Filing Chapter 13 Bankruptcy – Personal Bankruptcy
Chapter 13 is a reorganization of debt for individuals, couples and some small sole proprietorship’s. In chapter 13, you make a payment to the bankruptcy trustee each month, and the bankruptcy trustee distributes this money to your creditors. If a chapter 13 is right for you, my law firm will work with you to design the plan, come up with the monthly payment, and we’ll give you detailed instructions on making your payment.
How much is the monthly payment? In Chapter 13, you repay some, or sometimes all of your creditors. The amount of your repayment depends upon an analysis of your assets, your income, your family size, your debt level and whether there are any debts that you are required by law to pay back. However, even in the less common case of a debtor having to repay all debt, the outrageous interest rates charged by many creditors can be COMPLETELY eliminated.
Why would I file a Chapter 13? If your income is too high, you have assets to protect or you have a prior bankruptcy filing you may not qualify for chapter 7 bankruptcy. You therefore may be forced instead to file for a chapter 13 reorganization. Also, even though you may be eligible for chapter 7, you may never–the–less want to consider filing a chapter 13 bankruptcy. For instance: if your home is in foreclosure, you are permitted in a chapter 13 to freeze all of the mortgage arrears and pay them back without interest over a three to five year period. You may also be able to use chapter 13 to get rid of a second mortgage or home equity loan. This highly favorable mortgage work out is only available under Chapter 13 bankruptcy law. You may also use chapter 13 to repay certain back taxes, again without interest and penalties, to restructure car loans and to obtain a moratorium on paying student loans.
Business Bankruptcy Chapter 13
A business structured as a small sole proprietorship can often file for chapter 13 protection and continue to operate the business. However, corporations and LLCs are not permitted to file Chapter 13 under any circumstances. The only type of bankruptcy reorganization available to these types of businesses is Chapter 11 (unless the business is a family farm).
Thinking of filing Chapter 13 Bankruptcy in California? Call or fill out our form for a free consultation. Let our expert bankruptcy attorneys guide you with each step.