Helping Clients in Mission Valley and throughout Southern California Reorganize Their Debt
Being unable to keep up with your bills can be extremely frustrating and stressful, especially when you still have considerable income. You may start receiving hostile calls from creditors or even threats of repossession or foreclosure.
As a San Diego Chapter 13 bankruptcy lawyer, I have over 12 years of experience helping Southern Californians get their lives back on track. I can help you reorganize your debt through Chapter 13 bankruptcy, which involves creating a sustainable repayment plan based on your current disposable income. Filing for bankruptcy can help you discharge qualifying unsecured debts and stop damaging collection actions, including foreclosure. I will work directly with you throughout the process and help you maximize the benefits of your filing.
Discuss your case with Harley A. Feinstein by calling (619) 304-0975 or contacting me online. Free initial consultations are available for consumer filings.
There are two major types of consumer bankruptcy: Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 bankruptcy is in some cases the preferable choice for individuals experiencing major financial difficulties, but Chapter 13 bankruptcy can also provide significant and powerful relief in certain situations.
A good way to consider what type of bankruptcy may be right for you involves completing the California Means Test. This involves assessing your current ability to repay creditors.
First, calculate your average income over the preceding 6 months. Compare that income to the current average median income for your household size in the state of California. If your income is less than the average median, you can (and probably should) file for Chapter 7 bankruptcy.
If your income exceeds the average median, you will next need to determine your current disposable income. This is the amount of money you have leftover each month after paying necessary expenses. If you have sufficiently high disposable income, you will likely need to file for Chapter 13 bankruptcy. Calculating an accurate disposable income can be challenging if you are not familiar with what you can safely deduct, but I can assess your situation and walk you through the Means Test.
If we together determine Chapter 13 bankruptcy is right for you, I can help you prepare your bankruptcy petition and all of the relevant documentation and paperwork. As soon as you file, the automatic stay will take effect. This powerful court order stops all creditor actions, meaning you will be protected from any imminent or ongoing wage garnishments, collection lawsuits, foreclosures, or repossessions. In many cases, this freeze will continue until your Chapter 13 bankruptcy case has concluded.
After filing for Chapter 13 bankruptcy, you will need to submit a repayment plan. This plan will reorganize all of your outstanding obligations into a single monthly payment. The amount of this payment will be based on your current disposable income – your current ability to pay – and not the extent of your debt. This plan will last between 3 and 5 years.
The bankruptcy court will need to approve your proposed repayment plan. Creditors may also attempt to object to your plan. As a San Diego Chapter 13 bankruptcy attorney, I am extremely familiar with how to create plans that pass muster with creditors and the California bankruptcy courts. I will work closely with you to develop a strategy that meets all bankruptcy requirements and maximizes relief.
All debts are not created equal in a Chapter 13 bankruptcy. Debts are generally divided into one of several categories, each with its own rules that your repayment plan must adhere to.
Your Chapter 13 bankruptcy plan must repay 100% of all administrative fees associated with the bankruptcy filing. This includes your filing fee, your trustee’s commission, and legal fees.
You must also pay 100% of “priority debts,” which include:
- Missed spousal support payments, including alimony and child support
- Compensation owed to employees
- Most tax debts
Most other debts are considered “secured” or unsecured.” Secured debts are “secured” by some sort of collateral property, like a home or vehicle. Thus, mortgages and car loans are considered secured debts.
If you wish to keep an underlying secured property in a Chapter 13 bankruptcy, you must pay 100% of arrears associated with that property. This means you do not need to pay off the entirety of your loan, but you will need to catch up on missed payments. For example, if your home was in danger of foreclosure and you used Chapter 13 bankruptcy to stop a public auction, you will need to cure your mortgage as part of your repayment plan if you wish to keep the property.
Unsecured debts refer to obligations that do not have any collateral, including credit card debt, medical bills, personal loans, and unpaid utility bills. You do not necessarily need to pay off these debts in a Chapter 13 bankruptcy. Your available disposable income must first go toward paying administrative fees, priority debts, and any secured debts where you wish to save the underlying property.
If additional disposable income is available after addressing these obligations, it must go toward satisfying unsecured debts. If no additional disposable income is available, however, these unsecured debts can potentially go unpaid. Upon completing your Chapter 13 reorganization plan, you will also generally be permitted to discharge – or eliminate – any remaining unsecured debts. This means that, depending on your situation, you may be able to redirect your disposable income to primarily pay priority and secured debts over the life of the plan.
Chapter 13 bankruptcy is not necessarily right for everyone, but it can facilitate incredible relief for many filers. As a San Diego Chapter 13 bankruptcy lawyer, I can assess your circumstances and determine whether this type of filing is right for you. In your initial consultation, I can review your finances and help you understand what types of obligations the process can help address and what types of debt you may be able to discharge. I am committed to helping Californians get the relief they need and will do everything possible to help you access the fresh start you deserve.