Chapter 13

Chapter 13 (8)

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CHAPTER 13 RESOURCE LINKS

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United States Bankruptcy Courts 
The official website of the United States Bankruptcy Courts includes a variety of useful information about bankruptcy.

Bankruptcy glossary 
A glossary of bankruptcy terminology that explains, in layman's terms, many of the legal terms that are used in cases filed under the Bankruptcy Code.

Bankruptcy fees 
Bankruptcy filing fees, maintained by the Administrative Office of the U.S. Courts on behalf of the U.S. Courts.

Bankruptcy forms 
Official Bankruptcy Forms, Procedural Forms and the Bankruptcy Forms Manual.

Chapter 13 basics 
General information about individual debt adjustment under Chapter 13 of the Bankruptcy Code.

Bankruptcy information for consumers 
General information regarding consumer debt and bankruptcy from the American Bankruptcy Institute.

National Foundation for Credit Counseling (NFCC) 
The NFCC's website includes numerous educational resources including credit facts, budget calculators and more.

  1. Experian 
    Information for consumers about credit reports, establishing credit, risk scores and more.

Trans Union LLC 
Frequently asked questions about credit reports.

Copyright © 2014 D.J. Rausa, Attorney at Law.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

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REBUILDING YOUR CREDIT AFTER BANKRUPTCY

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Bankruptcy has a long-lasting impact on a person's credit rating and on his or her ability to obtain credit in the future. The impact is not entirely negative. In some cases, filing bankruptcy may actually improve a bad credit rating. In addition, there are a number of steps a person can take to improve his or her credit after bankruptcy. An experienced bankruptcy attorney at D.J. Rausa, Attorney at Law in San Diego, CA, can offer valuable advice about how credit can be improved after a bankruptcy, and how to work for a better financial future.

Discharge results in an improved debt-to-income ratio

Most of the debtors who consider filing bankruptcy already have poor credit histories. Their credit ratings have suffered because of slow payments, late payments, repossessions, extended credit, charge-offs, foreclosures or judgments. After their bankruptcy, however, the discharged debts will no longer count against their income, so their credit may be better after the discharge than it was before. In addition, while a bankruptcy case will remain on an individual's credit report for up to ten years; late payments stay on for up to seven years, so the effects are similar. Bankruptcy, however, gives consumers a chance to improve their credit faster because they will have an improved debt-to-income ratio after discharge.

Using credit cards wisely

In some cases, individuals may be able to keep one of their credit cards even after bankruptcy. They may retain a card that they already have but that has no debt on it, or they may reaffirm a debt on a card, which means that they sign a contract with the credit card company after filing bankruptcy that says the debt will be paid anyway if the holder is allowed to keep the card. Some companies are willing to agree to this arrangement because they will be paid for the debt, whereas without reaffirming the entire debt could be discharged in the bankruptcy proceeding.

A secured credit card is another option for rebuilding credit after a bankruptcy. A secured credit card is issued by a bank and backed up by money that is kept on deposit with the bank that issued the card. The bank account is the security for the card. If the bill for the credit card is not paid on time, the bank may use the money in the account to cover the payment. The limit on the card can be increased by increasing the balance in the linked bank account. The issuers of secured credit cards report about their customers to the credit bureaus, just like the issuers of other credit cards, so any subsequent positive payment history will be available to future creditors. The interest rates for secured credit cards are often higher than the rates for non-secured cards, but they still can be worth the extra cost by virtue of the redeeming value of the new and reported financial stability.

Co-signed loans

Still another way to re-establish credit after a bankruptcy is to obtain a loan with a co-signor whose positive credit convinces the bank or other lender that the loan is a safe bet. As payments are made on the cosigned loan, the positive credit history affects both borrowers.

"Credit-repair" services

One "credit repair" method to avoid after bankruptcy is seeking help from an unscrupulous "credit-repair service." Many consumers pay substantial sums of money to so-called "credit clinics" to "fix" their credit reports when, in actuality, only time can improve bad credit. A credit repair service or clinic can legally do nothing that a consumer cannot do on his or her own, for free. Some credit-repair companies actually encourage consumers to commit fraud by attempting to create a second identity. The Federal Trade Commission has investigated these often-fraudulent services and warns consumers to be wary of promises that seem shady or too good to be true.

