Finding yourself in a stressful financial situation can be difficult. The steps you should take to resolve your troubles are not always clear, and there are often many questions regarding the potential repercussions of choosing one strategy over another. At the Bereliani Law Firm, Los Angeles Chapter 13 bankruptcy lawyer Sanaz Sarah Bereliani has helped many people throughout Southern California weigh the options available to them. There are many different types of bankruptcy proceedings and specific procedural rules that must be followed in court. We guide our clients through every step of the process and help them protect their assets as much as possible.
Advantages of Using a Repayment Plan Under Chapter 13There are three different types of bankruptcy proceedings: Chapter 7, Chapter 11, and Chapter 13. A Chapter 13 bankruptcy is unique because it offers debtors an opportunity to maintain possession of their assets while developing a repayment plan. For this reason, many people refer to a Chapter 13 proceeding as a reorganization bankruptcy. In a Chapter 7 or Chapter 11 proceeding, by contrast, the debtor turns over possession of his or her assets to the bankruptcy court’s appointed trustee, who then sells certain assets in order to satisfy outstanding debts. Chapter 7 is available only to individuals who can pass a “means test,” while Chapter 13 is generally the process used by people who have somewhat more income and thus do not qualify for Chapter 7.
A debtor trying to use Chapter 13 would need to prove to the court that his or her income is enough to cover the monthly payments established through the repayment plan. In most cases, the repayment plan lasts for three to five years.
One of the central advantages that Chapter 13 may offer is the opportunity to save your home from foreclosure and your car from repossession. This is because, unlike in Chapter 7, you can keep an asset as long as you develop an adequate repayment plan and stick to it. For example, you can potentially stop foreclosure on your home by keeping up with your future mortgage payments while incorporating your delinquent payments into your debt repayment plan. If you keep up with paying that arrearage in set installments during the course of your Chapter 13 proceeding, you likely would be able to keep your home. A Chapter 13 bankruptcy attorney can advise Los Angeles residents on whether this may be possible in their situation.
Sometimes people have more than one mortgage on a property. Nevertheless, you could potentially be able to avoid foreclosure through a process known as lien stripping if the value of your first mortgage is greater than the value of your home. When this happens, the second and third mortgages may be reclassified from secured debts into unsecured debts, which would allow them to be discharged upon the completion of the repayment plan.
Depending on your situation, there may be additional doors that Chapter 13 opens for you. For example, you can potentially engage in debt negotiations with your creditors. There are some debts that you may be required to pay in full, including certain tax obligations and unpaid employee wages, but there are other debts that you can potentially try to work down so that they are more manageable for you. Additionally, a Chapter 13 plan provides debtors with the ability to eliminate equalization payments owed through divorce, and to force student loan companies and the IRS into a payment plan if these entities are not working with the debtor.
Discuss Reorganizing Your Finances with a Chapter 13 Bankruptcy Lawyer in Los AngelesIf you or someone you know is considering filing for bankruptcy under Chapter 13 or Chapter 7 in Los Angeles or the surrounding areas, attorney Sanaz Sarah Bereliani can help. The Bereliani Law Firm has counseled numerous debtors in communities across Southern California, ranging from Woodland Hills and Santa Barbara to Lancaster and Orange County. We offer a free consultation with a Los Angeles Chapter 13 bankruptcy attorney to help you determine which bankruptcy proceeding may be right for you and address any preliminary concerns you may have. Call us at (310) 882-5482 or contact us online to set up an appointment.