Chapter 13 Bankruptcy
Redding, California, Chapter 13 Bankruptcy Attorney
For consumers who do not meet eligibility requirements for Chapter 7 bankruptcy, Chapter 13 bankruptcy is the next option. In Chapter 13 bankruptcy, consumers pay back a portion of their debts within a three to five year timeframe. Our firm places an emphasis on identifying the best legal option based on each client's individual needs. If Chapter 7 is not an option for you, we can discuss the advisability of filing Chapter 13.
Are you interested in learning if Chapter 13 is right for you? Contact our firm today to arrange your free 90 minute consultation.
How does Chapter 13 Bankruptcy work?
Chapter 13 bankruptcy allows the debtor to retain their assets while making equal monthly payments on their secured debt, plus an additional payment on their delinquent secured debt with the object that the debtors could repay their over due secured debt within three to five years by filing and having the bankruptcy court adopt a debtor’s “repayment” plan.
After the individual files the Chapter 13 petition, the trustee holds a meeting of creditors. Among other items, the individual filing for bankruptcy answers questions about his or her financial situation and the proposed payment plan. After the meeting of creditors, there will be a hearing on the proposed payment plan. The debtor then begins making regular payments to the trustee or through payroll deductions.
With unsecured debt, the plans may vary from payment of 100% of the debt to 0% of the debt depending upon the circumstances of the debtor. Chapter 13 is a very useful means for a mid-income earner or business owner to preserve their assets during the lean times allowing them to have additional opportunity to scale back their business enterprise and debt and to repay the debt at a slower rate without suffering the loss of potentially income producing assets or assets that the family does not want to lose such as the family home.
Chapter 13 is also a good solution in many instances for those parties who expect to receive significant income in the near future that would cure their financial indebtedness to such a degree as to allow them to keep their assets but if these debtors are not permitted the time to obtain the income the debtors will lose substantial assets.
One of the negatives of filing a chapter 13 is the cost of administering your petition. The U.S. Bankruptcy Trustee to whom you send your secured debt payments is entitled to an administrative fee, currently approximately 10% of the payment due. The payment will include a portion of the delinquent debt as well as the normal monthly payment in order to allow the debtor to become current within the three to five year plan. Your lawyer can also be entitled to be paid through the plan and this payment will further increase your monthly fees and your administrative costs. Once an attorney’s fees exceed the fees she was paid, she can ask that part of her fees be approved by the court and paid through the plan. These sums can add up over time and consequently a debtor must evaluate the soundness of their filing this chapter with an experienced attorney.
Chapter 13 filings have increased since the bankruptcy laws enacted in 2005 and this increase may be recently due to the increase in foreclosures which are stopped or “stayed” usually with the filing of a Chapter 13 allowing the debtor to preserve their home and the equity in their home. There are now some exceptions to the federal bankruptcy court’s issuance of a stay for all legal proceedings in both a chapter 7 and 13 for repeated Bankruptcy filers etc.
However, in most of the Bankruptcy filings a stay is issued that prevents any other court from proceeding with legal issues or a case in any regard. There are only a few exceptions to this stay issuance and the 2005 Amendment increased the exceptions, some of the more frequently utilized exceptions include child support, criminal sentencing, some governmental fee assessments, and some foreclosure actions. Repeat bankruptcy filers may have to take extra steps to assure they have a stay issued or in some instances may not be entitled to a stay in a Chapter 7 case if repetitive bankruptcy filings occurred.
Other debt resolution alternatives
There are many other options available for resolving debt, however, evaluating their effectiveness is very important since in many instances, one of the most popular debt solutions, entering into a debt consolidation plan does not result in a successful retirement of debt and results in loss of additional family income. As a bankruptcy attorney, Bonnie Baker can negotiate debt resolution very effectively and usually is not required to spend a significant amount of attorney time negotiating the resolution of a debt. Deed in lieu of foreclosure may also be a reasonable resolution of a defaulting loan and requires the client to meet a lender’s financial criteria. This criteria varies from lender to lender so you should check with your lender to see if you qualify for their program.
Our firm thoroughly evaluates each client's specific situation. Our ultimate goal is to help our clients start anew on their finances. Contact our firm today to learn how we can help you.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.