Speak to a bankruptcy lawyer

In order to make the most of a bad situation, debtors must learn from bankruptcy and demonstrate greater financial responsibility in the future. A lawyer experienced in bankruptcy law at D.J. Rausa, Attorney at Law in San Diego,CA, is in a strong position to advise consumers not only before and during the bankruptcy process, but also after, guiding them through the necessary steps to improve their credit ratings and avoid future financial catastrophes.

Copyright © 2014 D.J. Rausa, Attorney at Law.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

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CHAPTER 13 BANKRUPTCY - AN OVERVIEW

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The bills are stacking up, demanding calls and letters are arriving with increasing frequency and despite the best of efforts, the overdue debts just cannot be paid. In such cases, filing bankruptcy under Chapter 13 of the Bankruptcy Code may provide a solution to what seems like an insurmountable problem. Once considered a last resort, bankruptcy has evolved into an accepted method of resolving serious financial problems. If you are facing serious financial challenges, it is important to seek the counsel of an experienced bankruptcy attorney at D.J. Rausa, Attorney at Law in San Diego, CA, to determine whether filing under Chapter 13 is right for you.

Bankruptcy law provides two basic forms of relief: (1) liquidation and (2) rehabilitation or reorganization. Most bankruptcies filed in the United States involve liquidation, which is governed by Chapter 7 of the Bankruptcy Code. A reorganization or rehabilitation bankruptcy under Chapter 11 or 13 of the Bankruptcy Code is, however, the option often preferred by the courts. Under Chapters 11 and 13, creditors may be provided with a better opportunity to recoup what they are owed.

When is "reorganization" or "rehabilitation" the right choice?

Chapter 13 has certain advantages over Chapter 7 in consumer bankruptcies. The biggest advantage for many people is that Chapter 13 allows individuals an opportunity to keep their homes and avoid foreclosure. Chapter 13 also permits individuals to reschedule secured debts and extend them over the life of the Chapter 13 repayment plan. In addition, Chapter 13 allows the debtor to discharge more types of debts than Chapter 7 does. Further, under Chapter 7, the court may order that all of the consumer's assets be sold, whereas under Chapter 13 the debtor may be able to retain more of his or her assets. A consumer's choice between Chapter 7 and Chapter 13 is not necessarily the last word; once bankruptcy proceedings have begun, a case may be converted to a different chapter. Once converted, however, the case may not be converted back again.

Who is eligible for Chapter 13?

A consumer may choose bankruptcy under Chapter 13 if he or she has a stable income, believes the financial crisis is temporary and wants to repay at least some debt. The debtor must have less than $383,175 in unsecured debt and $1,149,525 in secured debt, however, in order to be eligible for Chapter 13. 11 U.S.C. § 109(e). These amounts are adjusted periodically.

Chapter 13 generally applies to individual consumers with smaller debts. Corporations and partnerships cannot file under Chapter 13, but self-employed individuals and owners of unincorporated businesses are eligible for Chapter 13. If the debtor is an individual with extremely large or complex debts or is a corporation, Chapter 11, which also allows for rehabilitation or reorganization, will generally be available. Farmers can file under Chapter 12, which provides for reorganization, and municipalities may file for Chapter 9 reorganization.

How does Chapter 13 work?

A Chapter 13 proceeding, often called a wage-earner plan, is initiated by filing a petition. As in Chapter 7 cases, the filing of the petition automatically stays (stops) creditors from trying to collect on most of their debts. 11 U.S.C. § 362. There is also a special automatic stay provision in Chapter 13 that protects co-debtors. A creditor generally may not seek to collect "consumer debts" from any individual who is liable along with the debtor. 11 U.S.C. § 1301(a).

Along with the petition, the debtor must also file a schedule of assets and liabilities, a schedule of current income and expenditures, a schedule of executory contracts and unexpired leases and a statement of financial affairs. The debtor must also file a certificate of credit counseling; evidence of any payments made by an employer received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest in federal or state qualified education or tuition accounts. 11 U.S.C. § 521. After filing the petition, a trustee is appointed to manage the case. 11 U.S.C. § 1302. Within 20 to 50 days after the debtor files the petition, the trustee holds a meeting of creditors. The debtor must attend this meeting and answer questions regarding financial issues and the proposed plan terms. 11 U.S.C. § 343. The judge must hold a confirmation hearing within 45 days of the meeting of creditors, at which time he or she will decide whether the plan is feasible and meets the Bankruptcy Code's standards for confirmation. 11 U.S.C. §§ 1324, 1325. Creditors may ask questions about and object to the plan. If the court approves the plan, however, the creditors can take no action outside the plan's scope to collect their debts.

