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Filing Chapter 13 Bankruptcy in San Diego

by Paul Staley on August 30, 2016

Filing Chapter 13

Chapter 13 Bankruptcy in San Diego

Chapter 13 bankruptcy filing a type of bankruptcy that provides you protection from creditors while the outstanding debt is settled through a repayment plan. It can be used to halt  home foreclosure. Filing Chapter 13 in San Diego  is sometimes called the home-saver bankruptcy.  Depending on what the debts are for, the court may reduce the amount repaid to some creditors. However, once the creditors have received the agreed upon payment via the court, the debt is considered paid in full. This will mean that your credit rating will stay low for the period of time of the Chapter 13 length.

How does filing  Chapter 13 Bankruptcy save my home from foreclosure ?

The filing of your Chapter 13 bankruptcy immediately puts into effect the “automatic stay.” The stay says to your creditors, “Hands off this borrower.” Lots of people wait until the very last minute to file Chapter 13. While I never recommend procrastination, I had once case where  the foreclosure sale was scheduled for 10:00 a.m.  It took until 9:30 that morning to get the case together enough to file it, then fax a copy of the filing to the lender. It worked and bought the clients time to put a plan together.  That particular case was filed as a “bare bones” filing, just enough paperwork to get the stay in place. The stay stops the foreclosure.

What happens next if I file Chapter 13 bankruptcy ?

The stay only fends off your mortgage lender temporarily. You have to tell the lender and the court how it is that you’re going to repay the arrears on the mortgage (and any other debt that’s going to be paid through the plan.) There are time constraints so get your plan filed by the deadline. If you delay too long in getting the plan into place your case will be dismissed. If you fail to make the full ongoing mortgage payments and  the plan payment, two things will happen. First, the trustee will file a motion to dismiss your case. Second, the mortgage lender will file a motion for relief from stay, complaining to the Court that the borrower is not complying with the terms of the plan. So just getting the stay is only the beginning of the process. These is a lot of follow up to make sure the protection of the automatic stay remains in effect when it comes to your home.

Typically, for those who file Chapter 13, there is an expectation that you will be able to make regular payments, based on current your income level.  This is different from filing Chapter 7, where it’s clear you are unable to repay anything. Figuring out which chapter is right for you requires a Means Test (don’t try this online; it’s far more complicated than the form lets on) and review of current income and expenses.

If you qualify for filing Chapter 13, your attorney will prepare all the paperwork to be filed with the San Diego bankruptcy court, including your Chapter “13 Plan.” (That’s a proposed budget telling everybody who’s getting paid how much.) There is often some haggling over the plan, but a plan is eventually approved and “confirmed” by the judge.

You’ll be required to provide payments directly to the court. The court in turn disburses payments to each of the Chapter 13 creditors. Usually, the payments are collected by means of a wage garnishment. Once the repayment plan is finished, the court will notify the employer that the withholding is no longer necessary. Your “Chapter 13 Plan” will typically last three-five years. Filing fee is currently $281.00.

Can I Change from a Chapter 13 to a Chapter 7 or Vice Versa?

You can. People go into bankruptcy fairly optimistic that they’re gonna be able to repay some of their creditors something and so they file it as a Chapter 13. Things happen people lose jobs,you might have some kind of medical, emergency. Anything that throws a major wrench into the economic machine of a household can force them to consider changing the course from a Chapter 13 to a Chapter 7. Typically,changing from a Chapter  7 to a  Chapter 13 is gonna be someone else’s idea.

Feel free to call us to discuss your options . It will give you the peace of mind of knowing where you stand.

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