The number 13 in Chapter 13 bankruptcy may seem like a bad harbinger, but don't be scared off; Chapter 13 bankruptcy is there to help you keep your property while paying off debts over time. Importantly, Chapter 13 is distinct from other types of bankruptcy (all organized into "chapters"). For individuals seeking to liquidate all but non-exempt property and use the proceeds to pay creditors, Chapter 7 is a sensible option. For a business seeking to reorganize and remain in business by crafting a new payment plan and timeline, Chapter 11 may be prudent. The purpose of this article is to explain the basics of Chapter 13 bankruptcy. In choosing the chapter that is right for you, whether as an individual or business, consult with an experienced San Jose bankruptcy law attorney.
When you file for a bankruptcy in California, you may exempt, or protect, some of your property from creditors. In a Chapter 7 bankruptcy, you are allowed to keep this property. In a Chapter 13 bankruptcy, exempt property will not be counted towards the value of your assets, which ultimately reduces your monthly payments to creditors.
Deciding when to file for bankruptcy is a stressful decision for anyone to make. But, even after deciding what type of bankruptcy to file, you have to determine if you qualify for the type you so desire. Most people opt for chapter 7 bankruptcy because it discharges unsecured debt, unlike chapter 13, which restructures your debt but requires the debtor to still make repayments
If you have incurred a substantial amount of unsecured debt related to credit cards and medical bills, Chapter 13 bankruptcy might be a perfect solution for you. Chapter 13 bankruptcy is only available to you so long as you are petitioning as an individual, or operate a self-employed, unincorporated business. Additionally, in order to qualify, your unsecured debts must not exceed $383,175 and your secured debts, such as home mortgages and automobile loans, must be less than $1,149,525.
Not all bankruptcy cases are the same. There are several factors involved when beginning the process. An attorney will evaluate information including your personal income, assets, ownership of property, and debt obligations. Based on your individual situation, there will be a recommendation and plan for how to proceed.