Within fifteen days after the debtor's filing of the petition, the debtor must file a plan that sets forth the details of how he or she intends to pay off creditors in the next three years (or, with the court's permission, five years). Fed.R.Bankr.P. 3015. The plan must provide for fixed payments to the trustee on a regular basis and be submitted to the court for approval. If approved, the trustee will distribute funds to the creditors according to the plan's terms. Within 30 days of filing, the debtor must start making payments under the plan to the trustee, even if the court has not yet approved the plan. 11 U.S.C. § 1326(a)(1).

There are three types of claims: (1) priority claims, which include most taxes and the costs of the bankruptcy proceedings; (2) secured claims, which are those for which the creditor has the right of recovering property (collateral) if the debtor does not pay; and (3) unsecured claims, for which the creditor generally has no special rights to collect against any property the debtor owns. The plan must pay priority claims in full, unless a priority creditor agrees otherwise. Unsecured claims do not need to be paid in full as long as the plan provides that the debtor will pay all "disposable income" over an "applicable commitment period" and as long as unsecured creditors would receive at least as much under the plan as they would if the debtor's assets were being liquidated under Chapter 7. 11 U.S.C. § 1325.

Once the debtor completes all payments under the plan, the debtor is entitled to a discharge, which releases him or her from all debts provided for or disallowed under the plan. To obtain the discharge, the debtor must also (1) certify that all domestic support obligations have been satisfied (if applicable); (2) complete an approved financial management course; and (3) have not received a discharge within two years in a prior Chapter 13 case or within four years in a prior case under Chapters 7, 11 or 12. 11 U.S.C. § 1328.

Speak to a bankruptcy lawyer

Bankruptcy lawyers can help consumers struggling with increasing and inescapable debt find their way to a better financial future. An experienced bankruptcy attorney at D.J. Rausa, Attorney at Law in San Diego, CA, has the knowledge and expertise required to help clients get out from under formidable debt and emerge as productive citizens, and can advise them about whether Chapter 13 is the right course of action given their particular circumstances.

Copyright © 2014 D.J. Rausa, Attorney at Law.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

Q: How does a Chapter 13 bankruptcy case work?

A: Chapter 13 of the federal Bankruptcy Code allows a consumer to repay all or a majority of his or her debts through a payment plan approved by the Bankruptcy Court. When the plan is in place, creditors generally are prohibited from collecting debts directly from the debtor. Instead of paying his or her creditors directly, the debtor pays a certain amount every month to the Chapter 13 Trustee, and the Trustee distributes the money to the creditors, as provided in the Chapter 13 plan. When the last payment is made, the debtor is no longer liable for the remainder of his or her dischargeable debts.

Q: How long does it take to complete a Chapter 13 plan?

A: A Chapter 13 plan lasts for three years (36 months) unless the debtor can pay off all debts in less time. Under certain circumstances, the court may approve a plan that lasts as long as five years.

Q: How is Chapter 13 different from Chapter 7 from the point of view of the debtor?

A: The essential difference between Chapter 7 and Chapter 13 is in the handling of the debtor's property. In a Chapter 7 case, all nonexempt property owned by the debtor is sold, and the proceeds are used to pay as many of the debtor's debts as possible. In a Chapter 13 case, a debtor's income is applied towards payment of as many of the debtor's debts as possible, but a Chapter 13 debtor typically retains more of his or her nonexempt property. In addition, the discharge issued in a Chapter 13 case is usually broader than a Chapter 7 discharge, and will relieve the debtor of liability for several types of debts that are not discharged by a Chapter 7 case.

Q: Why would a debtor choose Chapter 13 over Chapter 7?

A: Chapter 13 is the preferred choice for a person who wishes to repay most or all of his or her unsecured debts, and whose income is sufficient to allow him or her to do so in a reasonable amount of time. In addition, if the debtor has a considerable amount of nonexempt property, or a lot of valuable exempt property used as security for debts, this property could be lost in a Chapter 7 case, and so Chapter 13 may be the preferred option. Some other types of debtors, whose debts might not be discharged under Chapter 7 and those with one or more large debts that may be discharged only under Chapter 13, might opt for Chapter 13 over Chapter 7.

Q: What debts are paid by a Chapter 13 plan?

A: The plan may pay any and all debts of the debtor, including secured and unsecured debts, and even debts that are non-dischargeable, such as student loans and spousal and child support.

