Chapter 13 Bankruptcy: Your Path to Financial Freedom in Northern California
Chapter 13 bankruptcy is a powerful legal tool designed to provide debt relief and offer individuals a fresh start. At Gale, Angelo, Johnson & Patrick P.C., we are your trusted Chapter 13 bankruptcy attorneys serving Northern California, including Sacramento, Roseville, Rocklin, Santa Rosa, San Francisco, Oakland, and San Jose and more. This guide will explore Chapter 13 bankruptcy, its benefits, the process involved, and how our experienced bankruptcy attorneys can assist you in navigating this complex journey to financial recovery.
Understanding Chapter 13 Bankruptcy
Chapter 13 bankruptcy can be a lifeline for individuals burdened by overwhelming debt who either can’t or may not want to file a chapter 7. This type of bankruptcy empowers debtors to establish a structured repayment plan spanning 3 to 5 years. What sets Chapter 13 apart from other bankruptcy chapters are the opportunities it provides for debtors to regain control of their financial future while streamlining debt payments. Let’s delve deeper into some of the key features of Chapter 13 bankruptcy.
The Chapter 13 Filing Process
Embarking on a Chapter 13 journey begins with filing a Bankruptcy Petition and the requisite paperwork with the Bankruptcy Court. This paperwork includes a comprehensive schedule of your creditors, a summary of your assets, and your current budget. A pivotal aspect of Chapter 13 is the creation of a Chapter 13 Plan, which outlines a strategic payment plan for debtors to repay creditors over time.
Approximately 30 to 45 days after filing your petition, you’ll attend the Meeting of Creditors. During this meeting, a court-appointed trustee will review your case with you and confirm the accuracy of your bankruptcy paperwork. Creditors may also be present to ask questions, though this is very rare. Typically, the trustee concludes the meeting during this session, sparing you from attending further meetings. Throughout this phase, it’s crucial to adhere to your repayment plan and make consistent monthly payments to the trustee.
Once the Meeting of Creditors is concluded, the next step is to seek approval from the Bankruptcy Judge to confirm your plan. The requirements for confirming a chapter 13 plan are outlined in 11 U.S.C. § 1325. In the event that the trustee or creditors raise objections, both parties will have the opportunity to present their arguments to the Judge. Once the plan gains the Judge’s approval, you’ll continue making payments until the specified period (3 to 5 years) concludes, at which point you can request the Court to discharge your case under 11 U.S.C. § 1328.
The Chapter 13 Repayment Plan
The Chapter 13 Repayment Plan is a meticulously crafted document that outlines each payment you must make to the chapter 13 trustee and to your creditors over the course of 3 to 5 years. According to 11 U.S.C. § 1322(d), this plan must run for five years unless your current monthly income falls below the state median, in which case a three-year plan may be enacted.
Here’s a breakdown of some general categories involved in a Chapter 13 case in the Northern and Eastern Districts of California, which includes areas like Sacramento, Roseville, Rocklin, and Santa Rosa, along with the corresponding payment requirements:
Priority debts, such as tax debts and unpaid child/spousal support, must be paid in full amount listed in the plan. For example, if you owe $4,000 to the Internal Revenue Service due to unpaid taxes, your Chapter 13 plan will require you to pay the full $4,000. Since these types of debts are not dischargeable, this ensures that crucial debts are addressed and resolved during the chapter 13 case.
Eliminating Second Mortgages
One of the remarkable features of Chapter 13 bankruptcy is the ability to eliminate second mortgages entirely in some situations. If your house is underwater, meaning your home is worth less than the amount due on your first mortgage, this means that as part of a Chapter 13 you can bid farewell to your second mortgage without the looming threat of future payments. This can significantly reduce your financial burden and help you secure your primary residence.
Halting Foreclosure Proceedings
If you’re facing the ominous prospect of foreclosure, Chapter 13 comes to your rescue. By filing for Chapter 13, you can effectively put a halt to any ongoing foreclosure proceedings. This grants you valuable time to recover from your financial hardships, explore repayment options, and potentially save your home from foreclosure.
If you have fallen behind on your mortgage payments, Chapter 13 mandates paying 100% of the arrears amount through the chapter 13 plan. In some instances you may also have to make your mortgage payments through the plan as well. For instance, if you owe $10,000 in back payments on your first mortgage and intend to keep your property, your plan will require you to pay the full $10,000 during its duration. This provision helps you catch up on missed payments and protect your home from foreclosure.
