Overview of Chapter 13

Partial Bankruptcy

Chapter 13 takes a much different approach than Chapter 7 in b ringing about debt relief and the opportunity to start over financially. The main feature of this form of bankruptcy is a court approved repayment plan. An attorney from Price Law Group prepares and files this plan by which all or the vast majority of your debts are paid off in a 3-5 year period of time. The intent of bankruptcy is to get your back on track by reorganizing your debts. Any repayment plan must, therefore, be something that you can actually afford and the goal of Chapter 13 is that you will be debt free when bankruptcy is concluded.

Chapter 13 has the additional benefits of stopping wage garnishment, repossessions and debt lawsuits while providing foreclosure prevention. Once the attorneys file your petition, creditors will no longer have a legal reason to contact you and any creditor abuse or harassment will be forced to come to an abrupt halt.

It is vital, of course, that your petition and plan be correctly researched, prepared and filed. Many such proposals are denied by bankruptcy court and that is where an experienced attorney can make a large difference to your future. Attorneys at the firm have over 20 years of experience in protecting individuals from overwhelming debt and have helped more than 100,000 people who were faced with tough financial situations. They enjoy an excellent reputation in bankruptcy court, based on their proven methods to obtain results.

Do you exceed the median monthly income?

According to Section 1325 of the U.S. bankruptcy law code, anyone who petitions for Chapter 13 bankruptcy, but exceeds the median monthly income will not qualify for this line of bankruptcy. To find out if you meet that requirement, you will have to take a median income test. What this means is that you have to calculate your gross income six months prior to the date that you are filing and then divide that by six. Those who fall below the average median monthly income in California for a family of similar size will qualify. Those who meet or exceed that will then have to take a means test if they want to continue to pursue the option of bankruptcy. A means test will evaluate your disposable income, rather than just your total income. It will take into account your monthly expenses.

Restructuring Your Debt

In Chapter 13, all or a good portion of your unsecured debts will be discharged without repayment. Secured debts, like a vehicle loan, are frequently made more manageable by getting the interest rates lowered. There are specific rules which apply to your eligibility for Chapter 13 bankruptcy. You must be able to show the courts that you have the required disposable income to pay your debts off per your repayment plan. In addition, you must not have more than $1,010,650 in secured debts (those with some type of collateral) or $336,000 in unsecured debts such as medical or credit card bills. Financial problems only get worse with time and it is important to act now to start your credit repair and to create a better financial future.