Q: How much must the debtor pay to the trustee?

A: The law says that all of a debtor's "disposable income" received during the time of the plan must be paid to the trustee. The law defines "disposable income" as all income earned or received by the debtor that is not reasonably necessary for the support of the debtor and the debtor's dependents.

Q: Who is the trustee?

A: The trustee in a Chapter 13 case is someone who is appointed by the Bankruptcy Court to receive the regular payments from the debtor, distribute those payments to the creditors according to the Chapter 13 plan and administer the bankruptcy case until it is closed. The debtor is always required to cooperate with the Chapter 13 trustee.

Q: May a self-employed person file under Chapter 13?

A: Yes. A self-employed person meeting the eligibility requirements may file under Chapter 13 and may continue to operate her or his business during the resolution of the bankruptcy case and the completion of the plan.

Q: Should a married couple file a joint Chapter 13 petition?

A: If both the husband and wife owe a significant amount of money, they may wish to file jointly under Chapter 13, even if only one of them has income. Otherwise, the non-filing spouse could still be liable for the unpaid debts.

Q: May a debtor convert a Chapter 7 case to a Chapter 13 case?

A: Yes. A Chapter 7 case may be converted to a Chapter 13 case at the request of the debtor at any time before the case is closed, unless the case was converted previously from Chapter 13 to Chapter 7.

Copyright © 2014 D.J. Rausa, Attorney at Law.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

When a Chapter 13 debtor enters into a wage-earner plan, he or she commits the next three years' disposable income — that portion of the debtor's income not required to meet the necessary needs of the debtor and his or her dependents — to the repayment of debt. Often, a debtor's income will increase after the plan is in place, and the question arises as to what becomes of this increase in income. A lawyer at D.J. Rausa, Attorney at Law in San Diego, San Diego, can answer these and other Chapter 13 questions as they arise, providing information, reassurance and competent and zealous advocacy throughout the bankruptcy process.

The debtor may be allowed to retain the increase in income unless the increase is significant and there are no offsetting increases in expenses.

The Bankruptcy Code requires that the debtor contribute his or her projected disposable income toward the plan payments for the first three years (36 months) of the plan. Although the Code imposes this requirement only when the trustee or a creditor demands it, in reality the trustee always requires it, at least at the beginning of the plan. Whether changes in salary will change the payment plan depends on a complete consideration of all of the relevant circumstances.

It is possible that a debtor's income could change after he or she files the petition, but before the court has confirmed the plan, which makes it binding on the creditors. A debtor may change jobs, get a raise or start a second job. During the time between filing and confirmation, the trustee will watch the debtor's disposable income to make sure that the payments fit with the debtor's income level and make any changes to the plan.

If the debtor's income changes within the first three years (36 months) of the repayment plan, it may not be necessary to make changes to the payment amounts. However, if the debtor's income increases by a significant amount, the trustee may ask that payments be adjusted accordingly. The trustee generally is not responsible for closely monitoring the debtor's income. After three years of a confirmed plan, if the plan even extends that long, there is no specific requirement in the Bankruptcy Code that disposable income be contributed to the plan, so an increase in income at that point in time would probably make little difference.

The trustee will consider not only the salary increase, but also whether there has been a corresponding increase in disposable income on which the payments are based. Disposable income is the amount of the debtor's salary that is left after deducting all reasonable living expenses. If the debtor's expenses increase along with his or her salary, the debtor's disposable income may not change and the payment plan will not change either. If the debtor's disposable income increases by a substantial amount, the trustee may ask for the payments to also increase. If the plan goes beyond 36 months, the increased payments may actually reduce the length of the plan. This would mean that the debtor has paid off his or her debts sooner and would receive a discharge earlier.

Speak to a bankruptcy lawyer

It could be disheartening to a debtor to receive a raise and have to turn it all over to the trustee for debt repayment, but that is not always the effect of a salary increase. A lawyer at D.J. Rausa, Attorney at Law in San Diego, CA, can put your mind at ease when questions about a Chapter 13 bankruptcy arise.

