Bankruptcy
Chapter 13 Bankruptcy in San Francisco
Chapter 13 reorganises debt into a repayment plan approved by the court, generally over three or five years.
What Chapter 13 does
Chapter 13 does not write debt off at the outset. It restructures it into a single plan, approved by the court, under which you make one payment to a trustee over a period of years. At the end, remaining eligible balances are discharged.
As with Chapter 7, the automatic stay takes effect on filing and most collection activity must stop while the case proceeds.
It is often the right route in two situations: where someone is behind on a home or vehicle and wants to catch up rather than surrender it, and where income is too high to qualify for Chapter 7.
Homes, vehicles and secured debt
The feature that draws most people to Chapter 13 is what it can do with arrears. Rather than requiring a lump sum to bring a mortgage current, a plan can spread that catching-up across its life while ongoing payments continue.
Secured debt is treated differently from unsecured debt throughout, and the treatment available depends on the type of asset, when the debt was incurred and what the asset is worth. These are the details that determine whether a plan is workable.
What a plan has to pay
A plan must devote your projected disposable income to creditors for the applicable period, and it must pay unsecured creditors at least what they would have received under Chapter 7. Certain categories — support obligations and some taxes among them — generally have to be paid in full.
Beyond that, general unsecured debt is frequently paid at a fraction of its balance, with the remainder discharged when the plan is completed. Building a plan that is both confirmable and realistic to live on is most of the work.
Questions
Common questions
- How long does a Chapter 13 plan last?
- Plans generally run for three or five years, with the applicable period depending largely on household income relative to California figures. The discharge comes at the end, once the plan has been completed.
- Can Chapter 13 help if I am behind on my mortgage?
- It is one of the main reasons people choose it. A Chapter 13 plan can allow arrears to be brought current over the life of the plan while ongoing payments continue, which is not something Chapter 7 is designed to do.
- Do I have to repay everything I owe?
- Not usually. What a plan must pay depends on your disposable income, the kinds of debt involved, and what creditors would have received under Chapter 7. Some categories must be paid in full; general unsecured debt is frequently paid at a fraction, with the balance discharged on completion.
- What if my circumstances change during the plan?
- Plans can sometimes be modified where income changes materially. What matters is raising it promptly — a plan that quietly falls behind is a considerably harder problem than one that is addressed early.
Consultation
Talk to Susan about Chapter 13
Every matter begins with a conversation about what happened and what your options are. You will speak with Susan F. Reyes directly.