Los Angeles Chapter 13 Bankruptcy Attorney
It is wrongly thought that individuals with high income or a lot of assets are not able to seek debt relief through bankruptcy. The truth is that many are eligible to benefit from a fresh financial start through a Chapter 13 bankruptcy filing. If you are battling overwhelming credit card debt, medical expenses, facing a mortgage foreclosure, or have other obligations, our firm may be able to assist you.
I am Mark J. Markus, a bankruptcy attorney experienced in the Chapter 13 process. Since 1991 I have helped those in Los Angeles and neighboring counties rebuild their financial future.
It is important to know all the alternatives and the “pros” and “cons” of any decision. Filing bankruptcy is no exception. My office provides a detailed analysis of the costs and benefits of filing any bankruptcy case to all clients. This will enable you to best decide what you should do. Contact us today to learn your options.
You get to keep all your property and assets in Chapter 13.
Chapter 13 benefits include, but are not limited to:
- Protect and keep all your assets
- Stop Foreclosure Sales and catch up on past due mortgage payments over time
- Remove Liens, such as second mortgages, on your property
- Discharge unsecured debts (such as credit cards, medical bills, certain taxes, and more) by doing an affordable repayment plan from 0%-100% (depending/based on your income and value of assets).
- Repay debts with zero percent interest
- Pay a Portion of Your Attorney’s Fees Over Time Instead of All Up Front
- Eliminate tax penalties where the underlying tax debt is not dischargeable.
Lawyer Assisting Those in Los Angeles with Chapter 13 Bankruptcy
Chapter 13 has many benefits in addition to those listed above.
How Does Chapter 13 Work?
In a nutshell, Chapter 13 is a repayment plan that lasts for 36 to 60 months. The amount you have to pay, and the duration, are based on several factors. It is fairly complicated and not a “do it yourself” project. Court analyses have shown that an experienced bankruptcy attorney is necessary to successfully navigate a Chapter 13 case.
It is possible to pay 0% to unsecured creditors in a Chapter 13. But even in cases where you have to pay 100%, that payment is at 0% interest, so almost always a superior option to non-bankruptcy alternatives.
Certain debts must be paid 100% during a Chapter 13 bankruptcy. These include:
- “Priority” debts, such as taxes for tax years within 3 years of the filing date
- Domestic Support past due amounts
- Catching up on past due mortgage payments
The payment amount beyond the “100% payments” above are based on your disposable income. That is what is left over after paying ordinary living expenses.
You must pay out at least as much as creditors would receive in a Chapter 7 case.
So, determining how much non-exempt assets you have is critical.
In all cases I do a complete analysis of all relevant factors to determine how to structure an affordable payment plan in Chapter 13.
Who Can File Chapter 13?
For cases filed after June 21, 2024, only an individual (or married couple) with regular income who owes, on the date you file the petition, less than $465,275 in unsecured debt and $1,395,875 in secured debts.
Corporations and partnerships cannot file Chapter 13 and must instead utilize Chapter 11 or Chapter 7.
The debts used to calculate the above limits must also be noncontingent and liquidated, meaning that they must be for a certain, fixed amount (or easily determinable amount) and not subject to any conditions or bona fide disputes. If they are legitimately disputed or not liquidated, then those amounts may be excluded from the debt limit calculations.
Los Angeles Bankruptcy Attorney Helps Residents File Chapter 13
Bankruptcy cases are filled with landmines and traps for the unwary. This is especially true in Chapter 13 cases, as they are more involved and are of a longer duration.
I am Mark J. Markus and I am an attorney that has advised and represented clients in Chapter 13 bankruptcy cases since 1991 in the Greater Los Angeles Area. I am a Certified Specialist in Bankruptcy Law by the State Bar of California Board of Legal Specialization.
I understand how difficult the decision is to file bankruptcy. My practice is structured to minimize surprises and problems in bankruptcy cases that often arise with other bankruptcy attorneys.
Open communication is a hallmark of my representation and I promptly respond to client questions. All work is done by me, a bankruptcy lawyer, in my Burbank, Los Angeles office. No paralegals or assistants.
Bankruptcy Attorney Mark Markus
Bankruptcy cases are only filed by our office after weighing all alternatives and analysis of the pros and cons of filing. My initial consultations are comprehensive and thorough, which is different from most other attorneys who give very short initial consults and guesstimates as to what you can do, without having all the necessary facts. In my consultations, I analyze all relevant information, including your income, expenses, assets, debts, and other factors. That way I can answer any questions you have, and I can tell you which chapter(s) you may be eligible for, what property/assets you can protect, and identify any problems that might arise in your case. After my consultation You will know the costs and benefits of filing a case for your personal situation.
