Chapter 13 FAQs

Below, The Los Angeles Bankruptcy Firm provides the answers to questions frequently asked in its practice helping people in Southern California through a Chapter 13 adjustment of debts.  If you have other questions or need advice on a particular situation, contact The Los Angeles Bankruptcy Firm for a free consultation.

Q.  Is a Chapter 13 better for my credit than a Chapter 7?

A.  Yes. A Chapter 13 bankruptcy stays on your credit report for a shorter period of time. It also allows you to be eligible to buy a home earlier than a Chapter 7 bankruptcy. However, the amount of time it takes for your credit to recover from a Chapter 13 or a Chapter 7 is shorter than most people think.

How is eligibility for Chapter 13 determined?

A.  Chapter 13 is for individuals only; corporations are not eligible to file Chapter 13. There are also limits on the amounts of unsecured and secured debt a Chapter 13 debtor can have. If you are not eligible to file for Chapter 13 because of debt limits, Chapter 11 may be a better option for you.

Q.  Will I be able to save my home?

A.  If you have missed loan payments and are facing foreclosure, Chapter 13 allows you to catch up those past payments ("arrearages") as part of your Chapter 13 plan.  Although this move will stop the foreclosure, you must continue to make your monthly mortgage payments going forward, or you could still lose your home to a foreclosure.

Q.  I recently finished a three-year payment plan under Chapter 13.  However, I fell behind on my other obligations and find myself back in the same old financial mess.  Can I file bankruptcy again?

A.  The law prohibits you from filing for Chapter 13 within two years of a previous Chapter 13 discharge, unless your plan fully repaid your unsecured debts.  If you previously had a Chapter 7 discharge, you may not file Chapter 13 for four years.

Q.  What if my bankruptcy case was dismissed?  Am I allowed to re-file?

A.  The law states that you must wait 180 days before re-filing. However, some judges may allow you to re-file without the 180 day waiting period if you have not filed bankruptcy within the past year. In either case, however, if you re-file within a year of dismissal, the automatic stay will only be effective for 30 days, unless the court grants your motion for an extension.