Many people see filing for bankruptcy as the final stop on the path to financial ruin, but filing for bankruptcy actually gives people the option to rebuild their financial lives. Chapter 13 bankruptcy, otherwise known as Wage Earner’s Bankruptcy, gives debtors the opportunity to pay off all or part of their debts while still keeping their home and cars. At Miranda, Magden & Miranda, we understand the differences in bankruptcy filings and can help you choose the best path for your financial future.
Any individual is eligible for Chapter 13 bankruptcy so long as they meet certain requirements. First, the person’s unsecured debts must be less than $394,725 and secured debts less than $1,184,200. A corporation or business cannot qualify for Chapter 13 bankruptcy, but an individual can even if self-employed or operating an unlicensed business. In order to be eligible for Chapter 13, a person must have received credit counseling from an approved agency within 180 days of filing for bankruptcy. Finally, a person is eligible so long as within the last 180 days a prior bankruptcy petition was not dismissed due to the debtor’s willful failure to appear in bankruptcy court or comply with the orders of the court. An experienced bankruptcy attorney will be able to review the eligibility requirements with you to determine whether you can file for Chapter 13 bankruptcy.
Under Chapter 13 bankruptcy, a debtor proposes a three-to-five-year repayment plan to pay off most or all of their debts to creditors. This begins by filing with the court a series of financial documents, including schedules of assets and liabilities, current income, executory contracts and leases, and statements of financial affairs. Certificates from credit counseling and any debt management plans must also be filed with the court, along with detailed lists of the creditors and their outstanding amounts, source, and frequency of debtor’s income, debtor’s property, and monthly living expenses.
A Chapter 13 trustee is then assigned to the debtor, who must give the trustee a copy of recent tax returns and other financial documentation. The trustee administers the bankruptcy case and handles all payments to creditors. The trustee also gives notice to all creditors that the Chapter 13 action has been filed. A creditor’s meeting is held with all creditors, the trustee, and the debtors to discuss the plan and resolve any final issues before payments are made.
One of the main advantages to filing for Chapter 13 bankruptcy is that the law forbids creditors from starting or continuing collection efforts while you repay the debt. This stops all of the harassing phone calls, letters, or visits from creditors to your work and home. It also protects the debtor from creditors because the debtor makes payments to a trustee, who then distributes that money to creditors, thus eliminating direct contract between debtor and creditor in the transaction.
Another advantage to Chapter 13 is that the debtor can keep their home, so long as they can continue to make the mortgage payments on the property and can even stop foreclosure proceedings by filing. Filing for Chapter 13 also allows the debtor to reschedule all of their existing debts over the course of the repayment plan, which can lower the payments over a longer period of time.
If you are contemplating a Chapter 13 or another type of bankruptcy in the Monterey or Salinas area, the experienced bankruptcy attorneys at Miranda, Magden & Miranda may be able to help. Call the office or contact us today to schedule a review of your case.
Miranda, Magden & Miranda, LLP is a designated Debt Relief Agency. We help consumers file for relief under federal bankruptcy laws designed to protect people like you.
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