Bankruptcy is an often-misunderstood financial tool. Not only are many people afraid of it, they also don’t realize how many nuances exist inside the Bankruptcy Code.
There are several different forms of bankruptcy, and each one is useful in different circumstances.
You’ve probably heard of Chapter 11 (if for no other reason than the bookstore chain that bears the name), and maybe even Chapter 7, where debtors liquidate a portion of their assets to resolve their debts.
But Chapter 13 is less well-known, despite its usefulness.
If you are an individual or business who needs time to pay off your debts, Chapter 13 can give it to you, along with an opportunity to lessen your overall balances.
What Is Chapter 13?
Under Chapter 13 of the Bankruptcy Code, borrowers reorganize their finances with the aid of a court-appointed trustee. A payment plan is created, with terms lasting from 3 to 5 years, and significantly reduced rates. At the end of this period, if you made all your payments on time, your entire debt burden is forgiven.
Certain debts cannot be erased under Chapter 13 bankruptcy in California.
Examples include:
- Child support
- Alimony
- Certain tax debt
- Court fees and penalties
- Personal injury debts incurred while driving drunk
- Unsecured debts that were omitted from your initial filing
In extreme cases, student loan debts may be repaid under a Chapter 13 plan.
What Happens When You File Chapter 13?
When you file for Chapter 13 bankruptcy, your creditors are automatically notified that there is a stay on collections. This means that the creditors you owe cannot collect payments, garnish your wages, repossess your property, file a lawsuit against you, or impose a bank levy on you.
Unlike Chapter 7, your personal assets are not liquidated under Chapter 13. Your home, car, and other significant property will not be taken. Your trustee (or your lawyer) may advise the sale of certain assets, but you do not have to worry that they will be seized by your creditors.
Your court-appointed trustee will work with you to get a full picture of your assets and income. You will continue to make payments toward necessary expenses (like your mortgage, car loan, alimony, child support, or tax debts) while you are under your Chapter 13 payment plan, and the amount you pay each month will be determined by your remaining disposable income.
Do I Need a Riverside Lawyer to File Chapter 13?
It is always advisable to work with an attorney when you file for bankruptcy. Navigating the bankruptcy process without an expert’s help is an arduous process, and it’s easy for laymen to make mistakes.
Additionally, your case could be dismissed due to technicalities, pushing back the timeline of your filing and causing missed payments to pile-up even further.
Hiring a lawyer for the first time can be scary – if you search “bankruptcy lawyer, Riverside, California,” you’ll certainly get many search results, but how do you know which law firms you can trust?
A couple of useful options to help you are:
Chapter 13 Lawyers in Riverside
Our Riverside office is staffed by attorney Frank X. Ruggier, and he is passionate about helping Los Angelinos improve their financial lives.
Our three-step process is designed to ensure that bankruptcy is the best option for you. We won’t recommend you file for bankruptcy unless we genuinely believe it is in your best interest.
Take the first step to finding out what is right for you. Speak to a Certified Bankruptcy Specialist by calling our Riverside office at 951-686-6300 right now.
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