The law allows everyone in the United States to file for bankruptcy if they struggle to repay their debts. There are several types of bankruptcies an individual or business can file for, each providing some form of relief from debts. Chapter 13 Bankruptcy is the most popular with individuals who cannot qualify for Chapter 7 bankruptcy and can benefit from a relief for some of their debts. If you wish to file for Chapter 13 bankruptcy and are looking for the right Sun Valley bankruptcy attorney to take you through the process, Los Angeles Bankruptcy Attorney can help.
Overview of California Bankruptcy Chapter 13
An individual applying for bankruptcy in California has mainly two options to choose from: Chapter 7 and 13. In Chapter 7 bankruptcy, the court will allow you to sell off your assets through a bankruptcy trustee. The trustee will then use the money obtained through the sale to offset your debts. If the trustee is left with some money after all the debts have been paid off, you will be given a check for the remaining portion. You can use that money to start afresh in life. Chapter 7 bankruptcy is mainly about the liquidation of assets to pay off your debts.
However, this does not always work for some people. You may have more debts than your assets can cover. Also, you might have some valuable assets you may not be willing to sell off, like your car or home. In that case, you will choose a bankruptcy Chapter that best suits your needs, which could be Chapter 13.
Chapter 13 bankruptcy is the next option for individuals who cannot qualify for Chapter 7 bankruptcy. It mainly involves a better payment plan whereby you list down your debt in the order of priority and then come up with a plan of between 3 to 5 years in which you can repay them off, starting with those that appear as high priority in the list.
Chapter 13 enables you to reorganize your debts with an experienced Sun Valley bankruptcy attorney. Once the repayment period is over, the court will relieve you of your dischargeable debts. The advantage in choosing Chapter 13 is that the court may discharge some of your debts. It means that you will be relieved of those debts and only be required to pay the remaining for five years or less. Some of your debts that the court could discharge include credit card debts, payday loans, and medical bills.
Chapter 13 works well for many people, mainly those who are not willing to sell their assets to clear debts. People with a high earning capability can easily design a repayment plan that will be agreeable with most creditors. If you can develop a workable repayment plan, the court might allow you to retain some of your valuable assets as long as you are willing to push through with the program.
Are You Eligible for Chapter 13 Bankruptcy?
Before you begin the process of applying for Chapter 13 bankruptcy, your Sun Valley bankruptcy lawyer will check your eligibility to apply for this particular Chapter. As mentioned earlier, several other Chapters are available to choose from, based on the type of applicant and the kinds of debts you have.
The eligibility criteria for this bankruptcy Chapter are:
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You must be an individual, single or married, or a business person running a sole proprietorship. Corporations, businesses, brokers, and large entities like those cannot qualify to file for this bankruptcy Chapter.
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You are up-to-date with your tax filings.
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You must not have $394,725 or more in unsecured debt like credit card debts or personal loans.
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You must not have $1,184,200 or more in secured debts like vehicle loans or mortgages.
If your Sun Valley bankruptcy attorney is satisfied that you qualify to file for Chapter 13, he/she could help you prepare the necessary financial documents. The financial documents needed in this case are those that include all your financial matters. In these documents, the court would want to see information regarding the type of debts you have, your income source and amount, your expenses, and any other relevant information.
The following are acceptable sources of income that could be used to offset debt in Chapter 13 bankruptcy:
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Regular salary or wages
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Wages obtained from seasonal jobs
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Income obtained from self-employment
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Commissions earned from sales or any other work
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Social security benefits
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Workers’ or disability benefits
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Strike, unemployment, and other types of benefits
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Pension payments
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Alimony or child support
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Rents and royalties
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Proceeds obtained from the sale of property
Note: If you are married, the income listed on your documents must not necessarily be your income. If you are a nonworking spouse, you can name your spouse’s income as your source of income.
It is advisable to be accurate and truthful when preparing these documents. An experienced attorney will advise you on the importance of being honest and accurate throughout the bankruptcy process. Otherwise, the court could charge you with perjury, or you might lose the court’s support in managing your debts. Again, if your creditors know that you deliberately lied in court, they might file a lawsuit against you. A case comes with additional penalties you may not be prepared for when you already have debts to clear. A knowledgeable bankruptcy attorney could help you ensure that all the documents required by the court are well-prepared and the information is accurate.
Another advantage of working with an experienced attorney is that he/she understands both federal and state laws and how they could affect your situation. Note that even though bankruptcy is a national matter, cases are not handled in the same manner in all states. State laws will still apply, and only a knowledgeable lawyer will know how they can be used in your case. For instance, your attorney could help you retain more assets than you thought possible.
