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Home > Chapter 13 Bankruptcy Requirements
Chapter 13 Bankruptcy Attorneys in Orange County California
Filing under Chapter 13 is for those who are not eligible for Chapter 7, those who want to pay some part of their obligations, and for those who want to try to save real property pledged as security for loans that are past due.
Unlike a Chapter 7 there are debt limits for eligibility and a requirement that a plan be filed.
The chapter 13 plan must provide that some portion of the debtor's future income be used to pay creditors. All allowed priority claims must be paid in full.
The minimum term of the plan is usually 36 months when the general unsecured creditors are receiving less than 100% of the debt. The court for good cause can extend the plan period for a total of 60 months.
The plan may not discriminate with in a class of claims. Claims categories are Priority, Secured Claims, and Unsecured General Claims and amounts need to cure defaults.
The plan must pay 100% of the priority claims, the amounts needed to cure defaults, and secured allowed claims. General unsecured claims must be paid an amount equal to or greater than the payout they would receive in a Chapter 7 liquidation.
Administrative charges (the Chapter 13 Trustee Fees are set at 11% of the payments made through the plan).
In addition to a 341 hearing there is a plan confirmation hearing. In some venues this is the same day as the 341a hearing and in other it is set at a later date.
All proposed plan payments and mortgage payments up to the plan confirmation made be made.
Failure to make the plan payments or to stay current on mortgage payments may result in a dismissal of the case. In some cases an adequate protection order may be obtained to cure defaults occurring after the plan is confirmed. In some case the plan may be modified based on a change of circumstances.
There are many additional technical requirements that must be met in order for the plan to be approved:
- The plan satisfies the best interest of creditors
- The plan provides proper treatment of secured creditors
- The plan is feasible
- The debtor has paid all post petition domestic support obligations
- The debtor has filed all applicable federal, state and local income taxes returns for the last 4 years.
One of the fundamental elements for plan approval is that it must be feasible. If a plan is not realistic it will not be approved and should not be. A plan is not realistic if it does not allow the debtor sufficient funds for basic needs or has unrealistically high payments that exceed the debtors real income.
Creditors have the right to file claims in the chapter 13 proceeding and they have the right to object to the plan. The objection must be based on a legal position not and simply because they want to be paid or the plan is not fair. One basis for an objection is that the plan does not account for all the debtors disposable income.
The plan may be used to cure a default on a loan and thus cause the loan to be reinstated during the plan period. A home mortgage that had been accelerated and become all due and payable because of default may be cured in the plan. Once the default is cured the loan is in fact reinstated.
Filing a chapter 13 plan may have significant benefits for you but it is a long commitment and should only be undertaken after careful consideration.
Once the plan has been completed the debtor will receive a discharge of the debts as provided for in the plan.
Contact us by calling 714-730-8202 or on-line to schedule an initial consultation.
Hosford & Hosford, Inc., A Law Corporation
17821 East 17th Street, Suite 295
Tustin, CA 92780-2163
Telephone: 714-730-8202| Fax: 714-730-1959
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At the Orange County, California law offices of Hosford & Hosford, A.L.C., we provide experienced consumer bankruptcy representation to clients in cities including: Tustin, Irvine, Orange, Anaheim and Santa Ana.
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The information you obtain at this site is not legal advice. For legal advice, consult an attorney for advice regarding your own situation.
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