Copyright © 2014 D.J. Rausa, Attorney at Law.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

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DEBTS THAT REMAIN AFTER A CHAPTER 13 DISCHARGE

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A Chapter 13 discharge affects only those debts provided for by the plan. Any debts not provided for in the plan will remain, and the debtor will have to pay them in full, even after discharge. Additional exceptions to a Chapter 13 discharge include, generally, claims for spousal and child support; educational loans; drunk driving liabilities; criminal fines and restitution obligations; and certain long-term obligations, such as home mortgages, that extend beyond the term of the plan. A lawyer at D.J. Rausa, Attorney at Law in San Diego, CA, can explain which debts are "erased" as a result of a Chapter 13 discharge and which will remain the obligation of the debtor.

Taxes

Taxes more than three years old are not dischargeable if a return was never filed, the return was filed within two years of filing bankruptcy or they arose in connection with a fraudulent return or willful attempt to evade taxes. 11 U.S.C. § 523(a)(1). Also nondischargeable are debts incurred to pay a state or local tax that otherwise would have been nondischargeable. 11 U.S.C. § 523(a)(14).

Fraudulently incurred obligations

Obligations obtained by false pretenses, a false representation, actual fraud or the intentional provision of false or incomplete financial information respecting the debtor or an insider on which the creditor relied are nondischargeable. 11 U.S.C. § 523(a)(2).

Unscheduled debts

Unscheduled debts, or debts not disclosed in the debtor's petition, are nondischargeable unless the creditor had actual or constructive knowledge of the debtor's bankruptcy. 11 U.S.C. § 523(a)(3).

Spousal support and child support

Domestic support obligations and obligations owed to a spouse, former spouse or child as a result of divorce or separation are nondischargeable. 11 U.S.C. § 523(a)(4) and (a)(15). The term "domestic support obligation" means a debt owed to or recoverable by a spouse, former spouse or child of the debtor in the nature of alimony, maintenance or support pursuant to a separation agreement, divorce decree or property settlement agreement. 11 U.S.C. § 101(14A).

The effect of a discharge on child and spousal support obligations depends upon whether the debtor filed under Chapter 7 or Chapter 13 of the Bankruptcy Code. Whereas a Chapter 7 filing will have little effect on such obligations, a Chapter 13 proceeding may stop the collection activities, at least temporarily. The difference between chapters arises because, although all bankruptcies stop or "stay" creditors' efforts to collect debts, the Bankruptcy Code excludes actions to collect child support or spousal maintenance from the stay unless the creditor attempts to collect from the "property of the estate," and the different chapters of the Code define this term differently.

In a Chapter 7 proceeding, "property of the estate" includes all possessions, money and interests the debtor owns at the time he or she files. Money earned after the bankruptcy is filed, however, is not property of the estate. Since most child and spousal support is paid out of the debtor's current income, the bankruptcy should have little effect. Under Chapter 13, however, the Code considers the debtor's earnings as property of the estate, since the wage-earner plan is based on making payments from the debtor's current income rather than from liquidated assets. As a result, support collections may be stayed. The court can decide to remove the stay to allow for withholding alimony and child support from the debtor's income. Whether it does so may depend on how well the wage-earner plan provides for child and spousal support. If the court does not believe that the plan includes adequate provisions, it may decide to lift the stay.

Neither a Chapter 7 nor a Chapter 13 discharge affects post-discharge child or spousal support obligations. In other words, even at the conclusion of the bankruptcy proceeding, these on-going obligations remain.

Student loans

Educational loans guaranteed by the United States government are generally not discharged by a Chapter 7 or Chapter 13 bankruptcy. They may be dischargeable, however, if the court finds that paying off the loan will impose an undue hardship on the debtor and his or her dependents. 11 U.S.C. §(a)(8). In order to qualify for a hardship discharge, the debtor must demonstrate that he or she cannot make payments at the time the bankruptcy is filed and will not be able to make payments in the future. The debtor must apply before the discharge of the debtor's other debts is granted. Application for a hardship discharge is not included in the standard bankruptcy fees, and must be paid for after the case is filed.

The Bankruptcy Code does not specifically define the requirements for granting a hardship discharge of a student loan. Courts have applied different standards, but they often apply a three-part test to determine eligibility:

  • Income — if the debtor is forced to pay off the student loan, the debtor will not be able to maintain a minimum standard of living for himself or herself and his or her dependents
  • Duration — the financial circumstances that satisfy the income test will continue for a significant portion of the repayment period
  • Good faith — the debtor must have made a good-faith effort to repay the loan prior to the bankruptcy

Speak to a bankruptcy lawyer

It is tempting to believe that a Chapter 13 discharge will leave the debtor completely debt free, but that is not the case. Certain debts remain even after bankruptcy. An experienced bankruptcy attorney at D.J. Rausa, Attorney at Law in San Diego, San Diego, can explain the differences between dischargeable and non-dischargeable debts and paint a realistic picture of your post-bankruptcy financial situation.