Our firm serves all cities and counties in California, including counties of Los Angeles, Orange, Santa Barbara, San Diego, Riverside, Fresno, Sacramento, San Bernardino, Ventura, San Luis Obispo, Tulare, Contra Costa, Shasta, Marin, Alameda, Kern, and San Francisco and cities including Burbank, Glendale, Sylmar, Panorama City, Simi Valley, San Fernando Valley, Irvine, Santa Clarita, Oxnard, Huntington Beach, Ontario, Rancho Cucamonga, Corona, Torrance, Agoura, Long Beach, San Fernando, Van Nuys, Sherman Oaks, North Hollywood, Anaheim, Hollywood, Riverside, San Bernardino, Lancaster, Palmdale, Pasadena, and many more.
FREQUENTLY ASKED QUESTIONS (FAQ’S) ABOUT CHAPTER 13 BANKRUPTCY
What is a Zero Payment Chapter 13 Case?
There is no such thing as zero payment Chapter 13 case. However, there can be a zero percent Chapter 13 case. In those cases, you would pay nothing to unsecured creditors. This would occur where several factors are present.
This happens where you are using all of your disposable income to catch up on past due payments on secured property (such as a mortgage). Also, if you are paying priority non-dischargeable debts over time, such as taxes.
Chapter 13 allows you to catch up on such payments over up to 60 months. If your budget shows you have just enough income to left over to make these payments, then that is all you would have to make. Zero would go to your unsecured creditors (credit cards, medical bills, etc.).
But your assets also factor into this. If you have a lot of non-exempt assets, you would have to pay some amount to your unsecured creditors so that they would receive, over time, at least as much as they would get had you filed a Chapter 7 liquidation case.
Determining all the possible scenarios for how Chapter 13 will work is complicated. Our office can assist in explaining how this would work in your personal situation. Contact us now to schedule an appointment.
How is the Los Angeles Chapter 13 Repayment Plan Amount and Length Determined?
The Chapter 13 Plan payment amount is determined by many factors, including:
- Your disposable income (what is left over each month after paying your necessary living expenses);
- What debts you have that must be paid 100% through your plan, such as certain taxes, domestic support arrears, mortgage arrear catch-up payments, etc.
- Value of your assets and what exemptions you have to protect that value. (non-exempt amounts must be paid out through your Plan over time).
If you want, any case can be 60 months, which is the maximum length allowed in Chapter 13. To qualify for a 36-month plan, the amount of gross income received in the 6 calendar months prior to filing your case must be below the median income for your household size and geographic area.
All the above is very case-specific and tricky to calculate. As experienced bankruptcy attorney, I can determine in a consultation what your payments are likely going to be and for how long. Schedule an appointment today to learn your options.
How Are Attorney’s Fees Paid in Chapter 13 in Los Angeles?
Chapter 13 allows a portion of attorney’s fees to be taken from the monthly Plan Payments you will be making in the case. This allows you to pay less up front in some cases. This works where you don’t have too much “priority” debt needing to be paid under the plan. Because if all of your disposable income is going to pay those items (mortgage arrears, certain taxes, etc.) then adding attorney’s fees would increase your needed payment beyond what you have.
My office works with you to structure an affordable fee payment program tailored to your situation that will allow you to achieve your goals in bankruptcy.
What assets are protected in a Los Angeles Chapter 13 case?
You get to keep all your assets in Chapter 13. You continue through your case as a “debtor-in-possession” where you retain control over all your property. The quid pro quo is that you must pay your creditors at least the amount of any non-exempt value in your assets, determined under state law, over your plan term. We explain how this will work specifically in your case in our consultations after receiving necessary information from you.
How Does Chapter 13 Stop Foreclosure in Los Angeles?
Yes. Filing any bankruptcy case stops a foreclosure process immediately, due to imposition of the “automatic stay.” A key benefit of Chapter 13 bankruptcy is that it allows you to catch up on past due mortgage payments over up to 60 months. You must, of course, also stay current with regular mortgage payments that come due after your case is filed. It is also possible to pursue loan modifications during a Chapter 13, which can eliminate all arrears while protecting your property from foreclosure during the process.
Can I Discharge (Eliminate) Tax Debts To the IRS, FTB, and California Sales Tax in Chapter 13?
