Chapter 13 Bankruptcy

Orange County Chapter 13 Bankruptcy Attorneys

For Orange County, California residents a Chapter 13 bankruptcy offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals, couples and families an opportunity to save their homes from foreclosure. Foreclosure prevention via filing a CHapter 13 bankruptcy is probably one of the biggest benefits of filing. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time. Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on “consumer debts.” This provision may protect co-signers. Finally, chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chapter 13 protection.

If you live in the Huntington Beach, Newport Beach or Irvine, California areas filing a Chapter 13 may be the best option for you provided you have valuable assets and/or significant value in real property. It also works well for those that are behind on their mortgage payments and want to maintain their home, second or third homes or rental properties.  A Chapter 13 is merely a debt consolidation and repayment plan and you do not liquidate your assets in order to reconcile with creditors. All bills are consolidated into a monthly payment plan and the bankruptcy is discharged once that plan is totally repaid. This can take up to 5 years in most cases.

According to California as well as federal bankruptcy laws in both a Chapter 7 and Chapter 13 creditors cannot call you, harass you or attempt to collect funds from you once the bankruptcy is filed. This alone can be worth filing bankruptcy as one of the most stressful aspects of filing bankruptcy is the constant harassment from creditors.

Many people do not fully understand how a Chapter 13 bankruptcy works. There are questions and concerns regarding when to start paying your bills, when to start making the plan payments and how do I know if I qualify for a Chapter 13. There are some basic answer to these questions. Qualifying for a Chapter 13 bankruptcy is done via the bankruptcy means test. This is a test that compares you debt, arrears and income as these are what demonstrate your ability to make the plan payments.

As far as when to start paying your bills the sooner the better once your creditors have been notified of you filing bankruptcy. What you do not want to do is fall behind on your bills before you even start making the plan payments. In a Chapter 13 you will have to meet with the bankruptcy trustee after you file. A skilled Newport Beach Bankruptcy Lawyer will explain this to you and be with you every step of the way.