What is Chapter 13 Bankruptcy?
Let Redding Bankruptcy Attorney Patricia Johnson Help
Chapter 13 of the Bankruptcy Code differs significantly from Chapter 7 bankruptcy. While only 28% of all bankruptcy filers use this statute for non-business filings, there are some distinct advantages. This page will provide a brief look at those advantages; however, any person examining his or her options should always contact a qualified bankruptcy lawyer to obtain credible advice. Patricia Johnson is a Redding bankruptcy lawyer who is ready to assist you in determining your best course of action. She will be able to review your specific situation and offer a service that fits your needs. Whether you need help with filing a Chapter 7 bankruptcy, filing a Chapter 13 bankruptcy, debt counseling or simply advice, Patricia Johnson has your best interests in mind.
Am I Eligible for Chapter 13?
11 U.S.C. § 109(e) describes those eligible for Chapter 13 Bankruptcy as “any individual, even if self-employed or operating an unincorporated business… as long as the individual’s unsecured debts are less than $360,475 and secured debts are less than $1,081,400”. (If you are incorporated, you file, but the business is handled separately.)
Now, what are “unsecured debts”?
- Credit Cards
- Signature Loans
- Utility Bills (including cell phone bills)
- Medical Bills
- Most Department Store Cards
- Rent
- Balances on Home Foreclosures or Auto Repossessions
- Payday Loans
- Old Taxes
- The balance owed above the value of the auto you bought at least 2 ½ years ago
There may well be others, which you will be able to discuss with Patricia Johnson, during your free consultation. In addition, when she instructs you on what financial documentation you will need to bring to her office, you will be providing information on your “secured debt”. A typical list includes:
- Home Mortgage
- Other Real Estate Loans
- Auto Loans
- Farm Machinery Loans
- RV Loans
- Boat Loans
A “secured debt” is one that attaches to real property or a vehicle as collateral, which the creditor may liquidate to recover all or some portion of the defaulted amount.
Why Chapter 13?
The most important advantage of a Chapter 13 bankruptcy filing is it affords the debtor the opportunity to rescue their home from foreclosure. It does not erase the first mortgage but it might be able to remove junior mortgages. However, it can stop foreclosure proceedings and provide more time to catch up on delinquent payments. The ability to restructure a payment schedule for other secured debt is another significant advantage. You can accomplish this by extending the payments over the term of the plan and, probably, lowering payment amounts.
What Is The Process?
Just as with a Chapter 7 bankruptcy filing, the debtor (you) will be required to provide the following information, at the minimum*:
- A list of all creditors, the amounts and nature of the claims, and when incurred
- The source, amount, and frequency of the debtor’s income
- A list of all of the debtor’s property
- A detailed list of the debtor’s monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.
*According to USCourts.gov
As in all bankruptcy proceedings, the courts will appoint a trustee to administer the case. The trustee, along with you and your attorney, will develop a repayment plan. There is a meeting during which the Court places the debtor under oath while answering questions from the trustee and any creditors who wish to attend. There may or may not be an additional hearing on the repayment plan, at which time a creditor may file an objection. The court will either confirm or deny the plan. If denied, it can be re-figured to meet the objections and confirmed.
The filing of the petition will offer protection from continued and future collections activity on the debts included in the plan as long as the plan payments are timely made, and the debt is not one that is excepted from the protection, such as child and spousal support. However, if a mortgage company has completed a foreclosure sale prior to the filing of the Chapter 13 bankruptcy petition, you will most likely lose your home. Because of this, Patricia Johnson urges everyone to contact her at the first indication of a financial crisis. Be assured that once you become a client, your case will not take a back seat to a “bigger” client and you will always speak directly with Patricia Johnson.