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  Murrieta | Temecula bankruptcy attorney Karen E. Lockhart

Chapter 13 Bankruptcy

If you have a steady income, Chapter 13 bankruptcy may be the best way to solve your debt problems. When you file for Chapter 13, you agree to repay all, or a portion, of your debts, over time, supervised by the bankruptcy court. Chapter 13 allows you to keep your property while you are using your income to repay some or all of your debts, including missed payments.

If you are facing foreclosure on your home, Chapter 13 can provide a powerful remedy. You can keep your home by proposing a repayment plan that includes your missed payments, as long as you remain current on your mortgage. Chapter 13 repayment plans generally last either 3 or 5 years, depending on your circumstances.

You may be able to reduce the amount you pay for your vehicle, paying its replacement value over the life of your plan, rather than the amount you actually owe.

You are protected from lawsuits, garnishments, and other creditor actions while the plan is in effect. At the conclusion of your plan you receive a discharge. This may include ń▓ępping?your second and third mortgages, if they are deemed to be unsecured based upon the current value of your home.

Contact Murrieta bankruptcy attorney Karen E. Lockhart at 951-698-5191, for a free, CONFIDENTIAL evaluation to determine whether you qualify for a Chapter 13 repayment plan. Consultations are available by telephone or in person. Weekends and evening appointments are also available.


Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual's unsecured debts are less than $360,475 and secured debts are less than $1,081,400. These amounts are adjusted periodically to reflect changes in the consumer price index. A corporation or partnership may not be a chapter 13 debtor.

An individual cannot file under chapter 13 or any other chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. In addition, no individual may be a debtor under chapter 13 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing


Chapter 13 offers individuals a number of advantages over chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time. Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on "consumer debts." This provision may protect co-signers. Finally, chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chapter 13 protection.


The timing of the discharge varies, depending on the chapter under which the case is filed. In a chapter 13, the court generally grants the discharge as soon as practicable after the debtor completes all payments under the plan. Since a chapter 13 plan may provide for payments to be made over three to five years, the discharge typically occurs about four years after the date of filing. The court may deny an individual debtor's discharge in a 13 case if the debtor fails to complete "an instructional course concerning financial management." The Bankruptcy Code provides limited exceptions to the "financial management" requirement if the U.S. trustee or bankruptcy administrator determines there are inadequate educational programs available, or if the debtor is disabled or incapacitated or on active military duty in a combat zone.

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