California Chapter 13 bankruptcy lawyer, you can be sure that you’re given a wide array of options and the best repayment program for your situation.
Am I eligible for Chapter 13 bankruptcy protection?
Chapter 13 bankruptcy isn’t for everyone. Because Chapter 13 requires you to use your income to repay some or all of your debt, you’ll have to prove to the court that you can afford to meet your payment obligations. If your income is irregular or too low, the court might not allow you to file for Chapter 13.
If your total debt burden is too high, you are also ineligible. Your secured debts cannot exceed $1,010,650, and your unsecured debts cannot be more than $336,900. A “secured debt” gives a creditor the right to take a specific item of property (such as your house or car) if you don’t pay the debt. An “unsecured debt” (such as a credit card or medical bill) doesn’t give the creditor this right.
Married couples, self-employed, private individuals, and/or unincorporated businesses are eligible for Chapter 13 Bankruptcy. This bankruptcy alternative is a choice for people who don’t want their house or other valuable assets to be repossessed. It is also the best choice for debtors who are in a financial crisis or those who are late on their debt payments but also want to pay back their debts but need more time to do so. This kind of bankruptcy alternative also won’t exempt you from other responsibilities such as child support and/or alimony.
The bankruptcy court also checks if you are up-to-date with your tax returns. You are going to need to submit proof that you filed for state and federal tax returns for the past years. Failure to do so will result in delays of your Chapter 13 bankruptcy petition, and dismissal of the filing is also possible if you are unable to provide your tax transcripts.
Call your trusted Chapter 13 Bankruptcy Lawyers right now to know if you are eligible for Chapter 13 Bankruptcy. If filing bankruptcy Chapter 13 is not the best course of action for you, you might also want to try another option such as Chapter 7 Bankruptcy.
Chapter 13 and CARES act
Because of the pandemic due to Covid-19 that wiped out many businesses and jobs, most people suffered a financial crisis and filed for bankruptcy. On March 27, 2020, former President Donald Trump signed into law the Coronavirus Aid, Relief and Economic Security act (CARES) which aims to provide financial assistance and aid for people and businesses that suffered the most.
Because of the newly signed law, there are few changes in the bankruptcy law to make the process more feasible for affected individuals and businesses especially in the middle of the pandemic. Make sure to ask your Pasadena Chapter 13 bankruptcy attorney about the CARES act and how it can make Chapter 13 Bankruptcy more applicable to your case.
What is the process in a Chapter 13 bankruptcy filing?
Before you can file for bankruptcy, you must receive credit counseling from an agency approved by the United States Trustee’s office. These agencies are allowed to charge a fee for their services, but they must provide counseling for free or at reduced rates if you cannot afford to pay.
In addition, you’ll have to pay the filing fee, which is currently $274, and file numerous forms.
What is covered in the Chapter 13 repayment plan?
The most important part of your Chapter 13 paperwork will be a repayment plan. Your repayment plan will describe in detail how (and how much) you will pay each of your debts. There is no official form for the plan, but many courts have designed their own forms.
By working with your local Chapter 13 Bankruptcy lawyers, you can be sure that the repayment plan is the best for your financial status right now. They can also help you with the needed paperwork and legal documents for a successful Chapter 13 Bankruptcy petition.
How much do I need to pay during the course of the plan?
Your Chapter 13 plan requires you to pay certain debts in full. These debts are called “priority debts,” because they’re considered sufficiently important to jump to the head of the bankruptcy repayment line. Priority debts include child support and alimony, wages you owe to employees, and certain tax obligations.
In addition, your plan must include your regular payments on secured debts, such as a car loan or mortgage, as well as repayment of any arrearages on the debts (the amount by which you’ve fallen behind in your payments).
The plan must show that any disposable income you have left after making these required payments will go towards repaying your unsecured debts, such as credit card or medical bills. You don’t have to repay these debts in full (or at all, in some cases). You just have to show that you are putting any remaining income towards their repayment.
What is the duration of my repayment plan?
The length of your repayment plan depends on how much you earn and how much you owe. If your average monthly income over the six months prior to the date you filed for bankruptcy is more than the median income for your state, you’ll have to propose a five-year plan. If your income is lower than the median, you may propose a three-year plan.
No matter how much you earn, your plan will end if you repay all of your debts in full, even if you have not yet reached the three- or five-year mark.
What will happen if I can’t make plan payments?
If for some reason you cannot finish a Chapter 13 repayment plan — for example, you lose your job six months into the plan and can’t keep up the payments — the bankruptcy trustee may modify your plan, or the court might let you discharge your debts on the basis of hardship. Examples of hardship would be a sudden plant closing in a one-factory town or a debilitating illness. Make sure to consult an experienced bankruptcy attorney to determine if you can modify your plan given your circumstances.
If the bankruptcy court won’t let you modify your plan or give you a hardship discharge, you might be able to convert to a Chapter 7 bankruptcy or ask the bankruptcy court to dismiss your Chapter 13 bankruptcy case (you would still owe your debts, plus any interest creditors did not charge while your Chapter 13 case was pending).
How does a Chapter 13 case end?
Once you complete your repayment plan, all remaining debts that are eligible for discharge will be wiped out. Before you can receive a discharge, you must show the court that you are currently on your child support and/or alimony obligations and that you have completed a budget counseling course with an agency approved by the United States Trustee. (This requirement is separate from the mandatory credit counseling you must undergo before filing for bankruptcy.)
Although Chapter 13 Bankruptcy provides temporary relief for the debtor, it can also affect your credit history. According to the Federal Fair Credit Reporting Act, this type of bankruptcy alternative will be listed on your credit report and may last up to seven years. During this time, gaining additional credit may be nearly impossible, and looking for another credit or loan will be challenging.
It is very important to know your options very well. By calling or working with the best Pasadena Chapter 13 Bankruptcy lawyers, you will be knowledgeable on your possible choices before filing for bankruptcy. Your Chapter 13 bankruptcy lawyers will help you with different bankruptcy plans, the pros and cons of each, and what alternatives are the best for your situation. You can book a consultation now at the Pasadena Bankruptcy Law to begin your journey to your financial freedom.
Example of Chapter 13 Bankruptcy Case
Person A suddenly loses his job because the company he is working for is heavily affected by the pandemic. Since he still has a mortgage to pay monthly, he failed to pay the balance for the past few months which accumulated to $25,000.
Luckily, he managed to find new work and has the capacity to continue paying his mortgage. He sought help from his trusted Chapter 13 Bankruptcy lawyers to file for bankruptcy and was approved of a repayment program to pay the $25,000 debt over the course of five years.
Start your debt relief and regain financial freedom now!
Our bankruptcy attorneys will also provide valuable information on how best to protect yourself from financial hardship in the future. We provide free consultations with attorneys specializing in Chapter 7 and Chapter 13 bankruptcies in Pasadena, California! We can assist you through every step of the process, answering any questions or concerns that may arise along the way.
You can book a schedule now at Daniela Romero Law office or you may call us at 626-296-6971.
We, at Daniela Romero Law Office, help our clients by freeing them from the burdens of debt. Helping every client for a fresh start to their new financial lives.