How Chapter 13 Bankruptcy Works in California
In a Chapter 13 bankruptcy, you will propose a 3- to 5-year repayment plan to your creditors, offering to pay off a portion of or all of the debts associated with your financial challenges by using your future income. In the event that you can maintain all of the terms of your repayment plan, the remaining dischargeable debt will be released at the end of the payment plan.
The amount that will be repaid is determined by several different factors including the debtor’s disposable income as outlined by a California means test. The total amount paid to the creditors in a Chapter 13 plan in Fresno must also be at a minimum, the same amount as what creditors would have gotten if you had filed for Chapter 7 bankruptcy.
Who Qualifies for Chapter 13 Bankruptcy?
The majority of individuals who choose to file for a Chapter 13 bankruptcy in Fresno are those debtors who intend to keep secured assets such as a car or a home when there is a higher level of equity in the secured assets than they are capable of protecting with their bankruptcy exemptions. Chapter 13 bankruptcy can be seen as a reorganization in comparison with Chapter 7 bankruptcy, which is a liquidation.
In a Chapter 13 bankruptcy in Fresno, you can make up your overdue payments over the course of time and even reinstate the original agreement in some situations. A Chapter 13 bankruptcy may be the better choice for you if you have valuable non-exempt property and intend to keep it.