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What is Chapter 13?

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The simplest explanation is that you will make a payment each month to the chapter 13 trustee. The payment is the amount you can afford to pay back to those you owe money to. No more, no less. See Chapter 13 Timeline There is a number of reasons why to file a chapter 13 bankruptcy case, such as:

Save Your House From Foreclosure

Get Rid of a Second Mortgage or Equity Line of Credit

You are Behind on Car Payments and Trying to Save your Car from Repossession

Reduce or Cram Down a Vehicle Loan

You Do Not Pass the Means Test and Have Disposable Income

You Have Assets That Cannot Be Protected

You are Not Eligible to file a Chapter 7 Bankruptcy

You Owe back Taxes to the Internal Revenue Service or Franchise Tax Board

A chapter 13 plan of reorganization is filed with the voluntary petition. This plan provides the treatment for repayment of your creditors. In many chapter 13 reorganization cases after paying secured debts such as mortgages, car loan or taxes, there is almost no money left over to pay unsecured debts such as credit cards or medical debts.

One of the main advantages of filing a chapter 13 bankruptcy is the ability to get rid of unsecured second mortgages or equity lines of credit. If your house is worth less than the first mortgage, then the second mortgage or equity line of credit is completely unsecured and can be avoided when filing a chapter 13 case.

Another advantage of filing a chapter 13 is cramming down a vehicle loan to the fair market value of the car or truck you are making payments on. If you purchased a vehicle 910 days prior to filing the bankruptcy case, and the vehicle is worth less than what you owe, you can pay back what the vehicle is worth, not what you owe. Depending upon the circumstances this can save you thousands of dollars off of a bad car loan.

Chapter 13 bankruptcy is a much more complicated process then filing a chapter 7 case. That is why the attorney fees for a chapter 13 as are at least 3 to 4 times more than the attorney fees to file a chapter 7 bankruptcy case. Most of the attorney fees in a chapter 13 are paid through the chapter 13 plan. Only a portion of the attorney fees are paid upfront before the case is filed. Our Fremont Bankruptcy Lawyer will explain the process of filing a chapter 13 case and obtaining court approval.