Chapter 13

California Chapter 13 Bankruptcy: Repaying Debts

Chapter 13 bankruptcy is for individuals and married couples that are able to pay off a percentage or all of their debt over a 3 to 5 year period.

When you file your Chapter 13 bankruptcy petition you will also file your Chapter 13 plan. This Chapter 13 plan is your written proposal for repayment to your creditors over then next 36 to 60 months. This Chapter 13 plan must be approved and made an order of the Bankruptcy Court.

Whether your Chapter 13 lasts for 3 years or 5 year depends whether your current monthly income is above or below the median income for the state of California.

All your monthly disposable income (as determined by the bankruptcy laws) must be paid to your creditors.

After you file your Chapter 13 bankruptcy your creditors must immediately stop any efforts to collect from you. That means no lawsuits, no garnishments, no auto repossessions, no tax liens, no nothing. As long as you continue making your monthly court ordered chapter 13 payment your creditors must leave you alone.

Additionally, if you have co-signers on some debt, they are also protected by the automatic stay. This is an important feature of the California Chapter 13 because many debtors have family members that have signed loans for them.

Think of a Chapter 13 as a court enforced debt management plan. This means that Chapter 13 allows you to deal with your creditors on your terms rather than them dictating terms to you.

Here are the most common reasons why people file a California Chapter 13:

  • Stop foreclosure on their home
  • Get rid of a second mortgage on the residence
  • Stop auto repossession
  • The possibility of reducing the balance owed on your debts
  • Protect a co-signer
  • Need some breathing room to pay off past debts
  • They have debts such as student loans or past due taxes that would not be wiped out in Chapter 7
  • They don't qualify for Chapter 7 protection
  • Keep all your property


If you want to read a more detailed explanation of California Chapter 13 Bankruptcy and what it can do for you, click here.



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