Chapter 13 will eliminate all tax debts. The key is whether the taxes are considered “priority”, requiring them to be paid 100% during the Plan term, or “non-priority” and able to be paid less than 100% and balance discharged in a Chapter 13.
It is a complex analysis, but basically income taxes and sales taxes are non-priority if certain requirements are met. Certain time periods must run after the returns are due to be filed, after they are actually filed, and after the taxes are “assessed” by the taxing agency.
In order for income and California sales taxes to be non-priority and dischargeable, on the date your bankruptcy case is filed, it must be:
- More than 3 years since the last due date for filing a return
- More than 2 years since the actual returns were filed
- More than 240 days from the date of assessment of the tax by the taxing agency.
Your plan payment can be modified to be increased or decreased if necessary due to changes in income during your case.
There are exceptions and extensions of time for each of the above rules and it is too complex to put into a short FAQ window. Contact me for a consultation to go over the specifics in your case to learn if your Los Angeles, California, and Federal tax debts can be discharged and what portions must be repaid.
Can I Discharge (Eliminate) Tax Debts To the IRS, FTB, and California Sales Tax in Chapter 13?
Chapter 13 will eliminate all tax debts. The key is whether the taxes are considered “priority”, requiring them to be paid 100% during the Plan term, or “non-priority” and able to be paid less than 100% and balance discharged in a Chapter 13.
It is a complex analysis, but basically income taxes and sales taxes are non-priority if certain requirements are met. Certain time periods must run after the returns are due to be filed, after they are actually filed, and after the taxes are “assessed” by the taxing agency.
In order for income and California sales taxes to be non-priority and dischargeable, on the date your bankruptcy case is filed, it must be:
- More than 3 years since the last due date for filing a return
- More than 2 years since the actual returns were filed
- More than 240 days from the date of assessment of the tax by the taxing agency.
Your plan payment can be modified to be increased or decreased if necessary due to changes in income during your case.
There are exceptions and extensions of time for each of the above rules and it is too complex to put into a short FAQ window. Contact me for a consultation to go over the specifics in your case to learn if your Los Angeles, California, and Federal tax debts can be discharged and what portions must be repaid.
What is the Chapter 13 Filing Process in Los Angeles?
Time from filing to discharge: usually 39 to 63 months
Step 1: Prior to filing any bankruptcy case for an individual, you must take a credit counseling course from an approved agency. Your attorney will provide you with information on how to obtain this counseling.
Step 2: File Petition, Schedules, and Statement of Financial Affairs with the Court
These are extensive documents which detail your assets, debts, income, expenses and historical financial affairs. These documents are signed under penalty of perjury. Once filed with the Court, you will be assigned a case number and this commences your case. In most cases, immediately upon filing your case, an injunction known as the “automatic stay” goes into effect. This immediately stops creditors from taking any further action to collect or recover on any debt you owe. The reason I say “most” cases is that if you have a prior dismissed bankruptcy case(s) in the past 12 months, or if certain other conditions are met, you may need to file a motion to get the court to impose the Stay.
Step 3: Mandatory meeting with the Trustee
Approximately 3 to 5 weeks after filing your case, you must attend a meeting with the Trustee in your case. It is often referred to as the section “341(a) Meeting.” It is a fairly simple meeting usually and only lasts a couple of minutes per debtor. Currently the meetings are being held by telephone/video, but historically these are done in person.
The Trustee is an independent person appointed automatically in all Chapter 13 cases by the United States Trustee’s Office (an administrative branch of the U.S. Department of Justice). The Trustee’s role is to accept and disburse plan payments to creditors and account for them. The Trustee also monitors cases and objects if anything is not proper.
The Trustee does not represent you and the Trustee does not represent any creditor in your case.
Step 4: Time for Objections to Discharge by Creditors and Trustee
Your creditors have until 60 days after the date first set for your meeting with the Trustee to file a complaint objecting to the discharge of their debt, or to your entire discharge. Grounds for objecting to discharge of individual debts include fraud (such as incurring charges on a credit card that you did not intend or have the reasonable ability to repay at the time they were made), false statements on a credit application, fraud while acting in a fiduciary capacity, willful or malicious injury to a person or property of a person, and certain others. Creditors can seek an extension of time to file their complaint, but as long as they received notice of your bankruptcy case, they must either file their complaint, or a motion requesting an extension prior to the expiration of the 60-day period.
In most cases no objections are filed. However, if a creditor does file a complaint, there will be a trial. You will need to consult with an attorney at that point to decide whether you wish to defend the action, settle it, or just let it go to default judgment. Usually, the matter can be settled or even pre-empted.
