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Chapter 13 Bankruptcy Information

Understanding The Concept and Purpose of Chapter 13 Bankruptcy

Contact Bankruptcy Law Professionals at 855 257-7671

Chapter 13 bankruptcy can be the right solution for your situation, but finding the right information online about Chapter 13 can be a challenge. It is a tricky engagement to self-evaluate due to the many variations of situations that individuals and families may face when looking for a bankruptcy option. Chapter 13 information can be confusing and too general for you to apply to yourself. Anything you read online can sometimes just lead to more questions about the process. Common terms related to Chapter 13 bankruptcy are terms like re-organization, monthly payment plan, trustee payment plan, 5-year payment plan, expendable income, confirmation hearing, trustee payments, Chapter 13 bankruptcy trustee, and bankruptcy court. Usually, the best route is to take advantage of a consultation by an attorney who is well versed and experienced in Chapter 13 negotiations in your local area. Bankruptcy Law Professionals is here to be different that other websites and law firms.

Our Chapter 13 Information page is designed to help you sift through all the meaningless and repetitive internet content that all other law firms have on their websites to actually set you in the right direction and help lead you to a good decision for your life. Please keep in mind that the information below should not be interpreted as legal advice although our attorney can be available to give you legal advice. Contact us at 855 257-7671 to speak with our attorney. Also, the information below has been extremely over-simplified to help you understand the concept of Chapter 13 bankruptcy. None of it is really this simple, but, if what you need is a general understanding, this is the right place to be. Let’s get started…

Chapter 13 in a Nutshell:

chapter 13 bankruptcy

If you make too much money to qualify for a Chapter 7 bankruptcy, you can use a Chapter 13. The reason a Chapter 13 is different than a Chapter 7 is that Chapter 13 requires some expendable income on a monthly basis to be able to use the Chapter 13 repayment plan to your benefit. As we mention many times on this site, Chapter 13 is designed to be used for those who have expendable income, meaning that you have extra money each month above your monthly expenses and payments. So, if you make $5000 per month and your monthly expenses total up to $4500 per month, you have $500 of expendable income, and you could qualify for Chapter 13.

 

What is the Reason for Expendable Income in Chapter 13? Why Would Someone Need Chapter 13 Bankruptcy If They Have Expendable Income?

Chapter 13 why bankruptcy

The reason that expendable income is required in Chapter 13 is because the bankruptcy court is expecting you to be able to make payments towards your past due debt. If you don’t have a little expendable income each month, you won’t be able to make these extra payments to contribute to the payment plan.

Sometimes people have ups and downs with finances. Chapter 13 is especially helpful if you were on a normal financial path and all of a sudden had a personal recession or dip in your income that made your debt unmanageable but then came back up to a normal or improved financial situation. When this type of situation happens, you can be left with a lot of past due debt while still being able to afford your normal monthly payments, and you may have too much income to qualify for a Chapter 7, but you still need some help with managing past due debt.

A bankruptcy court will recognize that you have:
1. Expendable Income
2. Past Due Debt

Within Chapter 13, You Can:
1. Put the past due debt into a 5 year payment plan
2. Stop collections activities including foreclosure, wage garnishments, bank account levies, repossession (if filed with enough time to notify the creditor and other parties involved in the collection activity like an employer or sherriff’s department)
3. Continue to pay your normal monthly payments as if you were in good standing with the debts and not be in danger of losing any of your accounts

A Chapter 13 bankruptcy is sometimes referred to as a re-organization bankruptcy because it doesn’t necessarily discharge all of your unsecured debt like a Chapter 7 would. Chapter 13 can just postpone collection activities on your debts and allow you to re-organize how the debt is collected upon based on the payment plan that a Chapter 13 can make for you. So, instead of wiping out all the debt, the Chapter 13 can let you keep the debt and make the regular payments, but also pay back the past due amount through a 5 year payment plan.

Who Uses Chapter 13 Bankruptcy?

Anyone who has too much income to qualify for Chapter 7 bankruptcy should look to Chapter 13 as an option. Chapter 13 bankruptcy is designed to help those who make too much money to qualify for a Chapter 7 bankruptcy, yet have past due payments that cannot be completely paid up to current immediately.

Why Do You Need a Local Chapter 13 Expert Bankruptcy Attorney?

Not all Chapter 13 bankruptcy courts are the same. The rules set in bankruptcy code are made at the federal level which would lead you to believe that all bankruptcies are going to work the same way no matter what court you are in, but this isn’t true. There are several people involved in translating the bankruptcy code to be applied to real life situations. These parties are the bankruptcy court judge, the bankruptcy court trustee, and your attorney. Like all legal situations, laws and regulations are subject to interpretation, and processes (the way different courts handle cases) are going to be different depending on where you file. For this reason, you should hire an attorney that has a significant amount of local bankruptcy court experience.

Bankruptcy Law Professionals has been working with the Orange County, Riverside, San Bernardino, and Los Angeles bankruptcy court systems for 10+ years. Our staff and attorneys know how the processes work in each court and we are also well known with the bankruptcy judges and trustees. Working with a reputable law firm can go a long way to help you avoid problems and issues that others with less experience may encounter. Contact us today to start discussing your situation.

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