A Chapter 13 is a very common type of bankruptcy for individuals living in California. While some people choose to file a Chapter 13 bankruptcy in Los Angeles, others are required to file it because of assets they own, or because they are not eligible for a Chapter 7 bankruptcy case in light of their income levels. To determine if you qualify for a Chapter 13, or determine if Chapter 13 is the right option for you, we suggest you contact a qualified Los Angeles Bankruptcy Attorney. In this post, we will discuss the new 2022 “debt-limit” for Chapter 13 cases, which now enables more individuals to qualify for a Chapter 13 bankruptcy instead of a Chapter 11.
What is a Chapter 13 Bankruptcy
Chapter 7 cases are designed to liquidate assets, and wipe out debt completely. On the other hand, the goal of a Chapter 13 bankruptcy is to wipe some portion of the debt and/or pay other debt over time. Additionally, in a Chapter 13, a Debtor is entitled to keep assets such as a home or a car. Further, any default in payments can be made-up throughout the Chapter 13 bankruptcy. In a Chapter 13, everything will be set forth in the “Plan” that must be approved by the Court. That Plan will lists how much and when creditors can get paid through the Chapter 13 bankruptcy case.
The Debt Limit Prior to 2022 and Qualifying a Chapter 13 Bankruptcy.
Prior to 2022, no everyone could qualify for a Chapter 13 Bankruptcy. Pursuant to 11 U.S.C. 109(e) of the bankruptcy code, individuals could only qualify for a Chapter 13 case if their debt was below a certain amount. Specifically, Chapter 13 was only available for people who have less than $465,275 in unsecured debts for cases filed between April 1, 2022, and March 31, 2025, or less than $1,395,875 in secured debt for cases filed between April 1, 2022, and March 31, 2025. Nonetheless, the law is now changing, where the debt limit no longer differentiates between secured and unsecured debt. A Chapter 13 bankruptcy is now available to “an individual with regular income that owes, on the date of the filing of the petition, noncontingent, liquidated debts of less than $2,750,000 or an individual . . . and such individual’s spouse . . . that owe . . . noncontingent, liquidated debts that aggregate less than $2,750,000”. If your debts are less than $2,750,000 , you qualify! It is as simple as that.
What is the Effect of Raising the Debt Limit in California?
The effect of raising the debt limit in California is amazing news for those considering filing for bankruptcy. Before this law, individuals with debts over the debt-limit where forced to file a Chapter 11 bankruptcy, which is a much more complicated and expensive bankruptcy. Now, they can simply file for Chapter 13!
Cost Involved With Filing a Chapter 13 Bankruptcy in California
With regard to the amount that a Chapter 13 Bankruptcy will cost, there are two (2) items that a debtor normally has to pay for. The first one is “costs”, which include the Court fees, credit report fees, and debtor counseling fees. The other item are “attorneys’ fees.” Attorneys’ fees vary depending on the complexity of the bankruptcy, but the prices at Katz Law are known to be some of the most competitive in the market. Additionally, in a Chapter 13 we often accept some portion of the fees to be paid before the bankruptcy is filed, and the rest of the fees paid in installment payments after the bankruptcy is filed. If you would like to learn more about the costs and fees for filing your specific bankruptcy in Los Angeles, give us a call now at (310) 444-9444.
Want to Learn More About Qualifying for Bankruptcy? Consult With a Los Angeles Bankruptcy Attorney Now!
If you or your loved one is considering bankruptcy, give us a call now. We would be happy to talk to you.