Most Car loans will be paid through the chapter 13 plan in full. By doing so, you can often times reduce your total monthly expenses, decrease the interest rate paid on your loan, and potentially decrease the total amount of principal that has to be paid back. If you have been making car payments for a little under 3 years and you still owe more on your car than the car is worth, you can reduce the amount that has to be paid down to the value of the car. For example, if you owe $12,000 on your car loan but the car is only worth $7,000.00, you would only have to pay back the $7,000 with interest rather than the full balance.
One of the benefits of chapter 13 is that you do not have to pay all of your attorney’s fees up front in advance of the case filing. Instead, most attorney’s fees are paid as part of your chapter 13 plan. This ensures that legal obligations are met and that essential services are compensated.
General Unsecured Creditors
The repayment for general unsecured creditors varies from 0% to 100% of the claim amount listed in the plan. General unsecured creditors include credit card companies, medical bill providers, personal loan lenders, payday loan companies, and balances from car repossessions. The repayment amount hinges on your disposable income and the total value of non-exempt assets.
Benefits of Chapter 13 Bankruptcy
Chapter 13 offers a multitude of benefits that can significantly improve your financial outlook. Here are some key advantages of choosing Chapter 13 bankruptcy:
- Saving Your Home: By filing for Chapter 13 bankruptcy, you gain the opportunity to prevent home foreclosure. The Automatic Stay, pursuant to 11 U.S.C. § 362, comes into play upon filing your initial bankruptcy petition. This Stay acts as an injunction, prohibiting creditors from collecting payments or enforcing liens, ultimately safeguarding your property from foreclosure. To halt foreclosure, you must repay both delinquent and ongoing mortgage payments under your Chapter 13 Plan.
- Stripping a Junior Mortgage: Stripping a junior mortgage allows you to eliminate a second mortgage on your home and reclassify the debt as a general unsecured debt. To achieve this, you must file a motion with the Bankruptcy Court as per 11 U.S.C. § 506 to value your property. If the Court concurs with your valuation, the junior lien can be treated as unsecured and “stripped” away. Once your bankruptcy is completed, the creditor must remove the lien from your property. This can significantly reduce your long-term financial burden.
- Saving Your Vehicle: Chapter 13 provides the flexibility to modify your vehicle plan and make payments through the Chapter 13 Plan. This extended repayment period, spanning 3 to 5 years, results in lower monthly payments and potential reductions in interest rates. This provision ensures that you can keep your vehicle while working towards financial stability.
- Paying Back Taxes: In most cases, tax debts are non-dischargeable in bankruptcy. However, Chapter 13 allows you to include priority taxes in your repayment plan, enabling you to continue making payments throughout the plan’s duration. This can help you manage your tax obligations and avoid aggressive collection actions by tax authorities.
- Continuing Your Business: Unlike Chapter 7 Bankruptcy, which often requires the liquidation of assets, Chapter 13 allows you to keep your business operational and maintain control over its operations. This can be crucial for individuals with small businesses who wish to reorganize their finances while keeping their business running.
- Reducing Secured Claims: Chapter 13 empowers debtors to reduce secured claims, particularly on vehicles and personal property. This reduction is based on the fair market retail value, with the remaining portion classified as general unsecured debt, which you won’t be required to pay. This provision can significantly lower your overall debt burden and make it more manageable.
- Avoiding Judgment Liens: Chapter 13 filings enable debtors to avoid judgment liens. A judgment lien occurs when a creditor wins a lawsuit against you and attaches the lien to your property. To prevent this, you can request the Court to enter an order preventing the lien, per 11 U.S.C. 522(f). This helps protect your assets and maintain control over your property.
Gale, Angelo, Johnson & Patrick P.C.: Your Trusted Chapter 13 Bankruptcy Attorney in Northern California
Navigating Chapter 13 Bankruptcy is a complex and intricate process that requires expert guidance. At Gale, Angelo, Johnson & Patrick P.C., we are committed to helping individuals in Northern California, including Sacramento, Roseville, Rocklin, Santa Rosa, and beyond, successfully navigate the Chapter 13 bankruptcy process and achieve a fresh financial start.
Our experienced Chapter 13 bankruptcy attorneys has been assisting clients through the intricacies of Chapter 13 since 2010. With his extensive knowledge of the Bankruptcy Code and the Local Rules of the Bankruptcy Court, Mr. Bains is well-equipped to provide you with the personalized attention and expertise you deserve.
