"Repayment Plan" - Chapter 13

Chapter 13 is typically referred to as reorganization and allows a debtor to restructure their debts and participate in a payment plan to their creditors that is administered by the bankruptcy court. In a Chapter 13, a debtor proposes a payment plan to the court that allows their creditors to be paid back a portion of the debt over either a 3 or 5 year period. Usually, a debtor who does not qualify for Chapter 7 bankruptcy will qualify for Chapter 13. People with some disposable income at the end of every month, but not enough to make sufficient payments to all their creditors, are normally good candidates for Chapter 13 bankruptcy. When contacting an Orange County bankruptcy attorney you will discuss your financial situation with the attorney. Chapter 13 bankruptcy allows a debtor to stop foreclosure and cure delinquent payments on real property. Chapter 13 bankruptcy also allows a debtor to reschedule certain secured debt payments over a 3 or 5 year period, thereby reducing monthly payments to such secured creditors.

Lien Stripping

Liens can be stripped off of the debtor's assets in a Chapter 13. Lien stripping may be possible when there is not enough equity in the asset after deducting senior liens from the property's current market value or where a lien exceeds the value of the debtor's property. In other words, if you own a home with a 1st and 2nd mortgage and the home is worth less than you owe on the 1st; you can get rid of the 2nd and any liability that goes along with it.

Also, in a Chapter 13, you may be able to get rid of non-consensual liens that have attached to your home. So, for example, if your creditor sued you, obtained a judgment and later recorded the judgment against your home; you still may be able to avoid this non-consensual lien in a Chapter 13.

You may be able to discharge your entire second mortgage. Call us now at 714-731-7595 to find out how.

The Chapter 13 Timeline

In most cases, you can expect to earn a discharge of your debts within 3-5 years from the date your action is filed in the federal bankruptcy court.

1. Provide Your Financial Information
You will need to provide and go over all of the necessary financial information and documents in preparation to file bankruptcy. The most important of these documents will be any statements showing all of your income for the past six months.

2. Credit Counseling
Prior to filing your bankruptcy case, it is necessary to obtain a certificate showing that you've completed the required credit counseling service. To prevent any delays, credit counseling should be started immediately after providing paperwork to your attorney.

3. Bankruptcy Petition is Prepared
Your petition will be completed after all requested documentation is received by our office.

4. Sign/File the Bankruptcy Petition
Your case officially begins on the day you file it with the court. This is the day that the ‘automatic stay' (temporary injunction) goes into effect. It prevents ALL of your creditors from contacting you, harassing you or dunning you for payment in any way.

5. Begin Making Scheduled Payments
Once the petition is filed with the bankruptcy court, you must begin making scheduled monthly payments as described in your petition.

6. Bankruptcy Court Hearings
We will attend the 2 required hearing at the local bankruptcy court. The first hearing generally occurs within 30 days after the petition is filed. We will be present with you at this meeting. You will be required to bring your social security card and a photo ID. The second meeting is the confirmation hearing. We will be attending this meeting with you as well.

7. Repayment Period
Your repayment plan will last between three and five years, and once you near completion, you will need to complete an educational course required by bankruptcy law. Once completed, a certificate will be sent to the bankruptcy trustee.

8. Bankruptcy Discharge
You can generally expect to be discharged upon the completion of your repayment period.

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