Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a repayment bankruptcy, in which you repay some or all of your debts over a 3 to 5 year period. Chapter 13 will be recommended by your attorney if you are behind on your home loan payments and want to save your home. In a Chapter 13, you can propose a Chapter 13 repayment plan that repays your missed mortgage payments over a 3 to 5 year period, thus bringing your home loan current. Because your proposed Chapter 13 plan will ultimately bring your home loan current, the filing of a Chapter 13 case will stop foreclosure of your home. Under certain conditions, you can wipe out a second mortgage or home equity loan by doing a lien strip. Chapter 13 also lets you reorganize your car loan payments, by taking the current balance of your car loan and paying it off over the next 3-5 years, substantially reduce your payments. In most cases, you will keep your home, cars and other assets in Chapter 13. More precisely, you will keep all of your assets that are covered by your bankruptcy exemptions. You can even keep property that is not covered by your exemptions, if your attorney can propose a viable Chapter 13 plan that repays all of your debts in full. Once you complete your Chapter 13, you can wipe out your debts just like you would in a Chapter 7 case.
How a San Diego Chapter 13 Attorney Determines If You Should File
In order to file under Chapter 13, your debts must not exceed the Chapter 13 debt limits. You will also need regular income to file for Chapter 13, since your Chapter 13 plan will propose to make certain regular monthly payments. The regular income requirement can be satisfied by various sources of income, including employment, self-employment, and even unemployment compensation. Your disposable income under bankruptcy law standards is also a critical factor that will be considered by your San Diego Chapter 13 attorney, as it will affect the amount that you repay to your unsecured creditors in your Chapter 13 case. If you own a business, your attorney will have to consider the value of the business. In most cases, the debts of the business will reduce the value to a point that your business will be protected in bankruptcy.
Chapter 13 Debt Limits
Chapter 13 has strict debt limits, placing a limit on how much secured debt (home loans and car loans) and unsecured debt (credit cards, medical bills, and similar types of debts) you can have when you file Chapter 13 bankruptcy. The debt limits are adjusted every 3 years. As April 1, 2010, the secured debt limit is $1,081,400 and the unsecured debt is $360,475. To be more exact, your total secured debts must be less than $1,081,400 and your total unsecured debts must be less than $360,475. If your Chapter 13 plan proposes to wipe out a 2nd mortgage or home equity loan though loan strip, then the loan will be considered as unsecured debt for purposes of determining whether you are above or below the debt limits. If either your secured debt, or your unsecured debt, exceeds the Chapter 13 debt limits, then you cannot qualify for bankruptcy under Chapter 13. If you are going to be doing a loan strip, be sure to discuss with a San Diego Chapter 13 lawyer how this will affect the Chapter 13 debt limits.
Regular Income
Because a Chapter 13 is a repayment bankruptcy, you need to have regular income to make your Chapter 13 plan payments, as well all of your other regular monthly expenses. The regular income requirement can be satisfied by various sources of income, including employment, self-employment, unemployment, retirement, and virtually any other type of income. But the income must be received on a regular basis. If you have a business, a skillful San Diego Chapter 13 bankruptcy attorney can present your income to the Court as an average based on the last several months of income that you have received from your business, and that will generally be sufficient to satisfy the regular income requirement.
Disposable Income Test
Your available disposable income under the Chapter 13 bankruptcy disposable income test, will determine the amount, if any, that you are required to repay to your unsecured creditors in your Chapter 13 case. This will be a crucial factor in determining whether or not it makes sense for you to file a Chapter 13 bankruptcy. The Chapter 13 disposable income test is basically the Means Test used in Chapter 7 case, but applied in a different way. The Means Test is applied not to see whether you qualify to file, but rather to see how much, if any, you will have to pay to your unsecured creditors in your Chapter 13 case.
