Elk Grove, CA Chapter 13 Bankruptcy Attorney
Many individuals and families in Elk Grove, CA struggle financially. The reasons are as varied as the number of people themselves. In some cases, a family provider loses their job. Sometimes, a family member becomes very ill, resulting in enormous medical bills. The debt could range from credit card bills to being behind on a mortgage or car payment. When faced with overwhelming debt, bankruptcy could provide an answer.
Our Elk Grove, CA Chapter 13 bankruptcy attorney is available to explain the benefits of Chapter 13. Through a Chapter 13 bankruptcy, an Elk Grove resident could save their home, keep their car, or pay significantly less towards what seems to be every deepening hole of debt. To see if filing for Chapter 13 could help you, contact The Bankruptcy Group at 1-800-920-5351 for a free consultation.
How Chapter 13 Bankruptcy Works in Elk Grove, CA
A Chapter 13 bankruptcy differs from the more popular Chapter 7 in several significant ways. Many people consider filing for bankruptcy a way to wipe out a large portion or all their debt. While Chapter 7 allows many individuals to achieve this goal, Chapter 13 is designed for individuals and families in Elk Grove to restructure or reorganize their debt.
On its face, a Chapter 13 bankruptcy is deceptively simple. Depending on your income and debt, a Chapter 13 will last 36 to 60 months. During that period, the petitioner will pay a monthly payment to a court-appointed trustee who will disburse those funds to the various creditors that filed claims in the case. Typically, a petitioner will pay substantially less than they owe without having to negotiate with each creditor individually. However, the Bankruptcy Code is complicated and there are many hidden nuances that could derail a debtor. To receive the most benefit from filing Chapter 13, it is crucial to have the assistance of an experienced Elk Grove bankruptcy lawyer.
The Chapter 13 Plan in an Elk Grove Bankruptcy
Probably the most critical document filed in a Chapter 13 bankruptcy is the repayment plan. While a petitioner does not have to negotiate with each creditor, a bankruptcy plan must comply with many Bankruptcy Code provisions.
When a Chapter 13 bankruptcy is filed, our Elk Grove bankruptcy attorney will file an original, or draft, plan. The first plan is based on the information the debtor provides and a detailed credit report. Creditors are grouped into separate classes, including secured, unsecured, and priority creditors. The bankruptcy plan will typically treat groups of creditors and not each one individually.
Therefore, if you owe eight different unsecured creditors a total of $60,000, you might pay a total of $20,000 to that particular class. The money you pay will be distributed through a pro-rata method based on the amount you owe each one.
Secured creditors are often treated individually and that treatment will depend on whether you wish to keep the secured collateral or surrender it to the creditor. The two types of secured debt seen in most Chapter 13 bankrtuptcies are mortgages and car payments. If your mortgage is in default and you wish to keep your home, the bankruptcy plan will list two specific payments regarding your property.
The first will be a monthly payment to the trustee that addresses the amount you are behind. For example, if you were $15,000 behind on your mortgage payment, $250 of your monthly trustee payment would be allocated towards your mortgage arrears. The second payment your plan would address is your regular monthly mortgage payment. Once you file for Chapter 13, you must begin paying your contractual mortgage payment in addition to the trustee payment. Therefore, your plan will state that you will be paying your mortgage company directly in addition to your trustee payment.
Priority debts are very specifically defined debts, such as taxes and child support. When you file for Chapter 13, debts that fall within this class must be paid in full.
Confirming an Elk Grove Chapter 13 Bankruptcy Plan
As stated above, the original plan that our Elk Grove bankruptcy attorney will file is a good faith estimate. Each creditor in your case is required to file a “proof of claim.” These claims will list the exact amount that you owe along with supporting documentation to prove that the debt is legitimate. In some situations, our office could file an objection to a claim.
Assuming that the claims are valid, the bankruptcy plan will typically have to be amended to address the claims that have been filed. This is especially the case when a petitioner is paying taxes or mortgage arrears through the plan. It could take five to seven months to ensure that your plan addresses all the filed claims. During this time, you must make the monthly trustee payment, though the trustee will be holding all funds until your plan is confirmed.
When you file for bankruptcy, the court will set a date for a confirmation hearing. At the confirmation hearing, if the bankruptcy plan addresses all filed claims and complies with the Bankruptcy Code, the trustee will ask the court to confirm the plan. When this occurs, your bankruptcy plan becomes a court order, and the trustee will begin paying your creditors according to the terms of the plan.
Call Our Elk Grove, CA Chapter 13 Bankruptcy Attorney for a Free Consultation
Bankruptcy is not a word to fear. In many situations, a person or family could alleviate their financial strain by filing for bankruptcy. Our Elk Grove, CA Chapter 13 bankruptcy attorneys at The Bankruptcy Group understand the apprehension people have when they hear “bankruptcy.” Our attorneys and staff are available to answer any questions you have about Chapter 13 or bankruptcy in general. If you feel you cannot deal with your debt, call our office at 1-800-920-5351 to discuss your options.