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Chapter 7

Chapter 13


National Association of Consumer Bankruptcy Attorneys

We are a federally designated Debt Relief Agency under the United States Bankruptcy Laws. We assist people with finding solutions to their debt problems, including, where appropriate, assisting with the filing of petitions for relief under the Bankruptcy Code.

Bankruptcy – Chapter 13 – Wage Earner Plans

Not everyone will qualify for a Chapter 7 Liquidation and sometimes a Chapter 13 Bankruptcy is the better solution.Your debts will not be completely eliminated under a Chapter 13 Bankruptcy but rather you will be allowed to repay them over a 3 to 5 year period (usually at significantly reduced rates and amounts). Any remaining balance unpaid at the end of your plan period may be discharged – or erased as in a Chapter 7.

House in HandsAssuming that you have not had a prior dismissed bankruptcy case within the last year, the Court prohibits your creditors from trying to collect any money or recover property from you during the time you are in your Chapter 13 plan.

Under a Chapter 13, a calculation will be made and agreed upon by you, the Bankruptcy Trustee, and the Court, requiring you to devote essentially all of your disposable income (after necessary living expenses are taken into account) towards paying your debts. You will make monthly payments to the Bankruptcy Trustee who will then distribute your plan payments to your creditors. The money collected by the Chapter 13 Trustee is disbursed to your creditors according to your Chapter 13 Plan with some claims to secured creditors paid immediately and all others paid according to your Plan after it is confirmed by the Court. Your first Plan payment will be due within 30 days from the filing of your case.

One of the greatest advantages in a Chapter 13 comes with the ability in some cases to avoid junior liens on your real property. What this means is that if the balance of the first mortgage on your property is more than what the property is worth today, any second mortgages or other liens against the property can be “stripped” and treated as unsecured debt in the bankruptcy. At the conclusion of your Chapter 13 plan, any remaining balances on these junior liens are discharged.

Chapter 13 Bankruptcies are more time consuming than a Chapter 7 and accordingly will be more expensive in terms of actual cost to you. For additional information on fees and costs for filing a Chapter 13 bankruptcy, please visit the Free Articles section of this website.

Foreclosure SignChapter 13 and Stopping Foreclosure

Chapter 13 is a powerful means towards stopping a pending foreclosure on your home. In most cases, as soon as your Chapter 13 Bankruptcy case is filed, you mortgage company must cease all collection activity on your loan – including foreclosure proceedings and trustee sales. During the Bankruptcy you can propose a plan to pay the arrears on your mortgage over 3 – 5 years rather than as a lump sum and often the proceeding can provide enough relief so that you can afford to stay in your home.

When Will You Have to Appear In a Chapter 13 Case

Appearing in CourtIn the United States Bankruptcy Court for the Southern District of California, you will have to appear for at least one hearing which is commonly referred to as the “First Meeting of Creditors” or “341 Hearing.” This meeting is conducted by the Chapter 13 Trustee assigned to your case. The Bankruptcy Judge will not be present at this meeting. Typically this hearing will be scheduled within 30-60 days after your case is filed and your appearance is mandatory. Failure to appear at this meeting will result in the automatic dismissal of your bankruptcy case. Confirmation hearings are handled by your attorney and the Chapter 13 Trustee and you typically are not required to be present. In rare cases, you may be asked to appear at additional hearings if circumstances regarding your case change but you will receive advance notice of any such requirement by the Court as well as through your attorney’s office.

To determine if you qualify for debt relief under Chapter 13 of the Bankruptcy code, please contact Kyllander Law for a free case evaluation.

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