Copyright © 2014 D.J. Rausa, Attorney at Law.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

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ALTERNATIVES TO FILING BANKRUPTCY

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Debtors who have faced obstacles to paying off their debts when due have no doubt received more than their fair share of demanding letters and phone calls, and the thought of filing bankruptcy and getting rid of their debts, and thus the constant demands, can be quite appealing. Before making a decision to pursue that route, which can have long-term effects on credit rating and the ability to make large purchases, debtors may wish to consider other, less drastic alternatives. Talking through these options with an experienced bankruptcy attorney at D.J. Rausa, Attorney at Law in San Diego, CA, can help make sense out of the myriad complex and confusing choices that must be made at an already stressful time.

Informal methods of debt resolution

If the debtor's financial problems are only temporary, he or she may want to ask creditors to accept lower payments or to schedule payments over a longer period of time. Creditors may be receptive to these ideas if the debtor has been a prompt payer in the past, or if the specter of bankruptcy is raised, since creditors know that once a bankruptcy proceeding is initiated they will probably collect only a portion of what is owed. In addition, creditors may wish to avoid the difficulties of a court proceeding to collect on the debt, which can be time-consuming and expensive.

Consumer credit counselors can also help creditors work out a repayment plan. Some so-called "credit counselors," however, prey on overwhelmed consumers, promising "a clean slate," often for a flat, up-front fee. They may promise to contact creditors and convince them to accept lower payments or to charge lower fees and interest rates. In many cases, unfortunately, the only ones who end up in better financial shape as a result of these "efforts" (or the lack thereof) are the counseling organizations themselves, while the consumers are left with even fewer resources as a result of high fees and more delinquent debts.

Beware of scams

Although reputable credit-counseling agencies that actually provide valuable services to financially overwhelmed consumers do exist, vulnerable debtors often fall prey to less scrupulous services. Tips that can help consumers avoid scams discussed below.

  • Beware of promises that sound too good to be true; claims of helping you "get out of debt easily" are a red flag.
  • Deal with a reputable agency by checking with state consumer agencies and the local Better Business Bureau to make sure there have been no or few complaints against the organization, and that the complaints that have been raised were favorably resolved.
  • Verify that the organization provides counseling and education, as well as debt consolidation and payment services, to help consumers achieve financial stability and remain debt-free.
  • Carefully read through and have your lawyer review any written agreement that a credit counseling organization offers to make sure it describes in detail the services to be provided; the payment terms for these services, including their total cost; how long it will take to achieve the desired results; any guarantees offered; and the organization's business name and address.
  • Avoid paying up-front fees — reputable agencies do not charge big up-front fees, but may take a small monthly fee for a debt repayment service; the initial consultation should always be free.
  • Beware of any high fees or required contributions, like high monthly service charges, that may add to the overall debt load and defeat efforts to pay off bills.

Confirm payments with creditors. Some debt repayment services require the consumer to periodically send it a lump-sum check that it divides among the creditors. Debtors who enter into these types of arrangements should verify with their creditors that the payments are actually being made.

Speak to a bankruptcy lawyer

If a debtor's financial troubles are long term or if his or her creditors will not informally agree to an alternative payment plan, bankruptcy may be the best way for the debtor to get out from under an insurmountable debt load. Although it is not without its adverse consequences, bankruptcy can be the right option to enable debtors to make a fresh start. An experienced bankruptcy attorney at D.J. Rausa, Attorney at Law in San Diego, CA, can advise clients about whether bankruptcy is the right choice for them.

Copyright © 2014 D.J. Rausa, Attorney at Law.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

For some individuals, one unfortunate or tragic event can lead to bankruptcy; for others bankruptcy results from their inability to curb overspending. If you are faced with the possibility of bankruptcy, contact an experienced attorney to discuss your options and whether Chapter 13 fits your situation.

Chapter 13 Bankruptcy Information

Are you overwhelmed by debt and just need some breathing room? At the California law offices of D.J. Rausa, we help people with Chapter 13 filings that restructure your debt to make it manageable. Find out how we can help during your initial consultation. Contact us today. Call 1-800-422-DEBT.