Business Chapter 13 Case
Only individuals can be a debtor in a Chapter 13 case. Business owners can still file Chapter 13, but the owner, not the business, must be the person filing the business Chapter 13 case. As a business owner, in your individual Chapter 13 bankruptcy case, you will list your interest in your business as one of your assets. If you operate your business as a sole proprietorship, your business is not a separate legal entity, your attorney will list your business assets and debts as your personal assets and debts, since a sole proprietorship is not a separate legal entity. You just do business as yourself. If your business is formed as a corporation or LLC, then your Chapter 13 attorney will list your interest in the corporation or LLC (for example, a 100% ownership interest), and state the approximate value of your interest, as one of your assets. An experienced San Diego Chapter 13 bankruptcy can help you file a business Chapter 13 case and keep your business and its assets. At Bankruptcy Legal Center, we have many business owners filing Chapter 13 business bankruptcy cases.
How the San Diego Chapter 13 Bankruptcy Process Works
In San Diego, the Chapter 13 bankruptcy process takes between 3 to 5 years, although you can pay off your Chapter 13 plan early under certain circumstances. As part of your Chapter 13 filing, your attorney will need to propose a viable Chapter 13 plan, in which you must propose whom you will repay and how much you will repay them. You will need an experienced Chapter 13 attorney to prepare a plan that the Court will approve.
Chapter 13 Plan
Your Chapter 13 plan must propose a Chapter 13 plan that is approved by the Court. Otherwise, your Chapter 13 case will be denied Court approval and you will lose all of the benefits you sought to obtain from your Chapter 13 case. There are a lot of novice bankruptcy lawyers out there and as a result the overall rate of approval of Chapter 13 bankruptcies is not very high. However, among the most skillful Chapter 13 bankruptcy attorneys, Chapter 13 plans are routinely approved. There are basically 2 kinds of lawyers handling Chapter 13 cases: those who should not be handling Chapter 13 cases and have usually their cases disapproved, and those who are Chapter 13 specialists and regularly have their cases approved. There are many factors that must be considered in presenting a Chaper 13 plan that the Court will approve, and a successful Chapter 13 plan requires strong familiarity with the local attitudes and practices of the San Diego bankruptcy trustees and bankruptcy judges. If you want your Chapter 13 case to be successful, it is an absolute must that you find a San Diego Chapter 13 bankruptcy attorney who is a Chapter 13 specialist.
Chapter 13 Meeting of Creditors
About 30-40 days after your attorney files your Chapter 13 bankruptcy case, a Meeting of Creditors will be held. The Meeting of Creditors will be before one of the San Diego Chapter 13 bankruptcy trustees, not a judge. Creditors are allowed to appear and ask you questions but they rarely do. You must personally attend the meeting or else your Chapter 13 case will be dismissed. The Chapter trustee will begin by asking you general questions, such as whether you reviewed your bankruptcy papers, whether they are accurate, and whether there are any changes. The trustee may then ask you some more specific questions regarding your assets, debts, income and expenses, depending on your circumstances. Usually, the focus will be on how much you earn per month, because that can affect your Chapter 13 plan payment amount. You must personally attend the meeting or else your case will be dismissed. Your Chapter 13 attorney at Bankruptcy Legal Center will attend the meeting with you to make sure the meeting goes smoothly.
Chapter 13 Discharge
After you successfully complete all of the payments under your Chapter 13 plan, you will receive a court order that will discharge your debts. The discharge order will eliminate your personal liability for all of your debts that can be eliminated in a Chapter 13 bankruptcy case.
Super Discharge
Chapter 13 allows also you to obtain a "Super Discharge," whereby you can eliminate debts that cannot be eliminated in a Chapter 7 case, such as divorce debt resulting from a divorce or separation agreement other than divorce debts for support (child support, spousal support, and alimony cannot be discharge, even by a Super Discharge), privately funded student loan debt, and certain other types of debts.
Chapter 13 Consultation
Call Bankruptcy Legal Center today to set up your free consultation with a San Diego Chapter 13 attorney to determine if Chapter 13 is the right solution to help you and your family obtain San Diego debt relief. Call us at 1 (800) 44-DEBTS (800-443-3287).
