One common concern that people who are considering bankruptcy have is losing their important assets, such as their house or small business. Chapter 13 Bankruptcy may be a good choice for San Leandro residents who are struggling with their debt, but still have significant assets that they want to protect. Likewise, if your income is too high to qualify for Chapter 7 Bankruptcy, Chapter 13 Bankruptcy is still an option.

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is the second-most common type of bankruptcy for individuals, after Chapter 7. Unlike Chapter 7, in which a debtor must liquidate all of his or her non-exempt assets, Chapter 13 Bankruptcy revolves around giving a debtor additional time to pay back some of their debt.

In Chapter 13 Bankruptcy, the debtor proposes a payment plan that lasts either three years or five years. After hearing from creditors, the bankruptcy court will either approve the payment plan or ask the debtor to make revisions. The debtor then makes payments according to the terms of the plan. After the debtor has completed the plan, any remaining unsecured debt is wiped away.

Benefits of Chapter 13

Chapter 13 Bankruptcy gives debtors additional time. This can be important because the protections of bankruptcy, such as the automatic stay, last for the duration of the Chapter 13 payment plan. This can help debtors to avoid events such as:

• A home foreclosure;
• Car or boat repossession;
• Wage garnishment; or
• Debt collection lawsuit.

Do I have to Qualify for Chapter 13 Bankruptcy?

Unlike Chapter 7 bankruptcy, which has a “means test,” there is no set income test to file for Chapter 13 Bankruptcy in San Leandro. However, there is an important limitation. The creditors of a debtor who files for Chapter 13 Bankruptcy must receive at least as much in Chapter 13 as they would have if the debtor had filed for Chapter 7 and liquidated his or her non-exempt assets. This usually means that a debtor who files for Chapter 13 Bankruptcy must have enough income to repay a significant portion of his or her obligations during the repayment period

In order to make this comparison, the bankruptcy court examines the bankruptcy schedules that the debtor files along with the Chapter 13 petition. These schedules list all of the debtor’s assets, and failure to list an asset can result in a dismissal of the bankruptcy case. Although there are 10 schedules in total, some of the most important include:

• Schedule A – real property;
• Schedule B – personal property;
• Schedule C – property claimed as exempt;
• Schedule I – your income; and
• Schedule J – your expenses.

One additional limitation is that people with more than $1,149,525 in secured debts are not allowed to file for Chapter 13 Bankruptcy.

Contact a Bankruptcy Lawyer

If you have a steady income and need time to repay some of your debts, Chapter 13 may be a good choice for you. The Law Offices of Melanie Tavare have years of experience helping San Leandro residents to file for Chapter 13 Bankruptcy. If you are interested in learning whether Chapter 13 is the right choice for you, call us at 510-255-4646 or contact us online.

The Law Offices of Melanie Tavare is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.