Chapter 13 Bankruptcy - An Overview

The bills are stacking up, demanding calls and letters are arriving with increasing frequency and despite the best of efforts, the overdue debts just cannot be paid. In such cases, filing bankruptcy under Chapter 13 of the Bankruptcy Code may provide a solution to what seems like an insurmountable problem. Once considered a last resort, bankruptcy has evolved into an accepted method of resolving serious financial problems. If you are facing serious financial challenges, it is important to seek the counsel of an experienced bankruptcy attorney at D.J. Rausa, Attorney at Law in San Diego, CA, to determine whether filing under Chapter 13 is right for you.

Bankruptcy law provides two basic forms of relief: (1) liquidation and (2) rehabilitation or reorganization. Most bankruptcies filed in the United States involve liquidation, which is governed by Chapter 7 of the Bankruptcy Code. A reorganization or rehabilitation bankruptcy under Chapter 11 or 13 of the Bankruptcy Code is, however, the option often preferred by the courts. Under Chapters 11 and 13, creditors may be provided with a better opportunity to recoup what they are owed.

Read More

Alternatives to Filing Bankruptcy

Debtors who have faced obstacles to paying off their debts when due have no doubt received more than their fair share of demanding letters and phone calls, and the thought of filing bankruptcy and getting rid of their debts, and thus the constant demands, can be quite appealing. Before making a decision to pursue that route, which can have long-term effects on credit rating and the ability to make large purchases, debtors may wish to consider other, less drastic alternatives.

Read More

Debts that Remain After a Chapter 13 Discharge

A Chapter 13 discharge affects only those debts provided for by the plan. Any debts not provided for in the plan will remain, and the debtor will have to pay them in full, even after discharge. Additional exceptions to a Chapter 13 discharge include, generally, claims for spousal and child support; educational loans; drunk driving liabilities; criminal fines and restitution obligations; and certain long-term obligations, such as home mortgages, that extend beyond the term of the plan.

Read More

Effects of a Salary Increase on a Wage-Earner Plan Under Chapter 13

When a Chapter 13 debtor enters into a wage-earner plan, he or she commits the next three years' disposable income — that portion of the debtor's income not required to meet the necessary needs of the debtor and his or her dependents — to the repayment of debt. Often, a debtor's income will increase after the plan is in place, and the question arises as to what becomes of this increase in income.

Read More

Rebuilding Your Credit After Bankruptcy

Bankruptcy has a long-lasting impact on a person's credit rating and on his or her ability to obtain credit in the future. The impact is not entirely negative. In some cases, filing bankruptcy may actually improve a bad credit rating. In addition, there are a number of steps a person can take to improve his or her credit after bankruptcy.

Read More


Chapter 13 Resource Links

United States Bankruptcy Courts 
The official website of the United States Bankruptcy Courts includes a variety of useful information about bankruptcy.

Bankruptcy glossary 
A glossary of bankruptcy terminology that explains, in layman's terms, many of the legal terms that are used in cases filed under the Bankruptcy Code.

Bankruptcy fees 
Bankruptcy filing fees, maintained by the Administrative Office of the U.S. Courts on behalf of the U.S. Courts.

Bankruptcy forms 
Official Bankruptcy Forms, Procedural Forms and the Bankruptcy Forms Manual.

Chapter 13 basics 
General information about individual debt adjustment under Chapter 13 of the Bankruptcy Code.

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D.J. Rausa interviewed by the Wall Street Journal for article on Bankruptcy and Student Loan Debt.

D.J. Rausa is recognized as a legal expert in Student Loan Debt Resolution and the associated Bankruptcy Laws.

Read what D.J. recently told The Wall Street Journal regarding the probable rise in Student Loan Debt Resolution through Bankruptcy.

Client Testimonial

To whom it may concern,
Mr. Rausa is extremely knowledgeable with the complexities of Federal Student Loans.
I went from a thriving career to full medical disability, ending with an SSDI placement. Unfortunately, I lost everything and became unable to continue making the student loan payments, so it was in deferment for over five years. When the SSDI settled I tried to negotiate an affordable payment plan with the loan holders but they refused my efforts, instead demanding over twice the amount I could afford.
I contacted Mr. Rausa and found him to be courteous, responsive and quick to assess my situation. He was sure he could help and took time to answer all questions, which relieved much anxiety. Within months he successfully resolved the debt! With much confidence, I highly recommend Mr. Rausa.
Please contact me if you have any additional questions.
Sincerely,
 CJWaldenSignature
CJW
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