A Chapter 13 bankruptcy is the reorganization of your debts
with the approval of the bankruptcy court. A common myth is that you have to pay back all of your
debts in a Chapter 13 bankruptcy case and that is not true. You are supposed to pay back what you can
afford. Call 650-366-4858 to schedule a free consultation and find out if bankruptcy is right for you.
What you have to pay back could be 0% of your general unsecured
debts just like in a Chapter 7 case depending upon your circumstances. When your Chapter 13 bankruptcy
petition is filed with the bankruptcy court the automatic stay will go into effect and stopping any
and all collection activity such as foreclosure, repossession or wage garnishment. A Chapter 13 Plan
is filed with the bankruptcy court that is confirmed or approved. See Chapter
13
Bankruptcy Timeline below.
Chapter
13
Bankruptcy Timeline
Why file a Chapter 13 Bankruptcy?
Save Your Home From Foreclosure
Get Rid of a Second and Third Mortgage or Line of Credit
Reduce or Cram Down a Vehicle Loan
Your Income is Higher than the Median Income for your County
You are Not Eligible to file a Chapter 7 Bankruptcy
You are Behind on Car Payments and Trying to Save your Car from
Repossession
You have a Large Outstanding Tax Liability to the IRS
Chapter 13 Assets
Most Chapter 13 plans last for three to five years. Depending
upon your income, expenses and assets, the Chapter 13 plan monthly payment can be as little as $120
per month. Our
San Mateo bankruptcy lawyers will review your
income, expenses, assets and other circumstances such as missed mortgage payments to determine
approximately how much your monthly Chapter 13 plan payment may be. Call now to schedule a free
consultation or submit your information on-line.
There are debt limitations to file a chapter 13 case. See
Section 109(e) of the Bankruptcy Code. Right now, and these change, the unsecured debt limitation is
$419,275.00, and the secured debt limitation is $1,257,850. Generally if your types of debts exceed
these debt limitations you will may not qualify to be a debtor under Chapter 13 and have to reorganize
under Chapter 11 of the Bankruptcy Code.
Save Your Home From
Foreclosure
If you are behind on your mortgage payments and/or facing
foreclosure, filing a Chapter 13 bankruptcy will stop the foreclosure and allow you to repay the
missed mortgage payments in equal affordable monthly payments in a Chapter 13 bankruptcy plan.
Example:
- Mortgage payment is $3,000 a month
- 5 months behind, total of $15,000 owed on your mortgage
- If the Chapter 13 Plan term is 5 years (60 months), then you will pay approximately $250 a month for
5 years to repay the $15,000 owed
- If the plan is 3 years (36 months), then you will pay approximately $417 a month to repay the
$15,000 that is owed on your mortgage
Get Rid of a Second and Third Mortgage or
Line of Credit
If you have a second mortgage or line of credit on your home or
investment property, a Chapter 13 bankruptcy will allow you can take advantage of your home or
investment property losing value during the last few years and get rid of the second mortgage or line
of credit forever.
Example:
- Purchased house in 2003 for $600,000
- 1st Mortgage $500,000; 2nd Mortgage $100,000
- Value of the house dropped to $450,000
- 2nd Mortgage of $100,000 is completely unsecured, there is no value in the property to secure the
loan
- Chapter 13 allows you to avoid/strip off mortgages that have no value
Reduce or Cram Down a Vehicle Loan
If you have a vehicle loan and you purchased your vehicle 910
days prior to filing a Chapter 13 bankruptcy, you only have to pay the fair market value of the
vehicle at the time or your bankruptcy filing.
Example:
- Purchased GMC Sierra for $30,000 in November 2007
- Loan is for 60 months with approximately 9% interest
- Monthly payment is approximately $600 a month before filing Chapter 13
- File Chapter 13 bankruptcy today, GMC Sierra is only worth $10,000 and you still owe $18,000 on the
loan
- Chapter 13 plan you will pay the fair market value of the vehicle $10,000 over the length of the
plan
- If the plan is 60 months, you will pay approximately $170 a month in the plan saving approximately
$8,000
Your Income is Higher than the Median
Income for your County
Bankruptcy law is based upon your income, expenses and assets.
If your income for the number of people in your household is higher than the median income for your
county based upon the number of people in your household, you may not be eligible to file a Chapter 7
bankruptcy.
