Californians who are experiencing financial difficulties that they cannot get out of on their own might want to consider bankruptcy. Often, taking the step to move forward with a bankruptcy is hindered by a lack of knowledge of which chapter to file under, the benefits and the eligibility requirements. Chapter 13 is of use for people who own property like a home or a vehicle they would like to keep and if they are wage earners so they can formulate a payment plan that lasts for three or five years to repay a portion of their debts. Before using Chapter 13, it is vital to know about its advantages and who is eligible.
With Chapter 13, there will not be a liquidation of assets. As time passes, any mortgage payments that are delinquent can be cured. They must remember that all mortgage payments must be made on time as they come due. Except for a mortgage on a primary residence, secured debts can be rescheduled and extended during the Chapter 13. This might reduce the payments. There is also the benefit for those who are third parties who might be technically responsible for a debt as a co-signer. The Chapter 13 payments will be sent to a trustee who will distribute them to the creditors. While the Chapter 13 is in progress, the debtor will no longer hear from the creditors.
Anyone can be eligible for Chapter 13 provided they meet certain requirements with the debts. Unsecured debts must be for less than $394,725. Secured debts must be less than $1,184,200. These amounts can change based on the consumer price index. If there was a bankruptcy dismissed in the past 180 days because of a willful failure to appear before the court or for a failure to comply with the orders of the court or because it was voluntarily dismissed when creditors sought relief for property that they held liens on, there cannot be a Chapter 13 filing. The person must also have received credit counseling in the 180 days before filing. In an emergency or if there is not an approved credit counselor in the vicinity, there can be exceptions.
People who are seeking to get on stronger financial ground and move forward from past problems with debt can think about filing for Chapter 13 bankruptcy. Understanding all the different details with it is key to a successful case and in knowing if it is the right option. Discussing the matter with a legal professional experienced in all chapters of bankruptcy is the first step.
Source: uscourts.gov, "Chapter 13 -- Bankruptcy Basics -- Advantages of Chapter 13, Chapter 13 Eligibility," accessed on Sept. 4, 2017