The Trustee has until 30 days after the date first set for your meeting with him/her to file an objection to any exemptions you have claimed. Again, this is rare, but it can happen depending on the specific exemptions you need to use in your case. Your attorney will advise about the likelihood of this happening in your case.
Step 5: Time to Object to Chapter 13 Plan
In the Central District of California (Los Angeles and surrounding counties) Objections to the Plan must be filed no later than 2 weeks prior to the scheduled Plan Confirmation hearing. The Plan confirmation hearing date is different with each Judge, but typically occurs about 3 to 4 months after case filing.
Step 6: Financial Management Course
A separate course in financial management must be taken and certificate filed with the court before your discharge can be entered.
Step 7: Discharge (For Individuals, Not Corporations)
Assuming you have made all your Plan payments, as modified (if you did a modification) and complied with all other terms of your plan, an Application for Discharge can be filed. It takes a few months for the Trustee to process their final report and submit to the court before the discharge can be entered.
Please note that the above are summaries and do not cover everything that can and does occur in a given bankruptcy case filing. The summaries are specific to rules and procedures followed in the Central District of California. Moreover, it assumes that you are represented by an attorney, because it omits certain tasks and duties that will be performed throughout the process by your attorney.
What Are the Chapter 13 Debt Limits in Los Angeles?
In order to file a Chapter 13 case, you must have less than $465,275 in unsecured debt and $1,395,875 in secured debts. (These figures are adjusted every 3 years and will next increase in April 2025) The above debt amounts are for noncontingent and liquidated debts, meaning that they must be for a certain, fixed amount (or easily determinable amount) and not subject to any conditions or bona fide disputes. If they are legitimately disputed or not liquidated, then those amounts may be excluded from the debt limit calculations.
To determine if you are eligible for a Chapter 13 case, contact us now to schedule a consultation appointment.
What Are the Chapter 13 Debt Limits in Los Angeles?
In order to file a Chapter 13 case, you must have less than $465,275 in unsecured debt and $1,395,875 in secured debts. (These figures are adjusted every 3 years and will next increase in April 2025) The above debt amounts are for noncontingent and liquidated debts, meaning that they must be for a certain, fixed amount (or easily determinable amount) and not subject to any conditions or bona fide disputes. If they are legitimately disputed or not liquidated, then those amounts may be excluded from the debt limit calculations.
To determine if you are eligible for a Chapter 13 case, contact us now to schedule a consultation appointment.
How Often Can You File Chapter 13 Bankruptcy in California?
There is no time limit for filing any bankruptcy case, as long as you are eligible to file under the given Chapter. But to receive a discharge of debts in a Chapter 13 case, there must be at least four (4) years between the filing date of a previous Chapter 7 case in which a discharge was entered, and the filing of the new case. If the prior case was a Chapter 13 and a discharge was received, you must wait 2 years from the filing date of the prior Chapter 13.
What Happens to Liens in Chapter 13 Cases in California?
In general, liens against property remain after a discharge in bankruptcy. Certain liens, however, can be removed (“avoided” in bankruptcy parlance). Judicial liens, which are involuntary liens put against property after a court judgment, can be avoided if they “impair” an exemption to which you are entitled. This is a mathematical calculation which will depend on the value of the property in question, the amount of exemptions to which you are entitled, and amount of other liens, including mortgages, against the property.
On a principal residence, in some cases voluntary junior liens, such as lines of credit or second mortgages, can be removed (technically, “stripped”) if the value of the property is less than the amount owed to senior liens.
In these cases, the amount stripped becomes an unsecured claim and could affect the qualification for the debt limits for Chapter 13.
Junior liens on non-principal residence property (such as a rental property) can be partially or fully stripped, depending on the value of the property and amount of senior liens. Any unstripped portion must be paid 100% through the Chapter 13 plan.
Will Chapter 13 Bankruptcy Ruin My Credit?
No. In fact, most of my clients’ credit scores go up immediately after a Chapter 13 case is filed (within a few weeks) before discharge is entered. And for others, they are able to increase their credit scores dramatically, even while the case is pending, and definitely after discharge. If your credit score is high when you file your bankruptcy, it will obviously go down a bit initially. But in most cases this would have occurred whether you file bankruptcy or not. The bankruptcy filing gives you a “fresh start” beginning and enables you to start rebuilding your credit immediately after the case is completed. This occurs much more quickly than if bankruptcy was not filed.