CHAPTER 13
Chapter 13 bankruptcy, known as the “wage earner’s plan,” is a powerful tool for those with regular income who want to save their home from foreclosure, manage tax debts, or protect valuable assets.
At UNITED LEGAL ADVOCATES, LLP, we craft Chapter 13 plans that stop creditor actions, preserve your property, and set you up for long-term success.
Unlike Chapter 7, Chapter 13 doesn’t liquidate assets—instead, it consolidates debts into an affordable monthly payment plan over 3–5 years, tailored to your disposable income.
Key Benefits
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Foreclosure Defense: Stops home auctions and rolls missed mortgage payments into the plan, bringing you current over 3–5 years.
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Asset Retention: Keep your home, cars, rental properties, and valuables—no forced sales.
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Debt Restructuring: Consolidate debts into one court-approved payment, often reducing the total amount owed.
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Tax Debt Solutions: Spread priority tax debts (e.g., recent income taxes) interest-free over the plan’s duration.
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Co-Signer Protection: Shields friends or family who co-signed loans from creditor actions.
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Cramdowns and Lien Stripping: Reduces car loan balances to the vehicle’s value and removes underwater second mortgages.
Who Qualifies?
Chapter 13 is available to individuals with regular income and total debt below $2.75 million, adjusted periodically. There is no longer a distinction between secured and unsecured debt for eligibility purposes (as of 2022). Self-employed clients must provide two years of profit-and-loss statements to prove income stability. Unlike Chapter 7, there’s no means test—your ability to fund a repayment plan determines eligibility. Our team will assess your income, expenses, and debts to create a plan that fits your budget.
The Repayment Plan Process
The heart of Chapter 13 is the repayment plan, which we negotiate with creditors and submit to the bankruptcy trustee for court approval. The process involves:
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Income Analysis: We calculate your disposable income after essential expenses (e.g., housing, food, transportation).
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Debt Prioritization: Priority debts (e.g., taxes, mortgage arrears) are paid first, followed by secured debts (e.g., car loans) and a portion of unsecured debts (e.g., credit cards).
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Plan Proposal: We propose a monthly payment, typically 10–50% of your disposable income, spread over 36–60 months.
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Creditor Negotiation: Creditors can object to the plan, but our aggressive advocacy ensures fair terms.
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Court Approval: Once approved, creditors are bound by the plan, and you make payments to the trustee, who distributes funds.
Lien Stripping and Cramdowns
Chapter 13 offers unique tools to reduce debt:
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Lien Stripping: If your home’s value is less than your first mortgage balance, we can strip off underwater second mortgages, converting them to unsecured debt that’s often discharged.
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Cramdowns: For personal-use vehicles purchased more than 910 days (approximately 2.5 years) before the bankruptcy filing, we may be able to help you reduce the loan balance to the vehicle’s current value, lowering payments. For example, a $20,000 car loan on a $12,000 car could be crammed down to $12,000 plus a low interest rate.
Benefits for Small Business Owners
Chapter 13 is ideal for self-employed individuals or small business owners with tax debts or business-related loans. By spreading priority taxes over 60 months and protecting business assets, Chapter 13 keeps your operation running while addressing personal debts.
Want to save your home or business?
Call (949) 234-8212 to explore Chapter 13’s protections.
CONTACT US
Address
19200 Von Karman Ave., Suite 600
Irvine, CA 92612
Email
Phone
949-234-8212
