What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is also commonly called a reorganization bankruptcy. It is the second most commonly filed form of personal bankruptcy and can help people pay off their debts over a period of three to five years. People who are facing chapter 13 bankruptcy may have certain property they'd like to keep that would not be otherwise protected by bankruptcy exemptions and sufficient income to pay both their debts and living expenses.

Not everyone who wishes to pay off their debts will be eligible to file for this form of bankruptcy. Those who are low income or who have debts exceeding a certain dollar amount will not be able to file for Chapter 13. If you are considering filing a bankruptcy petition, it is important that you discuss your options with our experienced Los Angeles bankruptcy lawyer.

Once your eligibility is determined, it will be necessary for you to receive credit counseling from an approved agency. You will also need to file your bankruptcy forms, which can be quite complicated. It is not recommended that you try to file these forms on your own. A single error can delay your petition or even lead to a dismissal in some cases. The guidance of our bankruptcy attorney in California can help prevent these errors and ensure your forms are filed correctly.

One critical aspect of this form of bankruptcy is the repayment plan. You will need to be able to show that you can pay certain priority debts in their entirety, as well as be able to catch up on any missed or late payments on your secured debts. Any remaining free income will go towards paying your unsecured debts. Your repayment plan will be between three to five years long, depending on your level of income. However, if you are able to pay off your debts early, your repayment plan will end.

At the end of the three to five year period, any remaining debts are eligible to be discharged by the bankruptcy court.

Source: Los Angeles Bankruptcy Attorney

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