One way to find your way out of debt is to file for bankruptcy. If you earn a regular income, you can get rid of some of your debts and reduce others by filing for Chapter 13 Bankruptcy. You can pay a small amount on your debt each month, without penalties or interest. After a few short years, you get out of your debt with confidence and the expectation of better times ahead.
Chapter 13 Bankruptcy attorney Gurjit Singh Srai serves communities across the Central Valley. He has helped many individuals and small businesses get debt relief from creditors. Our legal team can help you get started on the road to debt relief. For more information or to learn how we can help you achieve your financial goals, contact the Srai Law Office.
What Is Chapter 13 Bankruptcy?
Chapter Bankruptcy 13 is commonly known as the “wage earner plan.” When you file for this type of bankruptcy, it does not wipe all of your debt clean. Instead, your debt is restructured so that you can pay off your debts in approximately 3 to 5 years.
Chapter 13 Bankruptcy is a process where a debtor reorganizes their debts by proposing a payment plan. This payment plan ranges from 3 to 5 years. If a debtor’s income is below the state median, the plan will be for 3 years. However, if the debtor’s income is above the state median, the plan will be 5 years.
Each person who files for Chapter 13 Bankruptcy has his or her own set of unique financial facts. As such the outcome in court can vary. It is best to have an experienced Stockton bankruptcy attorney helping you with the process.
Benefits of Filing Chapter 13 Bankruptcy
Our Stockton Chapter 13 bankruptcy attorneys will go over all the reasons why filing a Chapter 13 bankruptcy may be best in your specific situation. Some benefits of filing for Chapter 13 Bankruptcy include:
- Protect and keep all of your assets
- Stop the foreclosure sale of your assets and catch up on your past due mortgage payments
- Remove liens, such as second mortgages on your property
- Discharge unsecured debts, such as credit cards and medical bills, by doing an affordable repayment plan
- Repay debts with zero percent interest
Details of Chapter 13 Bankruptcy
Chapter 13 Bankruptcy differs depending on whether it is filed on behalf of an individual or a business. Below are some differences for each of type of filing.
Chapter 13 Bankruptcy for Individuals
If you earn a regular income, a Chapter 13 Bankruptcy will let you pay off a large part of your debt over a specific time period. However, some restrictions may apply. The court will decide what debts you owe and will set the amount for repayment. The court will also determine the details of your repayment plan.
Certain debts under a Chapter 13 Bankruptcy cannot be discharged, including:
- Some taxes
- Fines and restitution
- Most student loans
- Domestic support obligations
One major benefit of filing for Chapter 13 Bankruptcy is that you get to keep your property and the creditors receive their payments minus the interest that would have been accruing but for being in the bankruptcy plan.
Chapter 13 Bankruptcy for Businesses
Businesses cannot file for a Chapter 13 Bankruptcy. However, if you are self-employed and run your own business or conduct business on your own, you can file for bankruptcy under this Chapter. The only caveat is that the bankruptcy must be filed in your name and not the name of your company. Additionally, you may face some limitations on how much unsecured debt you may have in order to be allowed to file a Chapter 13 Bankruptcy.
There are three categories in a business bankruptcy under Chapter 13:
- Mortgage and secured debts must be paid in full or the lender will sell the house or asset.
Alimony, child support, tax debts, wages, commission and
- benefits to employees, contributions owed to employees’ benefit funds are categorized as priority debts. These must be repaid in full.
- Every other unsecured debt must be repaid anywhere between 0% to 100%. The percentage depends on disposable income, the market value of nonexempt assets, and the length of the bankruptcy plan.
3 Requirements to File Chapter 13 Bankruptcy
1. Sufficient Income
One major requirement for the court to approve a Chapter 13 Bankruptcy plan is that your income must be sufficient to cover the payments under the plan. The court will allow you to use the following types of income to repay your obligations:
- Salary and wages
- Income from commissions from freelance or seasonal jobs
- Benefits from Social Security
- Workers compensation benefits
- Welfare benefits
- Rental income
- Asset sales
- Alimony or child support
- Spousal income
2. Proof Tax Filing
A second major requirement of a Chapter 13 Bankruptcy is proof that you have filed a federal and state tax return up through the bankruptcy year. You need to submit verification of the past 4 years’ tax filings.
3. How Much You Owe
A third requirement for successfully filing a Chapter 13 Bankruptcy is that you need to owe, on the date that you file the petition, less than $383,175 in unsecured debt and $1,149,525 in secured debts. If you are filing for Chapter 13 Bankruptcy after April 2016, the limits are $394,725 for unsecured debt and $1,184,200 in secured debt.
Filing for Chapter 13 Bankruptcy can be complicated. The slightest problem can cancel the whole process. It is best to work with a bankruptcy attorney. The legal team at the Srai Law Office can help you successfully file either a business or individual Chapter 13 Bankruptcy.
Contact an Experienced Bankruptcy Attorney
Bankruptcy issues can be complex process in California. An experienced Stockton bankruptcy lawyer can make sure that your legal rights are protected. The legal team at the Srai Law Office will make sure your creditors understand their rights under the law. We will help you get back on your feet and take back control of your life.
For more information or to schedule a complimentary consultation with one of our Stockton Chapter 13 bankruptcy attorneys, please call us at (209) 323-5558, or complete our online form.