Chapter 13 Bankruptcy San Diego CA
Reorganize Your Debts into Affordable Payments
Filing a bankruptcy case allows you to reorganize your bills into one fixed monthly payment. To begin with, you need to meet with a San Diego Bankruptcy Attorney who will determine if Chapter 7 or Chapter 13 is better for you. Our San Diego Bankruptcy Attorneys guide you through options for getting out of debt and help you decide which bankruptcy option is best for you.
What is a Chapter 13 Bankruptcy?
To begin with, the purpose of this type of bankruptcy is to give you time to restructure your debts into a fixed monthly payment. In Chapter 7 bankruptcy law limits the number of assets you can hold on to. By contrast, this bankruptcy does not have limitations on the assets that you can retain.
Another distinction is that you will propose this plan in addition to filing a voluntary bankruptcy petition. You need to identify all of your debt and determine how each will be paid, whether through your plan or via continued payments outside of the plan. Some debts must be paid through your plan.
Is Chapter 13 Bankruptcy Worth Filing?
By and large keeping your home from foreclosing is the most beneficial reason for filing a Plan of Reorganization. In this instance the past due balance on your mortgage loan will be restructured into your plan payment. Meanwhile, you retain your home and keep it from foreclosure.
As noted above, among the benefits of this bankruptcy is that you will keep all of your property. Another positive is that your debt will be restructured into one fixed monthly payment. No longer will you have to pay multiple payments every month. Instead, your creditors will be paid each month by the Bankruptcy Trustee appointed to your case by the United States Bankruptcy Trustee.
Another key point is that your plan payment will be set for a term of 3 or 5 years. To determine the length of your plan, your monthly income will be calculated using the "means test". If your income is higher than the "median income" for your household size your payments will be structured over 5 years. While if your income is below median, your plan length will be 3 years.
Other helpful reasons to file bankruptcy under this chapter include the ability to reduce the balance owed on your vehicle loan. Through a process called a "cram down" (only available through a Chapter 13 filing), you can reduce the balance owed on your vehicle loan. Using the "cram down" you can also reduce the interest rate on your vehicle loan.
Not to mention that you will begin rebuilding your credit!
Chapter 13 is a Good Option if you are:
- Behind on house payments
- Facing foreclosure
- Facing eviction
- About to lose your car
- Struggling with tax balances
- Having your wages garnished
- Facing a Collection Lawsuit
- Wanting to feel organized and that you are taking care of your finances
- Wanting to turn around your debt situation
- Sick of debt collectors
This type of bankruptcy can also allow you to combine all of your debt including credit cards, personal loans, medical bills, property taxes, and even income taxes into one set monthly payment.
Qualifying for Chapter 13
First, you can only file for this bankruptcy as an individual. If you own a business you can file but your business cannot file for this type of bankruptcy.
Second, you must demonstrate that you have regular monthly income. The purpose of regular monthly income is to show the bankruptcy court, Trustee and your creditors that you can afford the payments under your bankruptcy plan. On the positive side, several types of income are included in the definition of "regular" income.
Your income sources may include:
- Wages from your job
- Business income
- Unemployment compensation
- Spousal support
- Child support
- Social security payments
- Property sale proceeds
- Retirement account payments
- Contributions from family members
Third, your debt balances must be less than the limits set forth by the United States Bankruptcy Code. Secured debts and unsecured debts are calculated separately and must be within the allowed amounts. These debt limits change every three years therefore it is imperative that you consult with an experienced bankruptcy attorney to determine if you qualify for this bankruptcy.
Fourth, you need to be up to date with filing your income tax returns. You must provide your last two years' tax returns as part of your bankruptcy claim.
Lastly, at least two years must have passed since you filed bankruptcy under the same chapter. You need to wait at least four years after filing Chapter 7 bankruptcy before filing Chapter 13.
Qualifying for this type of bankruptcy is tricky and requires experience and understanding of the bankruptcy laws. Do not risk filing your case with an inexperienced bankruptcy attorney!
Chapter 13 vs. Debt Consolidation
This chapter has many advantages over debt consolidation programs. Namely, debt consolidation is not a legal process. No judge presides over the terms of creditor negotiations. In a debt consolidation, your creditors are not required to accept your settlement offer. During the debt consolidation process creditors and third party debt collectors can file lawsuits against you. Often these lawsuits are the result of failed settlement negotiations between the consolidation company and your creditors. Worse still, you may not know the creditors refused to negotiate and the lawsuit is a complete surprise.
Generally your credit accounts must be past due before the debt consolidation company will even discuss reducing your monthly payments.
Debt consolidation programs have a very high failure rate. As mentioned above, your creditors are under no obligation to accept a payment arrangement or even discuss reducing your monthly payments. Payment terms may be unmanageable. The fees for these consolidation companies are typically very high.
On the other hand, Chapter 13 is a legal process where a United States Bankruptcy Judge orders your creditors to accept an approved Court ordered plan of reorganization. Your creditors are bound by the terms of your confirmed plan. Furthermore, all of your debt is structured into a single monthly payment for 3 or 5 years.
We're Here to Help
The required paperwork in a Chapter 13 filing can be overwhelming with constant deadlines, court meetings, and red tape. With this in mind, you need an experienced attorney who can navigate the Bankruptcy Court. Negotiating with the Trustee, dealing with creditors, and getting your case approved requires a Chapter 13 bankruptcy attorney who will fight for you so you can move forward with your life.
Because bankruptcy law varies significantly from court to court, it is important to find an attorney who is familiar with how the courts operate in your particular area. The attorneys at the Law Offices of Mark L. Miller have experience with San Diego bankruptcy courts and have helped thousands of clients regain financial freedom.