Understanding Orange County Chapter 13 Bankruptcy

Chapter 13 bankruptcy offers more options for those who are seeking to protect their assets from liquidation, however, these options also have more requirements attached in terms of what must be done in order to qualify. In a typical Chapter 13 bankruptcy case, you must be able to pay off all monies owed on your priority and secured debts. Priority debts include such things as child support and back taxes. Additionally, you must pay off any monies owed on secured debts – the most common of these would be arrears on a mortgage or missed car payments.

Unlike Chapter 7 bankruptcy, which has requirements involving income, Chapter 13 bankruptcy qualifications are instead concerned with the amount of money you owe. In particular, you cannot owe more than $1,010,630 in secured debt and you cannot owe more than $336,900 in unsecured debt if you wish to qualify for Chapter 13 bankruptcy. Additionally, you must have a steady source of income in order to qualify for a Chapter 13 bankruptcy filing. This is to ensure that creditors will receive timely compensation throughout the life of your repayment plan.

If you are concerned about budgeting for your expenses and coming up with a reasonable payment plan, you may not need to worry. Another requirement for filing for Chapter 13 bankruptcy is the completion of a debt management/credit counseling class. While taking this required class, you will most likely develop your repayment plan and budget with the help of a financial counselor. The best advice for completing this type of plan is to be thorough – list all of your expenses, whether they are monthly, quarterly, or yearly, and be certain that they are included when it is time to draft your budget.

Another concern is the repayment plan itself. You must pay off not only priority and secured debts, but you may also have to pay all or a portion of your unsecured debts as well. The way Chapter 13 bankruptcy works in conjunction to unsecured debt is this – you must pay your unsecured creditors an amount that is equal or greater to what they would receive if you filed for Chapter 7 bankruptcy. This means that if your unsecured creditors wouldn’t receive any funds if your estate were liquidated under Chapter 7, then you do not have to include them on a Chapter 13 plan. If, however, your creditors would receive some compensation if your estate was liquidated, you must pay them at least the amount they would receive in that situation. This means that for some individuals, you may have to pay off a portion of unsecured debt in addition to the priority and secured debts.

Chapter 13 bankruptcy can be confusing due to the myriad of requirements involved and the planning necessary in order to ensure that you comply with each of those requirements. However, if you have legal representation in the form of an experienced, professional Orange County Bankruptcy Attorney, you will have a better understanding of the process, and peace of mind with regards to your case. Our exemplary team of Orange County Bankruptcy Law professionals is ready to assist you with your Chapter 13 case today. Contact us and we’ll arrange for a free initial case evaluation that will fully explain Chapter 13 bankruptcy and how it can benefit you in your current circumstances. Get the understanding you need and the peace of mind you deserve – contact one of our experts for your free Orange County Chapter 13 bankruptcy consultation today.