For most people, facing extensive financial difficulties or large amounts of debt may seem like an insurmountable problem. Even more so at the mention of bankruptcy, as the vast majority believe it is a one-way street to financial ruin. The truth, however, is quite the opposite!
Above everything else, bankruptcy is a lifeline, a way to regain financial freedom. To help you achieve this goal, the US Bankruptcy Code defines several distinct solutions, one of the most prevalent being Chapter 13.
By familiarizing yourself with the specifics of this provision of federal law, and with the help of a skilled Chapter 13 lawyer from San Diego, you can ensure the best possible outcome for your case, overcome different types of debt, and get back on your feet.
How does Chapter 13 work in California?
Chapter 13 is specific in that it outlines the provisions for individuals (as opposed to businesses), who are facing financial difficulties but still have a regular income. It enables you to develop a repayment plan to pay off a portion or all of your debt over the course of 36 to 60 months (3 to 5 years). Here’s how the process typically works:
- Proposition: The debtor’s lawyer proposes a repayment plan to the court. The specified period to pay off your debt will depend on:
- Whether your gross household income is above or below the median;
- Your living expenses;
- Specific types of debt you need to repay;
- Creditors’ best interest.
- Automatic stay: The biggest advantage of Ch13 is that automatic stay goes into effect immediately after filing, prohibiting creditors from collection attempts for the entire duration of the bankruptcy process.
- Payments: Once the repayment plan is approved, you’ll start making regular payments which the court-appointed trustee will distribute to your creditors. The first payment is typically due 30 days after the case is filed.
- Completion of plan: Once you complete the repayment plan, the remaining unsecured debt may be discharged, effectively relieving you of personal liability for their payment.
It’s worth noting that, unlike Chapter 7 bankruptcy, Chapter 13 typically doesn’t involve liquidation of assets in order to repay creditors. This is an enormous advantage since it allows you to keep your property while catching up on past-due payments in a streamlined, non-cumbersome manner.
What does Chapter 13 wipe?
Chapter 13 doesn’t exactly “wipe” debts in the way Chapter 7 does. Rather, it gives you a much-needed “breathing room” and an effective way to catch up with missed payments, namely on:
- Secured debts: e.g. mortgage or car loans;
- Priority debts: e.g. domestic support obligations, such as child support, alimony, etc.
- Non-dischargable debts: e.g. taxes or debts stemming from intentional wrongdoings.
That being said, certain unsecured debts can be discharged under Chapter 13 upon the completion of the repayment period. These include, but are not limited to:
- Credit card balances;
- Medical expenses;
- Utility bills;
- Certain court-ordered debts;
- Past-due rents;
- Personal loans tied to specific assets.
Where can I find a well-versed Chapter 13 lawyer near me in San Diego?
Facing an overwhelming debt does not mean that you have to give up your financial freedom – not if you have Bankruptcy Law Offices of Mark L. Miller by your side. Our seasoned legal team specializes in various aspects of the US Bankruptcy Law and has an in-depth understanding of how the California legal system works.
Whether you need help qualifying for Chapter 13 or wish to explore options that Chapter 7 gives you, we’re here to offer comprehensive guidance through every stage of the process. Schedule a free consultation at our San Diego offices near Cygnet Theatre today and let us help you ensure a brighter tomorrow!