You are Not Eligible to file a
Chapter 7 Bankruptcy
If you have received a discharge in a Chapter 7 bankruptcy
within the last eight years you are not eligible to receive another Chapter 7 discharge. You may be
eligible to file a Chapter 13 bankruptcy.
You are Behind on Car Payments and Trying
to Save your Car from Repossession
If you are behind on your car payments and are facing
repossession, filing Chapter 13 bankruptcy will stop all repossession proceedings and allow you to
catch up on missed payments in the Chapter 13 plan and keep your car.
You have a Large Outstanding Tax Liability
to the IRS
If you have a large outstanding tax liability to the IRS or
Franchise Tax Board bankruptcy can help. If the income tax debt meets all five of these rules, then
the tax debt is dischargeable in Chapter 7 and Chapter 13 bankruptcy petitions.
1. The due date for filing a tax return is at least three years
ago.
2. The tax return was filed at least two years ago.
3. The tax assessment is at least 240 days old.
4. The tax return was not fraudulent.
5. The taxpayer is not guilty of tax evasion.
CHAPTER 13 BANKRUPTCY
TIMELINE
Debt Reorganization
1. Attend free consultation with bankruptcy attorney to
determine if bankruptcy is the best course of action to stop the stress and burden of unmanageable
debt, retain bankruptcy attorney to represent you in your bankruptcy filing and pay initial retainer.
2. Begin to pay remainder of bankruptcy attorney fees, stop
using credit cards, stop making payments on debts that are dischargeable and refer creditors to your
bankruptcy attorney.
3. Once the upfront portion of the bankruptcy attorney fees are
paid in full, you will now provide the documents necessary to draft a complete and accurate petition
for bankruptcy protection and you complete the required Credit Counseling course (On-line with a
follow up phone call) with an approved provider. Your bankruptcy attorney will file the certificate of
completion with the bankruptcy court.
4. Bankruptcy attorney prepares the bankruptcy petition in five
to seven days to be filed with the bankruptcy court.
5. A signing appointment is scheduled for you and your
bankruptcy attorney to review the bankruptcy petition and sign the bankruptcy petition before filing
the petition for bankruptcy protection with the bankruptcy court.
6. The bankruptcy petition is filed with the bankruptcy court
and the Automatic Stay takes effect stopping any and all efforts to collect your debts including
foreclosures, repossessions, wage garnishments, lawsuits or bank levies.
7. Approximately 30-45 days after the petition for bankruptcy
protection is filed with the bankruptcy court, you and your bankruptcy attorney will attend the
Section 341 meeting of the creditors where the trustee assigned to your case will ask you a series of
questions under penalty of perjury; you will receive notice of the 341 hearing in the mail directly
from the bankruptcy court. In most bankruptcy filings this is the only hearing you will need to
attend.
8. You will now begin making your Chapter 13 bankruptcy plan
payments, the first payment is due 30 days from the date your Chapter 13 bankruptcy plan is filed, the
Chapter 13 bankruptcy plan payment must be made to the Chapter 13 Trustee assigned to your case.
9. The 341 meeting is attended and concluded.
10. You now must complete the second course, Financial
Management (On-line with a follow phone call) from an approved provider; your bankruptcy attorney will
file the certificate of completion with the bankruptcy court.
11. The confirmation hearing to approve your Chapter 13
bankruptcy plan of reorganization, if required, is attended by your bankruptcy attorney, after the
Chapter 13 bankruptcy plan is confirmed, the bankruptcy court will enter an order confirming the plan.
YOU HAVE NOW SUCCESSFULLY completed all the steps necessary to
reorganize your debt, you will now continue to make the confirmed Chapter 13 bankruptcy plan payment
each month for the term of your Chapter 13 bankruptcy plan (usually 3 to 5 years).
With offices in Redwood City and Fremont and bankruptcy lawyers in Oakland we represent clients
throughout the Bay Area including San Mateo County, Santa Clara County, Alameda County, Contra Costa
County, Burlingame, Daly City, Foster City, Half Moon Bay, Millbrae, Pacifica, Redwood City bankruptcy attorney, San Bruno, San
Mateo, South San Francisco, Cupertino, Gilroy, Los Gatos, Milpitas, Mountain View, Palo Alto, Santa
Clara, Sunnyvale, Concord, Danville, Martinez, Pittsburg, Pleasant Hill, Richmond, San Pablo, San
Ramon, Walnut Creek, Berkeley, Dublin, Hayward, Livermore, Pleasanton, San Leandro and Union City.