Chapter 13 Bankruptcy – Individual Reorganization
Chapter 13 is designed for individuals with regular income and whose income exceeds the family median income level for the State of California. You may be eligible for Chapter 13 bankruptcy protection if your unsecured debt does not exceed $383,175 and your secured debt is less than $1,149,525. If you debt limits for either unsecured or secured debt exceeds the limits, Chapter 11 bankruptcy is an option.
The significant difference between a Chapter 13 and a Chapter 7 bankruptcy is that in a Chapter 13 bankruptcy you must file a Plan to repay your creditors all or part of the money that you owe them, using your future earnings. The key term use which governs the length and amount of the Plan is something the Bankruptcy Code calls “disposable income”. You may be asking yourself, “What disposable income?” Disposable income is determined a couple different ways, but generally, it is the difference between your income and allowed deductions according to the Internal Revenue Service. Our job is to maximize your allowed deductions and reduce your monthly payments as much as legally possible.
The Plan is useful in many ways. If you are behind on your mortgage, you can use the Plan to get caught up on your mortgage and avoid foreclosure of your home. You can use the Plan to pay off a vehicle, motor home or boat. Depending on your “disposable income”, the Plan will pay all or a portion of your unsecured debt saving you thousands of dollars in principle and interest.