Chapter 13 Bankruptcy
Fees from just $2,000 to start. Flexible payment plans available.
A chapter 13 bankruptcy is also called a wage earner’s plan. It enables individuals with regular income>to develop a plan to repay all or part of their debts. Under this chapter, debtors >propose a repayment >plan to make installments to creditors over three to five years. If the debtor’s current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period “for cause.” If the >debtor’s current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a >period longer than five years. 11 U.S.C. §1322(d). During this time the >law forbids creditors from starting or continuing collection efforts.>
In a nutshell, if your income is greater than your reasonable and necessary living expenses such >that you have sufficient money left over, (this amount depends on how much your owe and the details of your case), then you may be able to qualify for a Chapter 13 bankruptcy.>
Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure when they are behind on their payments. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time as part of their plan repayment. Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time. Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments.>
Chapter 13 also has a special provision that protects third parties who are liable with the debtor on “consumer debts.” This provision may protect co-signers. Finally, chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chapter 13 protection. A chapter 13 bankruptcy may be dismissed voluntarily by the Debtor and converted to a Chapter 7 at any time if the Debtor’s financial situation changes and they can no longer adequately afford making a monthly plan payment.>
Additionally, a major benefit to a Chapter 13 bankruptcy is that in many cases (based on current market conditions here in California), a Debtor may be able to wipe-out the second mortgage on their primary residence. To be eligible to do this, the fair market value of the property must be less than the balance of the first mortgage on the property. If this is the case, any second and third mortgages become unsecured and can be stripped from the property provided the Debtor completes the term of his plan. Appraisals, additional motions must be filed and court hearings must occur for this to happen and it is not automatic.>
Chapter 13 Eligibility
Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual’s unsecured debts are less than $360,475 and secured debts are less than $1,081,400. 11 U.S.C. § 109(e). These amounts are adjusted periodically to reflect changes in the consumer price index and at the time of reading this, these numbers may have been updated. A corporation or partnership may not be a chapter 13 debtor.
Attorney fees for Chapter 13 cases are $5,000 for personal consumer debt cases, and $6,000 for business cases. However, unlike other law firms, we typically charge as low as $2,000 prior to filing the case, and the remaining balance is spread out over the terms of your plan, so between three to five years, making it very manageable for you to pay. If you drop out of your plan early, we will not pursue the balance against you.
Our fee includes:
3) Getting creditors to stop calling you
4) Tri-bureau credit reports
5) Your mandatory credit counseling class
6) Preparation and filing of your bankruptcy
7) Attending your mandatory 341 hearing
8) Attending your plan confirmation hearing
9) Preparing and filing appropriate motions and serving creditors if you are removing unsecured mortgages
10) Attending your hearing to remove your unsecured mortgages
11) Any follow-up work required
12) Monitoring your file for the life of your plan
The Court Filing Fee for a Chapter 13 bankruptcy is $310, which goes to the Federal government to process your paperwork, cover administrative costs, and pay the trustee assigned to your case. This fee goes directly to the Court. For those seeking to strip mortgages from their home, you will require a formal appraisal done to your property, the cost of which may range from $250 and upward. We do not provide this service but may be able to refer to you companies that do.>