Chapter 13

In cases where a Chapter 7 bankruptcy is not possible or is not the best option, Los Angeles Bankruptcy Attorney Sina Maghsoudi helps Southern California consumers through a Chapter 13 adjustment of debts, which can help individuals get out from under a mountain of debt and back on their feet.

What Is Chapter 13?

Also known as a “wage earner’s plan,” Chapter 13 involves the creation of a payment plan to repay a fraction of the debts over a three-year or five-year period. Your creditors have an opportunity to participate in the development of the plan and can object to the plan’s confirmation. Once approved, creditors are bound to the plan and must accept the amount in the plan and satisfaction for the debt. Upon completion of the plan, the debtor may receive a discharge of debts provided for by the plan.

Advantages Over Chapter 7

While Chapter 13 generally requires a manageable monthly payment unlike Chapter 7, it also has many advantages. It is easier to qualify for a Chapter 13 than Chapter 7, and a Chapter 13 will only stay on your credit report for seven years, as opposed to ten years for a Chapter 7. Perhaps most importantly, if you are behind on your home mortgage payments and facing foreclosure, Chapter 13 allows you to catch up those late or missing payments as part of the plan. As long as you stay current going forward, Chapter 13 can save your home from foreclosure.

Like Chapter 7, filing a Chapter 13 invokes the automatic stay, meaning that your creditors must stop all attempts at debt collection. Even if you qualify for Chapter 7, Chapter 13 may be the better option if you have a steady paycheck and are able to stick to a payment plan for a few years, and especially if you have certain assets like a home which you want to retain.

Which is Right For You?

Every situation is unique, which is why there are many different options available for debt relief, including negotiating a loan modification. At The Los Angeles Bankruptcy Firm, we will help you find the solution that is right for you. Call today for a free consultation.