Chapter 13 bankruptcy in Antioch, CA can let you keep your car and your home while you repay what you owe through a court-approved plan lasting three to five years. For families in eastern Contra Costa County who depend on a vehicle to commute and are behind on a mortgage, it can turn an emergency into a schedule.
If a repossession notice or a notice of default has already arrived, call (415) 754-0115 to schedule your free consultation, or use our contact page to tell us what is going on.
Why Antioch households look at Chapter 13
If you commute from Antioch to a job elsewhere in the Bay Area, losing a car can mean losing income. If you also own a home and fell behind after a job change, illness or a jump in expenses, the pressure comes from two directions at once. Chapter 7 can wipe out unsecured debt, but it does not give you a way to catch up on missed mortgage or car payments over time. Chapter 13 does.
Chapter 13 is a reorganization. You keep your property, make one monthly payment to a Chapter 13 trustee, and the trustee distributes that money to creditors according to your plan. When the plan is complete, remaining qualifying debts can be discharged.
How Chapter 13 bankruptcy in Antioch can protect your car
Vehicle loans get special treatment in Chapter 13. If you are behind, the missed payments can be folded into the plan so the lender cannot repossess while you keep up with the plan. Filing also triggers the automatic stay, which generally stops a pending repossession.
Restructuring the loan itself
In some cases, the plan can do more than cure arrears. If you bought a car for personal use more than 910 days before filing, the secured part of the loan may be reduced to the vehicle's current value, with the rest treated like unsecured debt. This is often called a cramdown. The interest rate on the secured portion may also be set by the court under the plan. Whether this applies depends on when and how you bought the car, so bring your loan contract to the consultation. Our article on keeping your car in bankruptcy compares the options under each chapter.
When the car was already repossessed
If the lender has taken the car but not yet sold it, a prompt Chapter 13 filing may in some situations allow you to get it back by providing for the loan in your plan. Time is critical, because once the car is sold the options narrow.
Catching up on a mortgage over three to five years
California foreclosures usually proceed outside of court, beginning with a notice of default and moving toward a trustee's sale. Chapter 13 allows you to cure missed mortgage payments over the life of the plan while you resume regular monthly payments. As long as the plan is followed, the lender generally cannot complete the foreclosure on those arrears.
Some homeowners also have a second mortgage or home equity line. If the home is worth less than what is owed on the first mortgage, a wholly unsecured junior lien may be stripped off through the plan. Our guide on stripping a second mortgage in Chapter 13 explains when that is possible.
Protecting co-signers
Chapter 13 includes a co-debtor stay. If a relative co-signed your car loan or another consumer debt, creditors are generally restricted from pursuing that person while your case is active. A creditor can ask the court to lift that protection, for example if the plan does not propose to pay the debt. That can matter a great deal if you borrowed with help from a parent, an adult child or a partner.
What your Chapter 13 plan has to include
The plan length is typically three years if your income is below the California median for your household size, although it can run longer, and five years if your income is above it. The payment is based on your disposable income after allowed expenses. The plan must also pay unsecured creditors at least what they would have received if your non-exempt property had been liquidated in Chapter 7, which is why home equity and other assets affect the numbers.
Certain debts must be paid in full through the plan, such as recent priority taxes and domestic support arrears. Others, like credit cards and medical bills, often receive whatever remains. The court must confirm the plan before it becomes binding.
Steps from filing to discharge
- Complete credit counseling and gather income, debt and property records.
- File the petition, schedules and proposed plan; the automatic stay begins.
- Start plan payments to the trustee shortly after filing.
- Attend the meeting of creditors and the confirmation hearing.
- Make every plan payment, complete the financial management course and receive a discharge.
Working with a local bankruptcy attorney
The Somal Law Firm, led by attorney Bob Somal, represents individuals and small business owners across Contra Costa and Alameda Counties in Chapter 13 and Chapter 7 bankruptcy, foreclosure defense and debt relief. A Chapter 13 plan has many moving parts, and a realistic budget is the difference between a plan that works and one that fails. Bob's approach is to review your income and obligations carefully, explain the options in plain language and help you choose a path you can sustain.
Frequently asked questions
Can I keep my car if I am behind on payments?
Often, yes. Chapter 13 lets you include missed car payments in your plan. You must keep the vehicle insured and make plan payments on time.
What if I miss a Chapter 13 plan payment?
Contact your attorney right away. Plans can sometimes be modified if your income changes, but repeated missed payments can lead to dismissal.
Does Chapter 13 stop a foreclosure sale?
Filing triggers the automatic stay, which generally halts a scheduled trustee's sale. Prior dismissed cases can limit that protection, so tell your attorney about any earlier filings.
If you live in Antioch and need to protect your car, your home or a co-signer, call (415) 754-0115 to schedule your free consultation with The Somal Law Firm. You can also reach us through the contact page. Bob will review your loans, income and deadlines and explain whether Chapter 13 or another option may fit your situation.
Attorney Advertising. This article is general legal information for Bay Area residents, not legal advice, and does not create an attorney–client relationship. Every situation is different — please consult a licensed attorney about your specific circumstances.