Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a reorganization plan intended for people with significant income and assets who cannot keep up with the payments on their debts. Christopher Donald Hewitt Esq. has been helping people with insolvency issues file Chapter 13 bankruptcies for about 20 years throughout San Bernardino, Los Angeles, San Diego, Orange, and Riverside counties. The intention is for the debtor to agree to a plan spanning 36-60 months to pay back a portion of their debts according to the plan. People will choose Chapter 13 over Chapter 7 after determining whether they can pass the Means Test; typically, those who cannot pass it will file for Chapter 13. Depending on how much disposable income the debtor has, the plan will usually include paying back unsecured debt anywhere from 10%-100% of what is owed by the debtor. Although there is a 0% plan in Chapter 13, it is untypical for any judge to agree to this, and the debtor must meet extreme circumstances for this to be accepted.Automatic Stay
People file for bankruptcy for many reasons, but when they are filing with urgency, it is because they are facing a foreclosure or eviction from their home. They know the only way to avoid moving is by filing and getting an automatic stay.Preparing Documents
The documents required for Chapter 13 will undoubtedly require more work on the debtor's part. Because you have to devise a plan of how much you can pay your creditors, which a judge will eventually scrutinize, it is essential to start preparing all the documents as soon as you decide to file for a Chapter 13 bankruptcy is what you want to do. Make sure you have a list of all of your creditors. Any creditor that you do not include will file a proof of claims.
Here is a list of some of the most important documents to prepare your bankruptcy petition. Please visit our List of Documents page for a complete list.
- State and Federal Tax Returns for the last two years.
- W2s or Pay stubs for the six months. You must prove you can make payments for your plan for the next 3-5 years.
- Proof of any other income such as Social Security, Alimony, Rental Income, or Child Support.
- An Approximate statement of what you owe your creditors. We can complete the list when we pull your credit report.
- Bank statements from the last six months.
- Your Social Security Card and Your California Driver's License.
Unlike a Chapter 7 Bankruptcy, you must use a lawyer registered with the California State Bar Association to file and process your Chapter 13 Bankruptcy. It is essential to find an experienced attorney with whom you are comfortable and are open and honest about your financial situation. For a Free Consultation with our firm, please Contact Us. Your lawyer will review all your debt and income and determine your disposable income. The amount of your disposable income will determine how long your Chapter 13 Plan will last (3-5 years) and how much you can pay back your creditors during that time.
We determine payments based on your disposable monthly income that you can save at the end of the month. We look at your income and your expenses. You can pay however much is necessary for your mortgage, financed cars, etc. There are limits on spending based on IRS standards, such as food, gas, rent, and other expenses, so it is a budgeting task. You must have enough disposable income to pay something back; otherwise, you cannot be in a 13. You can usually keep all your possessions in a 13. However, you cannot put your creditors in a worse position than if you had filed a Chapter 7. This means that you have to pay an amount through the plan that creditors would have been able to get paid had you done a liquidation in Chapter 7.Paying Back Your Arrearages
If you are six months behind on your mortgage and want to keep your home, chapter 13 is the best way to go if you face foreclosure. You can keep your home in Chapter 7, but only if you are current or can be current within a month or so. In a 13, we can put your arrearages into the plan, and you can pay them back over 3-5 years.More Qualifications
You must have a steady income to get a Chapter 13 Plan approved. You must average your monthly income if you are self-employed or get quarterly commission checks. Once we figure out your disposable monthly income, that is what you will pay in a Chapter 13 plan, presuming your expenses are reasonable. The court will discharge your case after your plan is confirmed and you complete the 36 - 60 months of payments. You must pay all your secured debt and the amount you agree on your unsecured debt according to your plan.
You must complete the required credit counseling course before filing for Chapter 13 bankruptcy. Additionally, you must complete a financial management course before receiving a discharge.Filing Your Petition
Once you and your attorney have reviewed your financial documents together, determined your disposable income, and decided on the best payment plan for you, your attorney will compile your Chapter 13 petition by filing all the required schedules. You will sign the petition, and your attorney will file your petition, which will grant you an Automatic Stay as stated above.
The first court hearing you must attend is called the 341A Meeting of Creditors. You will be assigned a court location, usually the Central District of California, Riverside Branch, a trustee, a case number and a judge.
The second hearing you must attend is a confirmation hearing for a Chapter 13 Bankruptcy.
Please read our additional page about the 341A and confirmation hearing for complete information.