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Chapter 13When you are trying to decide which bankruptcy is a good option to save your home from foreclosure, Chapter 13 may be the best option for you. In Chapter 13 bankruptcy, you do not lose your assets, and you will have three to five years to catch up on your payments through a court-approved repayment plan. You must have a reliable source of income to be eligible to file a Chapter 13 bankruptcy.

As part of your plan, you will make a monthly budget that allows for your monthly expenses such as:

  • Food
  • Shelter
  • Clothing
  • Utilities
  • Transportation
  • Child support
  • Alimony
  • EducationHealthcare

This budget is very detailed and specific and compared to the national standards used by agencies like the IRS. After you have completed this form, with your attorney's assistance you will file it with the court. The court will confirm the amount of your monthly disposable income to pay your creditors with.

Best Interest

The repayment plan must pass the best interest test, which means that the unsecured creditors must be paid at least as much as they would have if you filed Chapter 7 bankruptcy. The best efforts test requires you to pay your trustee all of your disposable income during the course of the bankruptcy.

Chapter 13

Chapter 13 cannot last longer than five years, according to the law. And creditors cannot contact you as long as you are making your payments according to the plan. For debtors that make less than the median income, a three-year plan is satisfactory for satisfying the best efforts test.

If you would like more information about Chapter 13 Bankruptcy, contact a Citrus Heights bankruptcy attorney.