Chapter 13 Bankruptcy California

Bankruptcy can be a lengthy process. Understanding the different requirements will help you determine which type of bankruptcy you need to file if you live in California.

There are different types of bankruptcy cases, each named for the chapter in the bankruptcy code that defines them. The two most common forms of personal bankruptcy are Chapter 7 and Chapter 13.

Chapter 7 is for people who meet a California bankruptcy means test, and most debt, especially unsecured debt, is erased. Chapter 13 is for people who cannot meet the means test because they have too much money or debt.

The means test compares your household's average monthly income over the last six months to the median income of a similar-sized California household. These numbers come, in part, from the Census Bureau. Find a free online means test calculator to determine if you meet the means test bankruptcy requirements.

Chapter 13 is not for business-related debt. If you have business debt as a sole proprietor, you may qualify for Chapter 7. Chapter 11 is more suitable for large business debts.

Consulting a bankruptcy attorney before filing for bankruptcy is recommended.

Chapter 13 bankruptcy and how it works in California

Chapter 13 bankruptcy is a "reorganization" bankruptcy. This allows people with regular income to repay their debts, at least in part. Under this plan, you make regular monthly payments to creditors.

Chapter 13 is designed for people with a steady income who want to keep their property. Chapter 13 allows you to catch up on car payments and missed mortgage payments.

Who can file for Chapter 13 bankruptcy

According to federal law, an individual can file for chapter 13 as long as the combined total secured and unsecured debts total less than $2,750,000.

If within the last 180 days, you have had a prior bankruptcy petition dismissed due to willful failure to appear or comply or was voluntarily dismissed, you cannot file for Chapter 13 bankruptcy.

How to file for Chapter 13 bankruptcy

To file for California Chapter 13 bankruptcy, you must complete an approved credit counseling course within 6 months of filing your petition with the local bankruptcy court.

Next, you prepare the bankruptcy packet. You will need most, if not all, of the following forms:

• Form 101 (“Voluntary Petition for Individuals Filing Bankruptcy”)
• Certificate of completion for required credit counseling
• Form 106Dec (Declaration About an Individual Debtor's Schedules)
• Form 106Sum (Summary of Your Assets and Liabilities and Certain Statistical Information) details the total value of your assets, debt amounts, and information about income and expenses
• Form 106A/B (Schedule A/B: Property) lists all belongings and an estimate of the resale value
• Form 106C (“Schedule C”) instructs the bankruptcy trustee as to what property is protected by an exemption
• Form 106D (Schedule D) lists secured debt like real property (mortgage) or personal property (car loans)
• Form 106E/F (Schedule E/F) lists other unsecured debts like credit card debt
• Form 106G (Executory Contracts and Unexpired Leases (individuals)) includes home rentals, car leases, or other long-term contracts
• Form 106H (Schedule H: Your Codebtors) must be filed even if there are no co-debtors
• Form 106I (Schedule I) lists all income, including unpaid commissions for personal services
• Form 106J (Schedule J: Your Expenses (individuals)) includes how much you spend monthly on things like rent, food, transportation, etc
• Form 107 (Your Statement of Financial Affairs for Individuals Filing for Bankruptcy) information about your financial situation that is not part of the schedules
• Form 113 (Chapter 13 Plan) is the repayment plan
• Form 121 (Your Statement About Your Social Security Numbers)
• Form 122C-1 (Chapter 13 Statement of Your Current Monthly Income and Calculation of Commitment Period)
• Form 122C-2 (Chapter 13 Calculation of Your Disposable Income)
• Form 423 (Certification About a Financial Management Course)
• 2010 Notice Required by 11 U.S.C. §342(b) for Individuals Filing for Bankruptcy
• A list of all creditors and addresses Ask your local court for the preferred format
• Pay the filing fee of $313

The following forms may be required:

• Form 101A (Initial Statement About an Eviction Judgment Against You) is behind on rent and there is a judgment to evict in the process
• Form 101B (Statement About Payment of an Eviction Judgment Against You) if you have an eviction judgment against you
• Form 106J-2 (Schedule J-2: Expenses for Separate Household of Debtor 2) is filed by a married couple who jointly filing for bankruptcy but not living together
• Form 119 (Preparer's Notice, Declaration and Signature)
• 2030 Disclosure of Compensation of Attorney for Debtor

Finally, you may need to file local forms required by your local bankruptcy courts. Always ask the clerk what forms need to be filed and what preferred format.

The benefits of filing for Chapter 13 bankruptcy in California

There are a number of pros to a Chapter 13 bankruptcy filing. These include:

• Consolidate remaining dischargeable debt into one affordable payment based on the debtor's current monthly income
• Keep your home and car as long as you are making secured debt payments
• Can make up delinquent mortgage payments without penalty or interest
• Can stop foreclosure proceedings
• Usually, can keep an income tax refund
• May discharge some tax debt
• Opportunity to repay unsecured creditors and secured debts over a longer period of time
• May reduce outstanding debts or interest rates
• Stop defaults and missed payments so you can structure a plan to pay debts in a timely manner
• Places an automatic stay on your debts once you file

The drawbacks of filing for Chapter 13 bankruptcy in California

Of course, there are reasons not to file for Chapter 13 bankruptcy. Some of these include the cost, the amount of time, the possibility of losing your home, and credit score damage. Since we are not lawyers, we strongly suggest you speak with a bankruptcy attorney before petitioning.

• Chapter 13 bankruptcy case stays on credit for 7 years. For more about credit scores, follow this link
• Takes up to 5 years to complete
• High fees and costs
• Can lose your home and assets
• The following debts are not included in a Chapter 13 bankruptcy:
• tax debt or government fees
• mortgages
• child support or alimony obligations
• student loan debt
• car loans
  

FAQ on Chapter 13 bankruptcy

Alternatives to Chapter 13 bankruptcy in California

As you read this blog, you may realize that filing is not your best option. Luckily, there is an alternative. Debt settlement can be a better option than filing for bankruptcy.

Debt settlement negotiates unsecured debt amounts. You may have a reduced amount to pay off without the hassle, expense, and social stigma. We at Pacific Debt Relief have probably worked successfully with your unsecured creditors.

Pacific Debt Relief is one of the leading debt settlement companies in the US. We are located in San Diego. Our monthly payment plan is based on your budget.

To learn more about debt settlement, check out this link.



Call for a free consultation. Our award-winning specialists will explain your options so you can make an informed decision.