You may be worried that going through bankruptcy will require the sale of all your assets. Though Chapter 7 bankruptcy does require the sale of some assets, Chapter 13 presents a less harsh alternative. In this program, you may seek debt relief while making regular payments according to a court-approved plan.
A Los Angeles Chapter 13 bankruptcy lawyer could help you to determine if this option is right for you. If so, a dedicated attorney could help you gather the necessary documentation and oversee the debt relief process.
When is a Chapter 13 Bankruptcy Appropriate?
Not every debtor will qualify for this Chapter 13 bankruptcy protection. Only individuals, couples, and sole proprietors can file under this chapter. Additionally, only those who earn an income may apply for this form of bankruptcy. The court will demand proof of the petitioner’s income in the initial filing.
The second qualifying factor for Chapter 13 protection is the amount of debt that the petitioner carries. According to 11 United States Code § 109, these maximum debt levels change over time to correspond to inflation rates.
As of 2021, petitioners cannot carry more than $419,275 in unsecured debt or $1,257,850 in secured debt. Parties carrying more than this amount of debt may need to pursue bankruptcy protection under a different plan. A local bankruptcy attorney could help parties to determine their eligibility for Chapter 13.
Navigating the Chapter 13 Bankruptcy Process in Los Angeles
Choosing to pursue a Chapter 13 bankruptcy is only the first step toward debt relief. To initiate the process, debtors must submit a significant amount of information to the court.
Gathering Financial Data
In every case, the bankruptcy court requests detailed financial data. This information helps the court determine the amount of disposable income the petitioner has to calculate their monthly payment. This data may include paystubs, a list of current debts, a list of assets, and profit/loss statements.
Completing an Approved Credit Counseling Course
Individuals and couples will also need to complete an approved credit counseling course. These courses take place entirely online in two sessions. At the end of the course, the credit agency will issue a certificate of completion that the petitioners must attach to their bankruptcy petition.
The Automatic Stay
Once the court receives a valid petition, it will issue an automatic stay. This prevents any current collection efforts from moving forward and prohibits the initiation of any new efforts.
Following the Repayment Plan
Once the automatic stay is in effect, the court will appoint a trustee to formulate a payment plan. This plan forms the core of the Chapter 13 process. Petitioners will make monthly payments to the trustee for a set period of time, usually between three and five years.
Once this term ends, the court will discharge the remainder of the debt. It may be beneficial to speak with a lawyer in Los Angeles before beginning the Chapter 13 bankruptcy process.
Let a Los Angeles Chapter 13 Bankruptcy Attorney Help You
The bankruptcy process can grant both immediate and permanent debt relief. However, this process is complex and requires significant dedication and attention to detail.
A Los Angeles Chapter 13 bankruptcy lawyer could provide essential guidance during this time in your life. Our firm could help you gather vital documents and submit a comprehensive application to the bankruptcy court on your behalf. Contact our office today to get started with a consultation.