Chapter 13 FAQ

Posted on: January 8, 2015

California Bankruptcy FAQ

In today's tough economy, it's easy to become overwhelmed with bills that you can't pay. However, if your income is too high to meet the qualifications for Chapter 7 bankruptcy, you may feel like you have no options left. Chapter 13 bankruptcy, on the other hand, may be the solution you need to get help paying back your debts and stop the creditors from harassing you. Here's what you need to know about Chapter 13 Bankruptcy in California.

  1. You Can Keep Your Assets

    In a Chapter 7 bankruptcy, non-exempt assets are liquidated and the cash is used to pay down debts. In a Chapter 13 bankruptcy, all assets will remain your property. Chapter 13 bankruptcy is an excellent option for individuals and families who have valuable assets that they would otherwise lose in a Chapter 7 bankruptcy.

  2. Your Debts May Not Be Discharged

    At the end of a Chapter 7 bankruptcy, most (if not all) of the remaining debt after asset liquidation is discharged. However, this is not the case with a Chapter 13 bankruptcy. You will still owe all of your debts, but you will be given a court ordered payment plan that is designed to eliminate them within 3-5 years. In some cases, if there is debt still left over after the repayment period is complete, it may be discharged at that time. This generally does not include new debt that is accumulated during the repayment period.

  3. You Can Stop Your Foreclosure

    If you have received a notice of impending foreclosure on your home, a Chapter 13 bankruptcy can help prevent your home from actually being foreclosed on. Your mortgage payment will be included with your other debts in your court ordered repayment plan.

  4. You Will Have a Trustee

    In a Chapter 13 bankruptcy, you will be appointed a trustee by the court. A trustee is an attorney that will collect payments from you, and will then disburse them to your creditors. Your trustee will work with you throughout the duration of the case, and can help you follow your repayment plan successfully.

  5. Your Creditors Can Reject Your Bankruptcy Claim

    Although most creditors won't, it is possible for them to reject your bankruptcy claim. The petition to reject the claim must go through the court, where it will either be approved or disapproved. If a particular creditor rejects your bankruptcy and the court approves their rejection, you may still owe that debt in full and it may not be included with the other debts in your repayment plan.

Although filing for bankruptcy can seem overwhelming, chances are, it's in your best interest to do so if you're having trouble paying all of your bills. Contact a skilled California bankruptcy attorney today to discuss your case and to learn more about how a Chapter 13 bankruptcy may be able to provide a solution for you. At Farhat Law Firm, APC, we can help guide you through the steps of bankruptcy, and assist you in getting a clean financial slate in which to start over. Contact us today for a consultation by calling (951) 808-0529.