Chapter 13 Bankruptcy
What is Chapter 13 Bankruptcy?
Chapter 13The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.) Click for more: Chapter 13 Bankruptcy bankruptcyA legal procedure for dealing with debt problems of individuals and businesses; specifically, a case filed under one of the chapters of title 11 of the United States Code (the Bankruptcy Code). Click for more: Bankruptcy Introduction Video is a full or partial debt repayment planA debtor’s detailed description of how the debtor proposes to pay creditors’ claims over a fixed period of time. administered by the Bankruptcy CourtThe bankruptcy judges in regular active service in each district; a unit of the district court.. The debtorA person who has filed a petition for relief under the Bankruptcy Code. submits a plan to the court for approval and, when a plan is approved, the debtor makes monthly payments to the bankruptcy trusteeThe representative of the bankruptcy estate who exercises statutory powers, principally for the benefit of the unsecured creditors, under the general supervision of the court and the direct supervision of the U.S. trustee or bankruptcy administrator. The trustee is a private individual or corporation appointed in all chapter 7, chapter 12, and chapter 13 cases and some chapter 11 cases. The trustee’s responsibilities include reviewing the debtor’s petition and schedules and bringing actions against creditors or the debtor to recover property of the bankruptcy estate. In chapter 7, the trustee liquidates property of the estate, and makes distributions to creditors. Trustees in chapter 12 and 13 have similar duties to a chapter 7 trustee and the additional responsibilities of overseeing.
The trustee in turn makes payments to the creditors. The repayment period may be from 3-5 years. If all payments have been made according to the plan, the remaining debt is discharged (eliminated) at the end of the plan.
Chapter 13 bankruptcy is referred to as a “reorganization” because it allows individuals to consolidate their debt into an affordable monthly payment plan. In addition, filing for Chapter 13 bankruptcy stops creditorOne to whom the debtor owes money or who claims to be owed money by the debtor. harassment and gives the debtor powerful protection of the Bankruptcy Court.
Who Can File for Chapter 13 Bankruptcy?
People who usually qualify for Chapter 13 make enough income to cover any living expenses, but not enough to pay off all of their debts. In many situations, individuals file for Chapter 13 bankruptcy when they have suffered a temporary loss or hardship. While there is no “means testSection 707(b)(2) of the Bankruptcy Code applies a "means test" to determine whether an individual debtor’s chapter 7 filing is presumed to be an abuse of the Bankruptcy Code requiring dismissal or conversion of the case (generally to chapter 13). Abuse is presumed if the debtor’s aggregate current monthly income (see definition above) over 5 years, net of certain statutorily allowed expenses is more than (i) $10,950, or (ii) 25% of the debtor’s nonpriority unsecured debt, as long as that amount is at least $6,575. The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income. Click for more: Means Test Article” as with a Chapter 7The chapter of the Bankruptcy Code providing for "liquidation,"(i.e., the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors.) Click for more: Chapter 7 Bankruptcy bankruptcy, an individual must prove to the court that he or she has a consistent source of income to afford the monthly payments. This can be a difficult task, and the help of an experienced Orange County bankruptcy attorney is often crucial.
Is Chapter 7 or Chapter 13 Bankruptcy Better?
It all depends on your specific situation. Generally, Chapter 7 bankruptcy is better for people who have a lot of unsecured debts, like credit card debt and medical bills, and do not have a lot of property. However, if you have regular income and non-exempt property you want to keep (such as your home with equityThe value of a debtor’s interest in property that remains after liens and other creditors’ interests are considered. (Example: If a house valued at $100,000 is subject to a $80,000 mortgage, there is $20,000 of equity.)), you should consider a Chapter 13 bankruptcy. Chapter 13 might also be better if you owe more on your home than it is worth. This is because a procedure called lienThe right to take and hold or sell the property of a debtor as security or payment for a debt or duty. Click for more: Lein Strip strip can help you completely eliminate the lien of your junior mortgages.
Contact a Skilled Chapter 13 Lawyer in Orange County
Chapter 13 can be very complex proceedings, which is why it is best to consult with an experienced bankruptcy attorney. The attorney will carefully review your specific financial situation and advise you about your bankruptcy options and rebuilding your credit after bankruptcy. We can help you determine if Chapter 13 bankruptcy can help you get a fresh startThe characterization of a debtor’s status after bankruptcy, i.e., free of most debts. (Giving debtors a fresh start is one purpose of the Bankruptcy Code.) and put your life back on track. Schedule your FREE consultation today by contacting us at (949) 450-8500.
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