Chapter 13 Bankruptcy Attorney Referral Service
What is Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy is one in which your income is used to pay some or all of what is owed to your creditors over time.
In a Chapter 13 bankruptcy, you must have a repayment plan which describes in detail:
- How you will pay for each of your debts
- How much you will pay for each of your debts
Without court approval, a repayment plan may not go forward. Additionally, a court must determine that you have enough income to meet the obligations under the repayment plan you will be following.
Before you can file for a Chapter 13 bankruptcy, you have to be eligible for it. Eligibility is determined based on the following factors:
- Whether you can afford to meet payment obligations;
- Whether your income is regular;
- Whether your income is too low to meet obligations;
- Whether your debts are too high.
In terms of what debt you already have, your secured debt (or debt that gives a creditor the right to take that specific item of property) cannot exceed $1,149,525.00. Your unsecured debt, such as medical bills, credit cards, or other things of a similar nature, cannot exceed $383,175.00.
Before filing for a Chapter 13, if you are eligible, you must receive credit counseling from an approved agency. The agency will generally not charge a significant fee for their counseling services, especially if you cannot afford to pay.
The repayment plan is the most important part of a Chapter 13 bankruptcy proceeding, and will provide the following:
- Administrative claims must be paid 100%. These include a filing fee, the trustee’s commission, and your attorney’s fees;
- Priority debts must be paid 100%. These include any backpay on alimony and child support, tax debts, wages, salaries, or commissions owed to employees, and contributions owed to any employee benefit fund;
- Mortgage defaults must be paid 100%, but this is only if you want to keep your house;
- Other secured debts will be paid 100%, but this is only if you want to keep the property that can be repossessed upon non-payment;
- Unsecured debts can be paid anywhere from 0% to 100%. The payment is dependent on factors such as the total value of the property, the amount of disposable income you will have each month for your debt, and how long your repayment plan will last.
The length of the repayment plan depends on your income level. For example, if your income level is over the median monthly income for a household of your size in your particular jurisdiction, then your plan must last at least five years. If your income is less than the median, you can request a three year plan.
If you are unable to continue following the repayment plan, it may be modified. Additionally, a court can discharge debts due to hardship. If none of these are available, your bankruptcy can be converted to a Chapter 7.
Finally, once the repayment plan is completed, all remaining debts will be discharged. You must also show a court that:
- You are current on child support and alimony payments
- And that you have completed a budget counseling course
How do I choose a Chapter 13 bankruptcy attorney that is right for me?
When looking for a Chapter 13 bankruptcy attorney, it is important to hire someone with proven experience in this field. Bankruptcy law is complex, so you will want to consult with a lawyer who knows its ins and outs.
Additionally, because bankruptcy is a personal and potentially embarrassing situation in your life, you will want to hire an attorney with whom you feel comfortable sharing personal financial details, as you will need to be extremely candid about what you make, what you owe, and whether you will be able to pay off your debts. Contact us online or give us a call at 818-340-4529, and the ARS representatives will put you in touch with an experienced bankruptcy attorney in your area based on your case and needs.
Let us know if you’re an attorney and would love to become a member of the SFVBA’s Attorney Referral Service.