Chapter 13 Bankruptcy Attorney in Modesto

Chapter 13 is a reorganization bankruptcy designed for debtors with regular income who have enough left over each month to pay back at least a portion of their debts through a repayment plan. Chapter 13 allows people who have significant income or assets to restructure their debt in a way that will allow them to pay back some or all of their liabilities in monthly installments over a set period of time. A Chapter 13 Bankruptcy Plan can be worked out that will provide you with fixed payments for three to five years with no more interest or penalties. This can be used to either eliminate some of your debt or to catch up when you are late on mortgage payments or other secured loans.

In Chapter 13 bankruptcy, you get to keep all of your property (including nonexempt assets—however you’ll have to pay creditors an amount equal to the value of your nonexempt property). In exchange, you pay back all or a portion of your debts through a repayment plan (the amount you must pay back will depend on your income, expenses, and type of debt). Typically, Chapter 13 bankruptcy is for debtors who:

• don't qualify for Chapter 7 but need debt relief (for instance, to lower credit card payments, stop litigation, or prevent a wage garnishment)
• have non-dischargeable debts such as alimony or child support arrears that they’d like to pay off over three to five years, or
• have fallen behind on a house or car payment and want to get caught up on missed payments and keep the property.

Chapter 13 Bankruptcy is also an option for people who wish to pay back all of their debt, but who need a structured payment plan to do so.

Even though most Chapter 13 filers make too much money to qualify for Chapter 7 bankruptcy, many debtors choose to file for Chapter 13 bankruptcy because it offers many benefits not available in Chapter 7. Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time. Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on "consumer debts." This provision may protect co-signers. Finally, chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chapter 13 protection known as the automatic stay.

Chapter 13 Bankruptcy Eligibility

Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual's unsecured debts are less than $419,275 and secured debts are less than $1,257,850. 11 U.S.C. § 109(e). These amounts are adjusted periodically to reflect changes in the consumer price index. A corporation or partnership may not be a chapter 13 debtor.

An individual cannot file under chapter 13 or any other chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d) and (e). In addition, no individual may be a debtor under chapter 13 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. 11 U.S.C. §§ 109, 111. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required credit counseling, it must be filed with the court.