Citrus Heights, CA Chapter 13 Bankruptcy Attorney
People who are dealing with a difficult financial situation can feel apprehensive about filing for bankruptcy. However, filing for Chapter 13 bankruptcy could be the best option to deal with a financial crisis. Despite many people’s misconceptions and fears about Chapter 13 bankruptcy, filing can make or break your chances to stay afloat and have a new financial start. If you are thinking of filing for Chapter 13 in Citrus Heights, CA, talk to the experienced California bankruptcy lawyers of The Bankruptcy Group before starting the process. For a free consultation about Chapter 13 in California, contact us online, or call The Bankruptcy Group at (800) 920-5351 today.
What is Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy is a powerful tool available to individuals who generate regular disposable income. Under this chapter of the U.S. Bankruptcy Code, the debtor creates a repayment plan to pay back certain debts to his or her creditors. Disposable income is used to fund the repayment plan.
The debt repayment plan is divided into monthly installments that must be paid to the appropriate creditors, through a bankruptcy trustee, over the course of three to five years, depending on the state’s median income and how the debtor’s income compares. It is important to point out that qualifying Chapter 13 debtors must comply carefully with the reorganization plan, which means sticking to timely monthly payments. Noncompliance can lead to severe consequences, potentially including dismissal of the case or conversion to Chapter 7.
Who is Eligible to File Chapter 13 Bankruptcy in California?
Only certain debtors who meet specific criteria are eligible to file a petition for Chapter 13 bankruptcy. For instance, a debtor cannot file Chapter 13 if his or her secured debt exceeds $1,184,200, or if his or her unsecured debt exceeds $394,725.
The process of Chapter 13 bankruptcy is comprised of several stages. The debtor starts this process by filing a bankruptcy petition with the bankruptcy court that has jurisdiction over the case. During this stage, it is also necessary to provide documentation related to the debtor’s income, such as statements of financial affairs and a report of income and expenses.
One of the main requirements outlined in Chapter 13 is participating in a credit counseling program and, later, a separate debtor education program. During credit counseling, which must be completed before filing for Chapter 13, the debtor will receive assistance from a counselor who will propose a plan based on the provided financial information. The debtor education program, which must be completed before the bankruptcy case can conclude, is meant to provide insight concerning better financial management.
A court-appointed trustee will handle the collection of money and payment to the debtor’s creditors. The trustee will also oversee other aspects of the debtor’s Chapter 13 case, such as evaluating the repayment plan to make sure it is feasible and satisfies the necessary financial requirements.
Benefits of Filing Chapter 13 Bankruptcy
Chapter 13 bankruptcy exists to provide debtors the chance to repay their debt. However, repaying debts through a manageable plan is not the only benefit Chapter 13 provides. In the long run, Chapter 13 can also help debtors achieve higher credit scores – or even stop home foreclosure proceedings. For some homeowners, filing Chapter 13 is a way to protect property.
Prevent Home Foreclosure
For many debtors, one of the biggest fears is whether they will lose their home due to debt. Many people also tend to believe that filing bankruptcy means they will end up homeless. Nothing could be further from the truth. When a person files for a Chapter 13, they can actually prevent the foreclosure of their homes by making up missed mortgage payments (called “arrears” or “arrearages”), while continuing to remain current on the mortgage. This feature is unique to Chapter 13 and does not exist in Chapter 7 bankruptcy.
Rebuild Better Credit
At the end of the day, debtors only want peace of mind and room to breathe – and that means having opportunities to start rebuilding better credit. Chapter 13 can offer these opportunities. With various debts either wiped out or under control thanks to the bankruptcy, it is much easier to start moving in the right financial direction. Unlike Chapter 7 bankruptcy, which remains on a debtor’s credit report for 10 years, Chapter 13 remains for only seven. However, a debtor can take steps to start repairing their credit almost immediately after filing.
Chapter 13 Bankruptcy Lawyers in Citrus Heights, CA
Going through bankruptcy should not be a daunting or scary experience. Debtors must realize there are alternatives to solve their financial situation and start anew. However, you should never attempt to tackle the bankruptcy process on your own. A mistake in your filing can lead to severe legal and financial consequences.
Our experienced California bankruptcy lawyers at The Bankruptcy Group can help you throughout the entire process. To learn more about the Chapter 13 process and how filing bankruptcy could help you, call our law offices at (800) 920-5351 today for a free consultation, or contact us online.