How Do I Qualify for Chapter 13 in California?

October 9, 2012
Barrios Machado

Due Diligence, Voluntary Petition, Schedules, Exemptions, SOFA, 22C with POS, Plan with Notice of 341a and POS, Priority vs. nonpriority, Trustee fees, Classes of debt, RARA with POS, Tax and DSO Dec with POS, Postpetition payments with POS, Trustee package, Plan payments, Step-ups, Tax refund issues, 109e objections, Creditor objections, Good vs. bad faith, Best efforts, Feasibility, DMI, 3 vs. 5 years, LAM motions, Service, Judge's calendar, etc., etc.

If any of the above terms seem foreign to you, I advise you to consult our law office before proceeding! Many people (with no familiarity of bankruptcy procedure or substantive law) are under the impression that they can properly manage their own bankruptcy, especially under Chapter 13 in the USA. BIG MISTAKE!

Technically to be eligible to file for Chapter 13 bankruptcy in Orange County or elsewhere in California a person must $394,725 or less in unsecured debt, such as in credit card bills or personal loans. A person must also have $1,184,200 or less in secured debts and that includes mortgages and auto loans (Figures adjust periodically according to the consumer price index).

"Case dismissed. Seek counsel," is what most judges will tell pro se debtors in open court when they attempt to go it alone. The reason an individual avoids hiring a lawyer is generally linked to the costs involved. I assure you, the time and effort spent, in addition to the risk of losing important assets (and even liabilities) does not come close to the couple, few thousand (fees vary based on many factors) that one might pay for a competent lawyer to file their Chapter 13 case. In any event, chances are very high that if you don't hire a competent attorney, you will likely waste time, who knows how much money (because time is money) and end up paying for the services down the road with competent counsel. But the question remains, how valuable is your time? I, for one, will pay top dollar for the one who has learned the secret to freezing it (time, that is)!

Make no mistake, the same principles apply to an Orange County Chapter 7 bankruptcy as well, but filing a pro se (on your own) Chapter 13 is tantamount to performing self-surgery with a butter knife. But like I tell all those who are adamant about doing it: "Live and learn. My door is always open when you need to do it right."

A Chapter 13 (just like any chapter of bankruptcy) is a very specialized, highly detailed process, laden in paperwork, wrought in legalilty and interpretation and not for the inexperienced or weak-at-heart. The preparation of the forms is enough to make 99% of educated novices run for cover, but all the hours spent prior to filing is only the beginning. Try going to court (where the subtle pressure is thick enough to see with the naked eye) without the slightest aptitude to handle the Chapter 13 Trustee's onslaught of objections, and when you request your day before the judge, expect the aforementioned, "dismissed," not "discharged" which is what most every debtor seeks when filing for bankruptcy.

Morale of the story, when filing for Chapter 13 Bankruptcy (or any Chapter under the bankruptcy code), seek out qualified legal representation from experienced lawyers. It also helps when, solely through the quality of your attorney's work, they have earned the respect of the bankruptcy trustees and the court. After all, this is a human world we live in, so the human factor can never be avoided.

Have Questions? Get in Touch.

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    Orange, CA 92866
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    Corona, CA 92878
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