Selecting Chapter 13 Bankruptcy to Protect Assets

Chapter 13 bankruptcy proceedings allows debtors to pay back some of their debt on a more relaxed schedule. However, because this type of bankruptcy allows creditors to recover a portion of the money owed, not everyone is allowed to file Chapter 13 bankruptcy. In order to be eligible for Chapter 13 proceedings, your Bay Area bankruptcy attorney will be required to establish that you have a steady source of income, since reliable income is necessary for the long-term planning and repayment schedules – typically 3 to 5 years –set up under Chapter 13 procedures.

Income Eligibility for Chapter 13

Debtors will also need to establish that at least some of their income is disposable. In other words, if you need all of your income to cover your basic necessities like groceries, rent and utility bills, Chapter 13 bankruptcy may not be right for you.

California provides a test to determine whether debtors’ means make the requirements for Chapter 13 versus Chapter 7 bankruptcy procedure. Your bankruptcy attorney in the Bay Area can look at your debts and expenses relative to your income in order to determine your eligibility for Chapter 13 filing.

Who Can Benefit From Choosing Chapter 13 Bankruptcy?

Because Chapter 13 bankruptcy does not allow debtors to discharge all of their debts from the beginning, it may not initially seem like the most attractive option for debtors. However, Chapter 13 proceedings do provide unique benefits that Chapter 7 bankruptcy cannot match. Some of the debtors who stand to benefit most from selecting Chapter 13 bankruptcy include those debtors who want to keep their homes, valuables and investments.

Homeowners in California Who Wish to Keep Their Home

Chapter 13 bankruptcy proceedings can help homeowners who wants to keep their home or who have substantial equity in their home, under California Code Section 704.710-704.850. Whether you are behind in mortgage payments, or already undergoing foreclosure, your California bankruptcy attorney can advise you regarding how or whether Chapter 13 bankruptcy can help you save your home, and how any equity you may have in your home will be affected.

Owners of Valuable Nonexempt Property

While California has strict lists covering which property is exempt from sale to pay creditors under Chapter 7 bankruptcy, Chapter 13 bankruptcy allows debtors to keep most of their property, including nonexempt property – though the values of the nonexempt properties may be used in determining the amount of repayment owed.

Some examples of nonexempt property that a Chapter 7 trustee may sell to pay a debtor’s creditors include but are not limited to:

•         Expensive collections, such as stamps, coins, antiques, etc;
•         Pricey family heirlooms;
•         Valuable musical instruments;
•         Vacation homes;
•         Investments or accounts that can be cashed in, such as stocks, bonds, bank accounts, savings,  stocks, bonds, etc.;
•         Vehicles exceeding one per family;
•         Vacation homes or second residences.

How Can a Chapter 13 Bankruptcy Attorney in California Help?

If you own valuable property that would not be exempt under Chapter 7 bankruptcy filing, your bankruptcy lawyer can advise whether Chapter 13 proceedings would be a viable alternative. Because the type and value of assets you possess make such a difference in choosing the right bankruptcy process, it is important to be upfront with your bankruptcy lawyer about your property.
Your bankruptcy attorney at the Law Office of Melanie Tavare can help you decide whether you would rather use the proceeds of the sale of your assets to pay your creditors and discharge your debts quickly, or whether keeping your property in the long-term is your priority.