| Filing of a Chapter 13 Bankruptcy may be the answer | | | | mortgage on their home and are in peril of foreclosure |
| for those debtors who need time to pay off certain | | | | because they no longer can make payment on all their |
| debts and who have a steady income stream | | | | outstanding liens, may elect to file a Chapter 13 |
| sufficient to meet the standards of such a filing. If a | | | | Bankruptcy, if their home's value is less than or equal |
| debtor's average monthly income during the six | | | | to what they currently owe on their first mortgage. |
| months immediately preceding the filing for Bankruptcy | | | | Many attorneys are using Chapter 13 Bankruptcy as a |
| is higher than the median income for California | | | | vehicle for their clients to strip off these additional |
| residents, their attorney may be required to file on their | | | | mortgages into unsecured debts, which need not be |
| behalf for Chapter 13 Bankruptcy. The Bankruptcy | | | | completely repaid. |
| Means Test further necessitates that a debtor file for | | | | The strip off procedure will also lower the amount a |
| Chapter 13 Bankruptcy if his disposable income (i.e., | | | | debtor makes on his monthly mortgage payments. |
| actual income minus actual expenses) would allow for | | | | Moreover, current legislation adopted by the United |
| repayment of unsecured debts to his creditors over a | | | | States House of Representatives and presently |
| fixed period of time. | | | | pending before the United States Senate may vest |
| Chapter 13 Bankruptcy allows a debtor to repay his | | | | the Bankruptcy Judges with a discretionary power to |
| debts out of his income rather than by selling his | | | | alter the terms contained in the promissory note |
| property. Most lawyers agree that a debtor filing for | | | | securing the primary deed of trust on a debtor's real |
| Chapter 13 Bankruptcy need not give up his residence, | | | | property. This means that upon the request by a |
| even if he has nonexempt equity in the home, and | | | | debtor's attorney, the Bankruptcy Judge presiding over |
| may keep all other property in his possession | | | | a Chapter 13 Bankruptcy case may order the principal |
| regardless of its actual value. However, the debtor will | | | | balance on the primary loan reduced, making the |
| need to repay his unsecured creditors at least the | | | | debtor's monthly payments on the mortgage more |
| value of his nonexempt property over the life of the | | | | affordable. |
| Chapter 13 repayment plan. Chapter 13 Bankruptcy | | | | Chapter 13 Bankruptcy will also allow a debtor facing |
| also permits the debtor to spread out his payments of | | | | repossession of his car to reduce his monthly |
| missed installments, taxes, and late charge fees on his | | | | payments on the vehicle if the car's current market |
| mortgage. And, if the lender started foreclosure | | | | value is less than what the debtor owes on it. A |
| proceedings on a debtor's home, Chapter 13 | | | | debtor may take benefit of the Chapter 13 |
| Bankruptcy can stop them as long as the home was | | | | Bankruptcy's "cramdown" alternative by repaying the |
| not yet auctioned off by the lender. | | | | creditor the car's replacement value in equal payments |
| Although Chapter 7 Bankruptcy is simpler, and for the | | | | over the life of the Chapter 13 Bankruptcy plan. This |
| most part, does not require repayment of unsecured | | | | option will be available to most debtors who purchased |
| debts, there are different reasons why debtors who | | | | their vehicles more than thirty months prior to filing for |
| qualify for both types of Bankruptcy have their | | | | Bankruptcy. |
| attorneys elect Chapter 13 Bankruptcy instead of | | | | There are other benefits a debtor derives from filing |
| Chapter 7 Bankruptcy. Chapter 13 Bankruptcy is | | | | for a Chapter 13 Bankruptcy. For example, if a person |
| suitable for debtors with sufficient, reliable income | | | | has a co-debtor such as a co-signer who owes |
| which can fund their plan for a period of 3 to 5 years. | | | | money with the debtor, a Chapter 13 Bankruptcy will |
| Using Chapter 13 Bankruptcy, a debtor facing | | | | protect the rights of such a co-debtor as long as the |
| foreclosure on his home can make up his missed | | | | case is pending. If a debtor files under Chapter 7 |
| mortgage payments over time by proposing a feasible | | | | Bankruptcy, even though his debts might be |
| repayment plan that includes all the missed payments. | | | | discharged, his co-debtor will still be liable on the debt |
| As long as the debtor stays current on his future | | | | with all the flowing consequences, and the co-debtor |
| mortgage payments during the life of his Chapter 13 | | | | therefore may need their own attorney. In addition, |
| Bankruptcy plan, he will be able to reinstate his original | | | | debts such as tax obligations, student loans, and back |
| mortgage contract with the lender. This option is not | | | | child and spousal support are considered |
| available for debtors who file under Chapter 7 | | | | non-dischargeable debts for the most part, and are not |
| Bankruptcy. An experienced bankruptcy attorney will | | | | eliminated in either Chapter 7 or Chapter 13 |
| be able to determine if and under what parameters a | | | | Bankruptcy. However, such debts can be paid off |
| debtor qualifies for either plan. | | | | over time in a Chapter 13 Bankruptcy plan. |
| In addition, debtors who are facing more than one | | | | |