If you are struggling with your debt, filing for Chapter 13 bankruptcy could help you and your family. Chapter 13, bankruptcy is ideal for individuals who have a regular income but cannot get out of debt once and for all. During a Chapter 13 bankruptcy, the bankruptcy trustee will help you restructure your debt.
At Heritage Legal, PC, we have extensive experience helping individuals understand their bankruptcy options. We’ve helped clients throughout the greater Palm Springs area reduce their debt through bankruptcy and make a fresh start. Contact our law office today to schedule your initial consultation and learn how we can help you today.
Who Can File for Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is available to most people. Applicants will need to show that they are up-to-date on state and federal tax filings for the past four tax years. They will also need to show the court that the amount of their debt is within the limitations set forth by federal law.
Importantly, applicants need to show that they have enough disposable income to meet the requirements. The applicant's regular wages and salary, income from self-employment, pension payments, Social Security benefits, commissions, child support, and alimony all count toward their income.
Unlike Chapter 7 bankruptcy, businesses cannot file for Chapter 13 bankruptcy. One exception does exist. If you are a sole proprietor, you can file in your name. Under a sole proprietorship, the business owner's business and personal debts are both the individual's responsibility. Thus, the owner of a sole proprietor's business can reorganize their debts through a Chapter 13 bankruptcy.
Keep in mind that you can always file for Chapter 13 bankruptcy as an individual, even if you are a business owner. If you are personally liable for business debts, you can include those debts when you file for Chapter 13 bankruptcy individually. The business will still be liable for any debt for which you aren't personally liable.
Filing for Chapter 13 Bankruptcy
The process of filing for bankruptcy is complicated and can take a significant amount of time and energy. Founding attorney Christopher Heritage has successfully helped many clients through the Chapter 13 bankruptcy process. Once you decide which type of bankruptcy will work best, his legal team will assist you in gathering all of the paperwork you will need to submit along with your bankruptcy application. Before you can apply for Chapter 13 bankruptcy, you will need to take a credit counseling class that is approved by the bankruptcy court.
Your petition for bankruptcy must include schedules that detail all of your liabilities, assets, income, and expenses. When you file, the bankruptcy clerk will send a notice to all of your creditors that you’ve filed your bankruptcy case. When you file, the court will place an “automatic stay” on all collection actions.
Submitting a Bankruptcy Plan
Within two weeks of filing your petition for Chapter 13 bankruptcy, you must submit a three-year or five-year reorganization plan to the bankruptcy court. The court will examine your plan and approve the plan. You will be allowed to make smaller, more manageable debt payments while protecting your home from foreclosure.
The goal of filing for Chapter 13 bankruptcy is to repay all of your secured debt and a portion of your unsecured debt. When your bankruptcy plan is complete, the bankruptcy court will typically discharge your remaining unsecured debt.
The Benefits of Filing for Chapter 13 Bankruptcy
Chapter 13 bankruptcy can be beneficial for many Americans who are struggling with debt. You will be able to prevent your house and vehicle from being auctioned or repossessed. You will also receive more time to make payments on your debt. Chapter 13 bankruptcy allows people to make flexible repayments. In many cases, you can even request an extension to take longer to repay your debts.
Chapter 13 bankruptcy also allows you to consolidate your debt. Once you submit your application, you will be able to stop individual creditors from collecting debts in full. This breathing room comes as a serious relief to many of our clients who’ve been harassed by creditors.
Bankruptcy courts will often eliminate any fines to help you repay your debt, including past fines and fines that you would incur going forward. The court will often eliminate or reduce your interest rate to minimize the total amount of money you need to pay back. When you complete the Chapter 13 bankruptcy plan, all of your accounts will show as being current.
Keeping Exempt Assets in a Chapter 13 Bankruptcy
The ability to retain your assets is one of the best benefits of filing for Chapter 13 bankruptcy. Bankruptcy courts will allow you to protect or exempt a certain amount of equity in your home. Exempt properties are safe in Chapter 13 bankruptcies, but if you want to keep the non-exempt property, you will need to pay for the items out of your pocket.
Paying for non-exempt assets is part of your Chapter 13 repayment plan. Bankruptcy judges want debtors to stay in their homes while they work to pay off their debt. Both California law and federal law define which assets are exempt and which assets are non-exempt. You can keep a vehicle to get to and from work, but if you own a newer model vehicle with equity, your car may fall into the non-exempt category.
Examples of non-exempt property may include luxury items, a boat, jewelry, expensive clothing, a second home, an antique collection, etc. The bankruptcy trustee, in your case, will gather your non-exempt assets and sell them. He or she will distribute the money from the sale among the creditors who filed a claim against you.
Contact Our Chapter 13 Bankruptcy Law Firm Today
Chapter 13 bankruptcy may allow you to save your home from foreclosure. Additionally, filing for Chapter 13 bankruptcy will allow you some breathing room and time to pay off your debts and stop your creditors from harassing you. Contact Heritage Legal, PC today to learn more about whether a Chapter 13 bankruptcy could help you pay off your debt. |