CHAPTER 13 BANKRUPTCY IN CALIFORNIA TO PROTECT YOUR ASSETS AND REBUILD YOUR FINANCES

Chapter 13 Bankruptcy in California to Protect Your Assets and Rebuild Your Finances

Chapter 13 Bankruptcy in California to Protect Your Assets and Rebuild Your Finances

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The U.S. Bankruptcy Code is a set of federal laws that govern the process by which individuals and businesses can seek relief from overwhelming debt through bankruptcy. It provides a legal framework for filing bankruptcy and outlines the various types of bankruptcy available, including Chapter 7 (liquidation), Chapter 11 (reorganization for businesses), and Chapter 13 (repayment plans for individuals). The code is designed to provide a fresh financial start for debtors while balancing the interests of creditors, ensuring that both parties are treated fairly under the law. 

 

Chapter 13 Bankruptcy under the U.S. Bankruptcy Code is a legal process that allows individuals with regular income to restructure their debts and create a manageable repayment plan, typically lasting three to five years. Unlike Chapter 7, where most unsecured debts may be discharged, Chapter 13 enables individuals to keep their property while repaying all or part of their debts over time. Chapter 13 bankruptcy California is often chosen by those who have fallen behind on mortgage or car payments but still wish to keep these assets.  

 

The U.S. Bankruptcy Code outlines the criteria for eligibility to file under Chapter 13, which generally requires that the debtor's unsecured debts must be below a certain threshold (approximately $465,275), and secured debts must not exceed a specified limit (about $1.39 million). If an individual’s debt exceeds these limits, they may not be eligible for Chapter 13 bankruptcy and may need to consider other options, such as Chapter 7 or Chapter 11. 

 

Chapter 13 bankruptcy California is designed to help people who are struggling with debt but want to keep their assets, such as their home or car, while reorganizing their finances.  

Eligibility for Chapter 13 

To qualify for Chapter 13 bankruptcy, the debtor must meet certain eligibility requirements. These include: 


  • Income Requirement: The debtor must have a steady income, whether from employment, self-employment, or another source.

  • Debt Limits: The debtor's unsecured debts (e.g., credit card balances) must be less than $465,275, and secured debts (e.g., mortgages, car loans) must be below $1.39 million. 

  • No Recent Bankruptcy Filings: The debtor cannot have dismissed a prior bankruptcy case within the last 180 days due to failure to appear or bad faith.


Once Chapter 13 bankruptcy is filed, the debtor works with an attorney to create a repayment plan, which is submitted to the bankruptcy court for approval. The plan typically lasts three to five years, depending on the debtor’s income and the amount of debt. One of the key benefits of Chapter 13 bankruptcy is the automatic stay, which provides immediate relief from creditors. Once the bankruptcy petition is filed, the automatic stay prevents creditors from pursuing collection actions such as: 

  • Foreclosure on a home

  • Repossession of vehicles

  • Wage garnishments

  • Lawsuits or harassment


 

Recovery Law Group has specialist Chapter 13 bankruptcy California attorneys who are well-versed in the intricacies of the U.S. Bankruptcy Code and can help clients determine if Chapter 13 is the right choice for their financial situation. They also handle communication with creditors and the bankruptcy trustee, helping to resolve any issues that may arise during the case. They also provide post-bankruptcy advice, guiding clients on how to rebuild their credit and manage their finances moving forward. 

 

 

 

 

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