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Chapter 13 Bankruptcy Attorneys in San Mateo, California

According to statistics published by the United States Courts website, overall bankruptcy filings in 2022 dropped from 413,616 the year before to 287,721, a decrease of 6.3 percent. However, filings under Chapter 13 of the United States Bankruptcy Code increased 30.9 percent—up to 157,087 for 2022, compared to 120,002 in 2021. 

As an explanation for the rise, the website states merely that “This chapter of the Bankruptcy Code provides for adjustment of debts of an individual with regular income.” This may indicate that these individuals or families may not have qualified for the swifter Chapter 7 process because of their income. Another factor may have been that Chapter 13 provided a much better vehicle for retaining personal assets. 

Essentially, Chapter 13 is known as the “wage-earner’s option,” because it does indeed mean that you as the filer have an income that can be used to repay at least part of your debt obligations. Chapter 7, the liquidation option, is means tested. If your income is too high, you cannot use Chapter 7, though it is quicker and offers exemptions that protect some, if not most, of your assets from being seized and sold off, depending on your circumstances. 

If debt is overwhelming you in or around San Mateo, California, contact us at EH Law Group. Our bankruptcy attorneys have over 30 years of combined experience in helping people get a fresh start in life through bankruptcy. We will respond quickly to your concerns and compassionately help you navigate this difficult time. No matter where you live in California—including San Francisco, Santa Clara County, Oakland, Daly City, and South San Francisco—reach out to us for a one-on-one consultation. 

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Overview of Chapter 13 Bankruptcy 

Chapter 13 is a bankruptcy option built on a repayment plan. Some debts such as secured loans—like loans on houses and cars—will have to be honored in full if you wish to keep them. Others such as alimony, child support, taxes, and student loans will also have to be honored. The key question is whether you have the necessary income to meet all your obligations even when you reduce your obligation to unsecured creditors.  

Most people opt for Chapter 13 because their income is too high for a Chapter 7 filing. In California, the threshold for Chapter 7 depends on household income. For a single person, the limit currently stands at $69,660. For a family of four, it is $113,615, though the figures are adjusted every six months or so. 

In either Chapter 13 or Chapter 7, California allows exemptions for certain property, assets, and income. There are two options known as 704 and 703, which are named after sections of the California Code. Under 704, depending on where you live, you can exempt up to $600,000 in your home’s equity.  

If you don’t own a home or have little equity, you can use 703, which provides more generous exemptions for other items such as cars. Under either 704 or 703, public benefits such as Social Security, Veteran’s benefits, and tax-exempt retirement accounts are protected. The catch is that you must have resided in California for 730 days to use either set of exemptions. Otherwise, you must use the exemptions allowed by your previous state of residence. 

Disposable Income & the Repayment Plan 

If Chapter 13 is your only option—or your option of choice—your first step after filing is to develop a repayment plan while there is a court-order automatic stay that prevents creditors and bill collectors from continuing in their efforts.  

To come up with a repayment plan, you first must determine your disposable income: what’s left after you’re met all your basic living expenses. Then, working with your attorney, you can use that figure to present your repayment plan at a mandatory meeting of creditors. They can accept or reject it. 

Keep in mind that you cannot pay secured creditors less than what your contract or agreement with them demands unless they’re willing to rework your loan obligation. Additionally, if you’re behind in payments on a home or car, they can still petition the court to proceed with repossession or foreclosure. As part of the plan, you must include any arrear amounts in your repayment plan and then continue to make agreed-upon monthly payments, or you may lose your home or car. 

A Chapter 13 repayment plan generally runs from three to five years. Obviously, the three-year option will mean a higher monthly payment. Your monthly payment will be made to the bankruptcy trustee assigned to you, who will then distribute the funds to creditors. The payments actually begin before the meeting of creditors, so don’t expect a long window in which to get ready.  

When your repayment plan is concluded after three or five years, then you will be discharged from all unsecured debts except for spousal and child support, student loans, and taxes (which should’ve been repaid in the plan). 

Chapter 13 Bankruptcy Attorneys in San Mateo, California

Here at EH Law Group, we will help you navigate the bankruptcy system in filing for Chapter 13, including the preparation of all filing documents and the creation of a repayment plan. We will also work with you to get your plan approved or modified as necessary so you can move forward to your fresh financial start in life. If debt is overwhelming you and your family, reach out to us as soon as possible.