Orange County Chapter 13 Attorney

Wage Earner Debt Reduction

If you are an individual with regular income, you may qualify for a Chapter 13 Bankruptcy. Under this form of bankruptcy, you have the opportunity to save your home from foreclosure by catching up on past-due payments through a payment plan.  Chapter 13 bankruptcy allows you to propose a repayment plan for your existing creditors. Depending on your personal situation, you will pay off a portion or all of your debt in installments over three to five years, depending on your median income. 

Contact The Law Offices of Michael Metaxas

Since 1989, we have dedicated our practice to working closely with our clients. We often handle bankruptcy issues by exploring a cost-benefit analysis with our clients. Bankruptcy may be an effective way to save your home and assets, but it also comes with certain responsibilities if you choose to quickly rebuild your credit. We explain these adversities and opportunities to help you consider all available solutions to resolve your financial situation.

The Bankruptcy Process

To qualify for a Chapter 13 Bankruptcy, the debtor must be currently employed or an operating unincorporated company with unsecured and secured debt under $290,525 and $871,550, respectively. Under this chapter, debtors are permitted to repay creditors, in full or in part, in installments over a period of 3 to 5 years, during which time creditors are prohibited from starting or continuing debt collection actions.  The debtor must be free of any bankruptcy filing in the 6 months preceding a Chapter 13 filing.

A chapter 13 case starts when the bankruptcy petition is filed with the court serving the area where the debtor resides.  A set of schedules and statements documenting the debtor's financial affairs and property is filed along with the petition. The debtor is required to pay a court filing fee.  Upon filing the petition an impartial trustee is assigned to manage the case and administer the repayment plan (chapter 13 "plan").

Within 2 weeks after filing the petition/schedules, the debtor must file a plan. The plan must guarantee a payment to each creditor who has submitted a claim.  The amount of debt that will be paid through the plan is determined by the amount of your disposable income and existing debt. The plan is approved by the court and provides for regular payment of a fixed amount to the trustee, who distributes the funds to creditors according to the terms of the plan.

Once a bankruptcy is filed, the automatic stay takes effect and creditors are "stayed" from undertaking any action against the debtor, including lawsuits, wage garnishments, harassing telephone calls, and foreclosure.  Chapter 13 allows the debtor a reasonable period of time in which to make payments of any overdue balance to bring the loan current.

Twenty to fifty days after the petition is filed a meeting of creditors is held during which the debtor is examined under oath. The debtor must attend the meeting with his attorney, at which creditors may appear and ask questions regarding the debtor's financial affairs and the proposed terms of the plan. Under certain circumstances, the repayment plan may be modified by any party in interest either before or after confirmation of the plan. After the meeting of creditors, a confirmation hearing is conducted to decide whether the plan is feasible and meets the standards required by the Bankruptcy Code.

Once the court confirms the plan, it becomes the debtor's responsibility to make the plan succeed. The debtor must make regular payments to the trustee, with adjustment to living on a fixed budget for a prolonged period. Alternatively, the debtor's employer can withhold the amount of the payment from the debtor's paycheck and transfer it to the chapter 13 trustee.

The chapter 13 debtor receives a discharge after all payments under the plan are successfully completed. The discharge releases the debtor from all debts listed in the plan, and creditors cannot take any action to collect discharged debts. Although chapter 13 provides a broad discharge, the debtor remains responsible for some debts until they are paid in full. These debts include:

• certain long term obligations (such as a home mortgage),
• debts for alimony or child support,
• debts for most government funded or guaranteed educational loans,
• debts arising from death or personal injury caused by driving while intoxicated,
• debts for restitution or a criminal fine
• and some other.

Credit After Bankruptcy

While it's only natural to worry about whether or not you will be eligible to receive a loan or credit card, re-establishing your financial footing will require changing spending habits, expectations, and other behaviors as well.

Changing Behavior, Re-Establishing Credit

When asked these questions debtors must remember that their credit was poor before they came to my office and that their credit will not renew itself without substantial change. The real challenge is to focus on changing your financial condition so that you are looked upon as a safe risk? If you were led into bankruptcy in part by mounting credit card bills, you have to determine how you became so indebted in the first place. Forcing yourself to stop making credit card purchases that cannot be paid within the month is a first step in the right direction.

Credit card companies market themselves by promising an initial period of low interest or no payment in order to convince consumers to spend, spend, spend.  According to Associate Professor Katherine M. Porter of the University of Iowa and author of Bankruptcy Profits: The Credit Industry's Business Model for Post bankruptcy "card issuers send more than DOUBLE as many credit card solicitations per month to individuals exiting Chapter 7 bankruptcy than the normal consumer." In fact, the study shows, that of the 341 families in the study who filed Chapter 7 bankruptcy, 88% received credit card solicitations within the year and that the solicitations specifically mentioned their bankruptcies.

Isn't that fact amazing? The credit card industry is targeting post Chapter 7 bankruptcy individuals as a marketing tool!  So, the question you should be asking instead is: "WHAT KIND OF CREDIT WILL I BE OFFERED." Credit card companies know that they are protected against bankruptcy for at least another 8 years.  When you ultimately do obtain a credit card, pay on time to begin building your credit and enhance the FRESH START afforded through your bankruptcy filing. This will ensure a stable and lower interest offering by credit card issuers.

Why an Experienced Bankruptcy Attorney Can Help You

This is where advice from an experienced bankruptcy attorney, such as myself, comes in handy. The banks are hoping that you will get right back into the habit of relying on their credit cards with their outrageous fees and interest. They do not care that you may need to file bankruptcy again in the future because they have 8 years to profit over any financial errors you may make. So, it's not that you should never have another credit card. It's that you should be careful, use it frugally and pay off the full balance each month to avoid excessively high interest charges. Also, a DEBIT card may serve the same purposes for many individuals.

A Lawyer's Solutions for Repossession and Foreclosure

In these difficult economic times, many people have concerns about saving their homes from foreclosure. Some reports indicate as much as a 200 percent increase in foreclosures in Orange County over years past. And the damage extends beyond the mortgage crisis. A slower economy puts many people in a difficult financial situation, often with the risk of repossession of important assets.

At The Law Offices of Michael Metaxas, we help our clients stop home foreclosure and repossession of assets by taking legal action. Serving clients throughout Southern California, we guide you through the legal system to help you achieve the best possible results.

How an Attorney Can Help Stop Home Foreclosure

If you are concerned about stopping home foreclosure, you do have options. Chapter 13 bankruptcy gives you an opportunity to save your home from foreclosure by catching up on past-due payments through a repayment plan. Working with an experienced attorney can help you file for Chapter 13 bankruptcy or explore other options available to you.