Chapter 13 bankruptcy (also referred to as "repayment plan") is generally used for wage earners who have property that would not be exempt in a Chapter 7, or for those who may be behind on mortgage or car payments. It also can help people who have debts that would not be discharged in Chapter 7. With a repayment plan, the consumer makes payments to a Trustee, who will then distribute the money to the creditors according to a Chapter 13 plan. These payments can continue for up to five years.

The proposed Chapter 13 plan will be based on the consumer's monthly income, monthly expenses, debt, and property. These factors will determine how much of the debt is paid back and after how long. As long as Chapter 13 consumers keep up with the plan, they are able to keep their property.
 Chapter 13 advantages, including but not limited to:

• stop your home foreclosure, and enable you to gradually pay off your overdue payments in a 3 to 5 year plan.

• catch up on delinquent car payments and prevent auto repossession.

• repay child support arrearages 

• stop IRS garnishment or levies

• protect your non-exempt property that you would have had to surrender in Chapter 7

• discharge tax penalties, eliminate or reduce tax liens to asset value, and devise an interest free repayment plan for recent taxes.

As soon as you file for chapter 13 bankruptcy, you can stop the foreclosure of your home and put an end to creditor harassment. 
Chapter 13 is especially beneficial for people who have faced a short-term financial setback like an illness, job loss, or any other unexpected expense.

Chapter 13 Bankruptcy gives you some breathing room to allow you to catch up on past due payments so you can get back on track. Upon approval, we will work with the court to create a debt payment plan you can afford. The debt repayment can last from a period of three to five years. This plan will allow you to keep your home and other important assets, including non-exempt assets. After three to five years of making regular payments and rebuilding your credit, your remaining debt will be completely forgiven. Call our office today to speak to a knowledgeable Orange County Chapter 13 bankruptcy attorney.

Many people believe that you must repay 100% of your debts in Chapter 13. That is usually not true. Credit card debts and other unsecured debts are paid if and only if funds remain after the debtor has repaid delinquent mortgage payments, auto debts, tax debts, and other secured or priority debts. Thus, the vast majority of debtors filing Chapter 13 still discharge a large portion of their unsecured debts