Benefits of Filing for California Chapter 13 Bankruptcy
Every bankruptcy Chapter comes with unique benefits that the applicants can enjoy while seeking help managing their debts. Although Chapter 13 will take you a much longer time to get out of debts, some benefits could still make it the right bankruptcy option for you.
If you are employed or a higher income, there is no need to dispose of your possessions to pay off your creditors quickly. Some of your essential assets may have taken you a lot of time to acquire. You might have great emotional attachments to your valuable assets. Chapter 13 provides you with a chance to keep those assets, as long as you are willing to pay off your debts bit by bit for a predetermined period.
Chapter 13 bankruptcy enables you to consolidate your debts and reduce your monthly payments. If you have so many financial obligations but are not making enough money to make repayments as per your creditors’ agreement, you could benefit significantly from a repayment plan that takes into consideration what your monthly income is. All your debts are put together, with a clear plan on how each of those debts will be paid.
If you live from one paycheck to the other, you may experience difficulties paying off your debts and saving. When you have many and different debts, your financial responsibilities become too hard to accomplish. A structured repayment plan provided by Chapter 13 makes it easy to manage your debts and might leave you with some money to save. All your financial responsibilities are taken into consideration when planning your income to accommodate debt repayment. You may even have something extra to save for the future.
Chapter 13 bankruptcy gives you enough time to pay off your debts in a relaxed and more flexible manner. Your creditors can no longer rush you through repayments once the court has approved your repayment plan. Your trustees can even stretch out your debt payments based on your disposable income. Once the repayment period is over, your creditors cannot obligate you to pay their debts in full.
Filing for Chapter 13 Bankruptcy
Filing for Chapter 13 bankruptcy won’t be complicated if you have the help of an experienced Sun Valley bankruptcy attorney. An experienced attorney has gone through the process several times before. Therefore, he/she knows what is needed, the do’s and don’ts, and the right steps to take for a successful outcome.
Collecting Documents
The process starts with the applicant gathering all the documents that he/she will need throughout the process. You may want to obtain a credit report. It will help you determine who your creditors are and how much you owe each of them. Note that some of your creditors may not appear on your credit record. The law requires you to make a complete list of all your creditors, including those missing from the record.
Other documents you might need include recent tax returns, recent pay stubs, bank statements, mortgage statements, appraisals or valuations of any property you own, and other documents containing information regarding your income, assets, and debts.
Analyzing Debts
Your attorney will then help you analyze all your credits, specifying the type of debt it is. Debts could be categorized under medical bills, payday loans, credit card loans, vehicle loans, or mortgages.
Still, on this, categorize your debts further under secured and unsecured debts. A secured debt is that which you have attached some form of security. Mortgages and vehicle loans are usually secured debts, while payday and personal loans are unsecured debts.
Lastly, you might want to list your debts in order of priority. Priority debts could be those debts that will cost you more or cause you penalties if they are not cleared on time. For instance, they could be tax debts, child support, and alimony payments.
Your trustee will rely on this information when deciding on the amount and order you will pay your debts every month.
Taking Inventory of Assets
Next, you need to make a list of all the assets you have and how much each of them is worth. The court will want to know your assets’ value and how much of that value you would like to protect using the exemption law. Chapter 13 bankruptcy might allow you to retain some of those assets, but the court may require you to repay some creditors the exact value of the unprotected property.
Creating a Budget
Your attorney will then take you through creating a budget that will include all your needs. The budget must be in line with your income. Remember that if you are jobless, you might receive some form of payment every month. If your monthly income cannot cater to your needs and pay off some financial obligations, the court may not allow you to proceed with your application. The court will want to see a clear and workable plan that shows your ability to cater to your needs and pay off your debts in a particular period.
Filing a petition in Court
Once everything is ready, your attorney will guide you to fill the right documents and file them in court. The kind of information you are required to submit through these forms are, for instance, the amount of money you make, how you spend it, what and who you owe. It is advisable to take your time when filling these forms. Ensure that you provide the right information in each document.
Once the documents are received and reviewed by the judge, you may be called for a hearing. The outcome of the hearing will determine whether or not the court will grant your petition.
Find a Los Angeles Bankruptcy Attorney Near Me
The process of filing for insolvency in California can be quite complicated. You can benefit greatly if you engage the services of a skilled bankruptcy attorney. At Los Angeles bankruptcy Attorney, we have the necessary skills and experience to advise, guide, and take you through the legal process. Call us at 424-285-5525 if you want to file for Chapter 13 bankruptcy, and let us make the process smooth for you.
