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Are you falling behind your bills in Los Angeles? You are certainly not alone. With multiple years of high inflation and other economic challenges, there are many people dealing with financial issues. If your debt payments are too high for you to afford—meaning you are falling behind each month—it may be time to consider bankruptcy protection. Chapter 13 bankruptcy is a form of personal bankruptcy that allows people to roll debts into a single, affordable monthly payment. It may be the best path forward for your family. At Resolve Law Firm, APC, we have deep experience with Chapter 13. Here, our Los Angeles bankruptcy attorney provides a guide to Chapter 13 repayment plans.
Background: What is Chapter 13 Bankruptcy?
Chapter 13 is one of the two main options for personal bankruptcy in California. As described by the California Courts, Chapter 13 bankruptcy is a type of restructuring bankruptcy that ends with “a repayment plan for individuals with regular income” and allows “you pay your debts off over a 3- to 5-year period and you keep your property.” It is often referred to as a wage earner’s plan.
Is Chapter 13 the Right Option for My Situation in Los Angeles?
If you are struggling with financial difficulties, Chapter 13 bankruptcy could potentially be the best available option to resolve your issues and find stability. Here is an overview of the most notable benefits of Chapter 13 bankruptcy protection:
- No Means Test: Many people in California cannot actually file for Chapter 7 bankruptcy protection. There is a means test that limits the option to people and families with a median (or below) state income when adjusted for household size. In contrast, Chapter 13 is not subject to the means test. The vast majority of people are eligible to file.
- Debt Consolidation (Affordable): Chapter 13 bankruptcy consolidates multiple debts into a single repayment plan. The plan involves making monthly payments to a trustee. The trustee is then responsible for distributing. The repayment plan can waive penalties, eliminate interests, and even reduce the principal of existing debts.
- Foreclosure Avoidance: One of the most significant benefits is the ability to stop foreclosure proceedings. Filing for Chapter 13 can halt the foreclosure process and provide an opportunity to catch up on missed mortgage payments over the term of the repayment plan. If you are behind on your mortgage—and dealing with other debt problems—a Los Angeles bankruptcy lawyer can help you assess Chapter 13.
- Protection of Assets: Unlike Chapter 7, Chapter 13 allows debtors to keep their property, including non-exempt assets. By obtaining and completing a Chapter 13 repayment plan, debtors can protect and retain ownership of their valuable assets. For financially distressed people in Los Angeles who do have existing assets, Chapter 13 is often better than Chapter 7.
How to Develop an Affordable Chapter 13 Repayment Plan in Los Angeles
Developing an affordable Chapter 13 repayment plan in Los Angeles involves careful, comprehensive planning. These plans are no one-size-fits-all—far from it. Every Chapter 13 repayment plan should be customized to meet the debtor’s unique financial situation. Here are some of the important considerations for developing an affordable Chapter 13 bankruptcy plan:
- Calculate Income: To start, you should gather all sources of income—from wages to freelance payments to other financial benefits. The total forms the basis of what you can pay.
- List Expenses: You should document all monthly expenses such as rent, utilities, food, transportation, and any other necessary costs.
- Determine Your Debt Obligations: Classify your debts into priority (such as alimony, child support, and certain taxes), secured (like car loans or mortgages), and unsecured debts (like credit card bills and medical expenses).
- Propose a Plan: You should allocate funds for priority debts that have to be paid (child support, taxes, etc), develop a plan for secure debts (mortgage, car loan, etc), and determine how much you have left for unsecured debts, such as credit cards or medical bills.
Your Chapter 13 Repayment Plan Must Be Approved By a Bankruptcy Court
A key point to know about Chapter 13 repayment plans is that they must be reviewed and approved by the bankruptcy court. The approval process involves a confirmation hearing where creditors can object to the terms if they believe the plan is unfair. The court evaluates the plan’s feasibility, its compliance with bankruptcy laws, and whether it is proposed in good faith. A plan is often approved with support from creditors who are made to understand that it is the best option for an orderly resolution. However, a bankruptcy court can also approve a Chapter 13 repayment plan over a creditor’s objections if deemed to be warranted under the law.
Why Trust Resolve Law Firm for Help With Personal Bankruptcy in Los Angeles
Chapter 13 bankruptcy is complicated. Our founding attorney Le’Roy Roberson is an experienced advocate for people and families navigating rough financial waters. The reality is that filing for bankruptcy should never be a source of shame. It is a legal process that exists to solve problems. You need to be able to exit the process with a fair, affordable repayment plan that you can actually keep up with. We are proactive. Among other things, our Los Angeles bankruptcy attorney is prepared to:
- Listen to your story and answer questions about a the Chapter 13 bankruptcy process;
- Help you gather documents and records and handle the bankruptcy paperwork; and
- Take whatever legal action is needed to help you negotiate the best repayment plan.
Contact Our Los Angeles Bankruptcy Lawyer Today
At Resolve Law Firm, APC, our Los Angeles Chapter 13 bankruptcy attorney is a solutions-focused advocate for clients. If you have any questions about Chapter 13 repayment plans, we are here more than ready to help. Contact us today for a free, 30-minute consultation. We provide bankruptcy representation in Los Angeles, Los Angeles County, and throughout all of Southern California, including in Orange County, Ventura County, San Diego County, and San Bernardino County.
