File Chapter 13 for $1,500 up front, the balance of fees are paid thorough the plan. State of California employees, file Chapter 13 for $500 up front, the balance of fees are paid thorough the plan.
Chapter 13 is a repayment of part or all of the Debtor’s debts. In some cases, the repayment is very minimal. A below median Debtor is only required to repay the same amount to unsecured creditors that they would receive if the debtor filed Chapter 7.
Chapter 13 Bankruptcy is also called a wage earner plan. If you are behind on secured debts and want to make up the payments, cannot qualify for a Chapter 7 Bankruptcy or need to repay debts (like taxes) over time, then Chapter 13 Bankruptcy works for debtors in those situations.
The advantages of a Chapter 13 Bankruptcy are that the Debtor may be able to save assets that would otherwise be repossessed by the Creditors. If the Debtor is behind on their mortgage, the Debtor may repay the arrears through the Chapter 13 Plan. The same is true of repaying delinquent auto payments. Another advantage is the ability to strip off a junior mortgage, given the senior mortgage is greater than the value of the property. For auto’s that qualify, the Debtor may have the Court determine the value of the auto and then only pay that amount. Another advantage of a Chapter 13 is that interest is, on secured debts paid off during the plan, paid at the TILL rate of interest. This interest is, most times, much lower than the Debtor was paying. Unsecured debt repayment is without interest, therefore if the Debtor is paying 100% of their unsecured debt in the plan, they pay it off without interest.
Eligibility to file Chapter 13 is limited to Debtors owing less than $360,475 in unsecured debts and $1,081,400 in secured debts. Additionally the Debtor must have income sufficient to support their proposed plan payments.
Chapter 13 plans are 3 to 5 years in length. If a Debtor is over the under median income, the plan length is 3 years, unless the Court approves a longer Plan for “Cause.” Above Median income Debtors will have a 5 year plan. A Debtor repaying 100% of their unsecured debt may have a Plan less than 5 years.
The Plan payments are made to the Chapter 13 Trustee. The Trustee disburses the money according to the Plan, monitors the plan and if the Debtor stops making the payments, requests that the Court dismiss the case. The Trustee is not a government employee, but is appointed by the U. S. Trustee. The Trustee operates their trusteeship using income from the Trustee fees collected from the Chapter 13 Debtors. The fees paid to the Trustee are determined by a review of the Trustee’s budget, but in no case may be greater than 10% of the plan payment.