Chapter 13 bankruptcy may be less well-known than Chapter 7, but it possesses many advantages to the consumer, and the Fishback Law Corp in Irvine takes the time to educate its Orange County bankruptcy clients on the pros and cons of each, so they can make an educated and informed decision about which type of bankruptcy is right for them. Our practice extends beyond Orange County as well and encompasses Los Angeles and the San Fernando Valley, Riverside, and all of Southern California.
What is Chapter 13?
A Chapter 13 adjustment of debts, also commonly known as a wage earner’s plan, allows you to consolidate your debt and develop a plan to pay off existing debt over a three or five-year plan, depending upon your current monthly income. With Chapter 13, you can develop a plan that fits your disposable income and ability to meet your financial obligations without undue stress and burden.
Creditors play a role in both Chapter 7 and Chapter 13 bankruptcy proceedings. In a Chapter 7, the creditors have an opportunity to examine the debtor’s finance and question the debtor about his or her ability to repay the debt. In Chapter 13, the creditors can take an active role in the development of the repayment plan and may object to the plan before it is confirmed by the bankruptcy court. Once the plan is approved, however, the creditors are bound to abide by its terms for the repayment of their debt.
This process has the advantage of bringing all the creditors together into one place and developing one plan, and one payment, that addresses them all at once. This procedure can be much more preferable than continuing to deal with creditor harassment from all angles or trying to negotiate a debt settlement with each creditor individually.
Why Chapter 13?
If you have already considered filing for Chapter 7, where you can have your debts eliminated, you may wonder what is attractive about a Chapter 13, where you still have to repay your debts. There are actually many reasons why you may want to consider Chapter 13. For one thing, it is easier to qualify for a Chapter 13. If you are working and have enough disposable income to put toward paying off your debt, you may not be eligible for Chapter 7. Also, Chapter 13 does not require you to sell off any assets, so if you have nonexempt assets that would be liquidated by the trustee in a Chapter 7, you do not have to worry about that in a 13. And the Chapter 13 process does in fact enable you to adjust and reduce some of your debts, and after the plan is completed, you can receive a discharge of any remaining debt. So you can derive some of the same benefits from Chapter 13 that you do from Chapter 7.
Experienced Orange County Chapter 13 Bankruptcy Lawyers
Chapter 13 doesn’t only protect your own personal assets from being seized and sold. If you had a friend or relative co-sign a loan that you default on, the creditor may go after the co-signer’s assets in an attempt to collect on the debt. Co-signers can receive court protection of their assets in a Chapter 13, which is in no doubt beneficial to your long-term relationship with the co-signer.
If you have a steady income and the ability to stick to a payment plan over the course of a few years to become debt-free, a Chapter 13 can give you the tools to make that happen and the breathing room to figure out a plan without the constant stress and worry of threats of foreclosure, repossessions, or creditor harassment. In Orange County or anywhere in Southern California, contact the Fishback Law Corp to find out if Chapter 13 is right for you.