CHAPTER 13 BANKRUPTCY

A fresh start for paying your debt

Unlike Chapter 7, filing for Chapter 13 bankruptcy involves the restructuring of debt to creditors and establishing a reasonable payment plan. The terms of this plan must be approved by the creditors concerned and lasts from three to five years.

What is Chapter 13 used for?

Families and individuals eligible for Chapter 13 who are behind on house or vehicle payments can usually hold on to these important assets as long as they don’t violate the terms of the court order. After the three- to five-year repayment period has concluded, any remaining dischargeable debt will be erased, including utility payments, credit card balances, and medical expenses.

Limitations and qualifications for Chapter 13

Filing for bankruptcy is more than having an attorney file the documents for you. There are certain stipulations and actions you must satisfy to be eligible.

Credit counseling

If you’re filing for bankruptcy, it’s clear managing your debt has been difficult for you. This is why you are required to take a credit counseling program. You will need to do so at least 180 days before you file for Chapter 13 and provide the bankruptcy court a document from the counseling agency that shows a plan has been set for you.

Debts falling within limitations

Secured debt, which is based on property a creditor can take from you, and unsecured debt, such as credit cards and medical bills, are limited to certain amount. Secured credit debt is held to no more than $1,010,650, and unsecured debt may not exceed $336,900.

Previous filing statuses

If you’ve filed for a previous Chapter 13 bankruptcy, you must wait at least 180 days to file again if the prior bankruptcy was dismissed. Dismissals happen if you violate a court order, fail to appear in court or request a dismissal.

For previous cases that were not dismissed or were not granted, you must wait at least two years before filing again.

Filing taxes

Nobody likes filing taxes, but these are important for your Chapter 13 case to proceed. You must have proof of state and federal income taxes having been filed for the previous four years, this includes a transcript of recent federal returns.

You may not file as a business

Businesses are excluded from Chapter 13. Only individuals or married couples may file for it. For businesses, Chapter 11 is more appropriate for relieving those commercial debts.

Income sufficient for paying debt

Chapter 13 is a way of restructuring your debt in a way you can afford. The most important factor to successfully filing is having the income to do it. This includes coverage of expenses and mandatory payments to creditors.

An attorney can determine if Chapter 13 is for you

Bankruptcy is not simple, and you need an attorney who understands the fine details of your situation and which laws can bring about financial relief. Reynolds Law Corporation can assist you with filing your bankruptcy petition and any related paperwork as well as serve as your legal representative during your 341 creditors meeting.

Our goal is to help you restructure your debt effectively and create a payment plan that fits your budget and puts you on the track to a debt-free future. It’s important to note that some businesses, such as sole proprietorship, may also be able to file for Chapter 13 bankruptcy in the State of California and still remain open. Call us today to schedule a free consultation.