Don’t delay any longer in taking control of your financial future. Contact our office at 916-290-7778 to schedule your free consultation with a Sacramento Chapter 13 Bankruptcy Lawyer who specializes in helping individuals like you regain their financial stability. When you choose us, you’ll deal directly with Mr. Bains throughout the entire Chapter 13 process, ensuring that you receive the guidance and support needed to make informed decisions about your financial future.
Serving Clients Across Sacramento, the Bay area and Beyond
We take pride in extending our services to clients in various areas of Northern California, including Placer, Sacramento, El Dorado, Yolo, San Francisco, Contra Costa, Santa Clara, and Alameda counties.
Areas of Specialization
At Gale, Angelo, Johnson & Patrick P.C., we excel in various aspects of bankruptcy and debt relief, including:
- Automatic Stay: The Automatic Stay, initiated upon filing for bankruptcy, immediately stops creditors from pursuing debt collection actions, including foreclosure, wage garnishment, and more. We can help you understand how this provision can provide you with immediate relief from creditor harassment.
- Bank Levies: If your bank account has been levied by a creditor, we can assist you in understanding your rights and options. Bank levies can be challenging, but we can help you navigate the process and work towards a resolution.
- Bankruptcy & Divorce: Divorce and bankruptcy can often intersect, leading to complex legal and financial challenges. Our experienced attorneys can guide you through the complexities of navigating both divorce and bankruptcy simultaneously.
- Bankruptcy Exemptions: Understanding bankruptcy exemptions is crucial in protecting your assets during the bankruptcy process. We can help you identify applicable exemptions and safeguard your property.
- Bankruptcy Means Test: The means test is a critical component in determining eligibility for Chapter 7 bankruptcy. We can evaluate your financial situation and help you determine the most suitable bankruptcy chapter for your needs.
- Chapter 7: If Chapter 7 bankruptcy is a better fit for your circumstances, we can provide expert guidance on how to proceed. Chapter 7 typically involves the liquidation of non-exempt assets to pay off creditors, and we can help you navigate this process effectively.
- Debt Settlement: Debt settlement is an alternative to bankruptcy that involves negotiating with creditors to reduce the amount you owe. We can assess whether debt settlement is a viable option for you and guide you through the negotiation process.
- Emergency Bankruptcy: In urgent situations where immediate relief is needed, we can assist you in filing for emergency bankruptcy. This can help you stop imminent creditor actions and gain valuable time to consider your long-term financial strategy.
- Home Foreclosure: If you’re facing the threat of home foreclosure, our attorneys can help you explore options to prevent it, including Chapter 13 bankruptcy and loan modification.
- Lawsuits: Legal actions and lawsuits from creditors can be daunting. We can provide you with legal representation and guidance to address creditor lawsuits and defend your rights.
- Motion Work in Bankruptcy: Various motions may arise during bankruptcy proceedings. We can handle motion work effectively and ensure that your interests are protected.
- Preparing for Bankruptcy: Proper preparation is key to a successful bankruptcy filing. We can assist you in gathering the necessary documentation and information needed to file for bankruptcy.
- Second Mortgage: If you have a second mortgage and are struggling with debt, we can help you explore options for dealing with it, including lien stripping in Chapter 13 bankruptcy.
- Taxes in Bankruptcy: Tax debts can be challenging to address, but Chapter 13 bankruptcy allows you to include certain tax debts in your repayment plan. We can help you understand how this provision applies to your situation.
- Vehicle Repossession: If your vehicle is at risk of repossession due to unpaid loans, Chapter 13 bankruptcy can provide a way to prevent repossession and retain your vehicle.
- Wage Garnishment: Wage garnishment can severely impact your financial stability. Our attorneys can help you stop wage garnishment and work towards a resolution.
- 341 Hearing: The 341 Meeting of Creditors is a critical part of the bankruptcy process. We can prepare you for this meeting and ensure that you are well-informed and confident when attending.
Schedule Your Free Consultation
At Gale, Angelo, Johnson & Patrick P.C., we prioritize direct client-to-attorney contact throughout your bankruptcy journey. When you reach out to us, you will speak directly with our local Sacramento Chapter 13 Bankruptcy Lawyers, from the initial consultation to the final discharge in your case. We understand that your financial situation is unique, and we are committed to providing tailored solutions to meet your specific needs.
Don’t wait any longer; call Sacramento Chapter 13 Bankruptcy Lawyer now at 916-290-7778 to schedule your free in-person or phone consultation with Attorney Scott Johnson or Joseph Angelo today. Let us help you embark on your path to a fresh financial start. We are here to support you every step of the way, providing expert legal advice and guidance to help you regain control of your financial future. Contact us today to take the first step toward a brighter financial tomorrow.