Many people in California work hard to meet their financial obligations. Often, even people who earn a regular income can find themselves mired in debt, despite their best attempts. Though their situation may feel overwhelming, there are legal options available, such as seeking Chapter 13 bankruptcy protection, also known as a wage earner’s plan.
Under this plan, a petitioner will create a plan to repay his or her debt in installments. Depending on whether the petitioner makes above or below the state median, he or she may be approved for a 3-year repayment plan or a 5-year repayment plan, respectively. However, even those who make above the median income for the 5-year plan can seek approval for it.
While many people may think that Chapter 7, in which debt is discharged, is a better option, there are several advantages of seeking Chapter 13 protection. These include:
- There are protections for third parties who may be held liable for certain debts, such as co-signers
- Under Chapter 13 protection, debt is consolidated, and payments are distributed to creditors by a trustee
- Foreclosure proceedings can be stopped, saving the petitioner’s home
Those in California who are struggling with debt are already experiencing a great deal of stress. Though filing for bankruptcy protection may be their best option to remedy their finally situation, they may find the process overwhelming. As such, many turn to an attorney with experience with the variety of available options to help them choose and navigate the path that is best for their individual situation.