San Francisco Chapter 13 Bankruptcy
Bay Area Bankruptcy AttorneyA Chapter 13 Bankruptcy is also known as a “wage earner’s bankruptcy” or a “consumer reorganization” bankruptcy. Unlike Chapter 7, Chapter 13 does not require the liquidation of non-exempt assets. Instead, Chapter 13 requires that the consumer use his/her future income to repay as much debt as possible through a three or five-year plan under the supervision of the bankruptcy court. The debt which remains upon completion of the plan is subject to discharge.
Chapter 13 is only appropriate for people who have a regular income and can pay a portion of their debt. If you are behind in payments under your mortgage or your car loan, the lender will ordinarily require that you bring the loan current immediately to avoid foreclosure or repossession. Chapter 13 can enable you to retain your home or car and repay the amount you are behind in interest-free monthly payments.
Plan TermGenerally speaking, if your family income is less than the state-wide median income for a family of your size, you can propose a three-year plan. If your income exceeds the state-wide median, you must propose a five year plan.
Plan PaymentsYour plan must generally provide for the payment of all secured creditors if you decide to retain the collateral securing the debt; however, the terms of repayment will not necessarily be the same as the pre-bankruptcy terms (e.g. interest rate, repayment term, and amount to be repaid may in some cases be altered in the Chapter 13 plan). The exact amount to be paid to unsecured creditors must be at least as much as the unsecured creditors would receive if you filed under Chapter 7 and is generally determined by deducting your reasonable and necessary expenses, including payments to secured creditors, from your income.
Plan ConfirmationYou and your attorney will craft and propose a repayment plan under Chapter 13. The proposed plan will be the most beneficial plan possible, within the constraints of applicable law. The proposed plan, however, must be confirmed by the bankruptcy court. This confirmation process can take several months and involve modifications to address objections by creditors and/or the Chapter 13 Trustee. Once confirmed, the plan will generally remain static until it is completed in either three or five years. However, if circumstances dictate, the plan may be modified to address issues such as job loss, disability, a decrease in pay, or other circumstances which temporarily result in an inability to make plan payments.
The Automatic StayAnother important aspect of a bankruptcy filing is what is known as the "automatic stay". As the name indicates, the stay is imposed automatically upon the declaration of bankruptcy (the bankruptcy petition filing). The automatic stay prevents creditors from taking any further steps to collect their debt. Collection calls must cease, attempts to attach assets or garnish wages must stop, and repossession or foreclosure actions must cease. The stay generally remains in place from the time the petition is filed until an order of discharge is granted, which in the case of a Chapter 13 filing, could be five years.
Credit Counseling and Debtor Education RequirementsThe bankruptcy reform enacted by Congress in 2005 also included a mandate that bankruptcy filers must undergo credit counseling before their case is filed, and also must undergo a debtor education course after their case is filed but before they will receive a discharge of their debts. Both of these counseling requirements are mandatory and can be satisfied by taking internet based courses which take from 1 to 2 hours, or through telephone interviews.
Consult an Experienced Bay Area Bankruptcy AttorneyMy office can assist you in determining whether bankruptcy is the right choice for you, and which chapter under the Bankruptcy Code would provide you with the most relief. To schedule a free consultation with an knowledgable lawyer regarding filing a Chapter 13 bankruptcy in San Francisco, please call my office today at 415-865-0212.
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