A Chapter 13 bankruptcy attorney in California does far more than fill out forms. Over a case that lasts three to five years, the lawyer designs a repayment plan that meets the Bankruptcy Code's tests, answers trustee and creditor objections, guides the plan to confirmation, seeks modifications when life changes, and helps you reach the discharge at the end. Here is what each stage involves.
If you are behind on a mortgage or facing a sale date and wondering whether Chapter 13 could help, call (415) 754-0115 to schedule a free consultation, or use our contact page.
Why a Chapter 13 bankruptcy attorney in California stays involved for years
Chapter 7 is usually a short case. Chapter 13 is a long relationship with the court, the trustee and your creditors. Plans must satisfy several legal requirements at once, and they have to survive changes in your income, household and expenses for years. Mistakes early on, such as an unrealistic budget or an overlooked creditor claim, tend to surface later as missed payments or dismissal motions.
Stage one: designing the plan
The plan is the heart of the case. In the Northern District of California, it is prepared on the district's standard plan form, and it must be filed with the petition or shortly after.
Tests every plan has to pass
- Disposable income. If you are above the California median income, the means test forms calculate what must go to unsecured creditors, and the plan typically runs five years. Below-median filers usually propose three years.
- Best interests of creditors. Unsecured creditors must receive at least what they would have received if your non-exempt property had been liquidated in Chapter 7.
- Feasibility. You must be able to make the payments. A plan that looks good on paper but leaves no room for groceries will fail.
- Good faith. The court looks at the whole picture, including your reasons for filing.
Decisions the attorney makes inside the plan
Mortgage arrears
Missed payments are spread across the plan while you resume regular monthly payments, which is how many California homeowners who stopped a trustee's sale by filing go on to keep the house.
Vehicles
A loan on a car bought more than 910 days before filing can sometimes be reduced to the vehicle's value, with the interest rate adjusted. Loans on vehicles bought within that window generally cannot be reduced below the balance owed.
Second mortgages
If a home is worth less than the first mortgage, a wholly unsecured second loan or HELOC can often be treated as unsecured debt in the Ninth Circuit, with the lien removed after the plan is completed.
Priority debts
Recent income taxes and domestic support arrears generally must be paid in full over the plan, but without the pressure of levies or garnishments while you do.
For a closer look at how payments are structured, see our explainer on the Chapter 13 repayment plan.
Stage two: the trustee review and objections
Every Chapter 13 case is assigned a standing trustee who reviews your plan, questions you at the meeting of creditors, and collects your payments. You must begin making plan payments within 30 days of filing, even before confirmation.
Common trustee objections
- The budget does not match pay stubs or bank statements
- Tax returns have not been filed or provided
- Unsecured creditors are not receiving enough under the disposable income or liquidation tests
- Pre-filing transfers or unexplained expenses
Creditor objections
Mortgage lenders sometimes dispute the arrears figure, and car lenders may challenge a valuation. The attorney reviews filed proofs of claim, objects to inaccurate ones, and negotiates or litigates the differences.
Stage three: getting the plan confirmed
The court holds a confirmation hearing after the meeting of creditors. By then, your attorney will usually have worked through the trustee's concerns, often by filing an amended plan or providing more documents. Once the judge confirms the plan, its terms bind you and your creditors.
Stage four: life during the plan
Staying current
You make plan payments to the trustee and keep up ongoing obligations such as mortgage payments, insurance and taxes. Falling behind can prompt a motion to dismiss or a lender's motion for relief from the automatic stay, and the attorney responds to both.
Modifying the plan
Job loss, illness, a new baby or a raise can all change what is affordable. The Bankruptcy Code allows confirmed plans to be modified, and your lawyer prepares the request and supporting budget.
When the plan cannot continue
If circumstances change dramatically, options include converting to Chapter 7, seeking a hardship discharge in limited situations, or voluntary dismissal. Each has consequences that deserve careful review first.
Stage five: the path to discharge
After the final plan payment, you must complete a financial management course and certify that domestic support obligations are current. The court then enters the discharge, releasing most remaining unsecured debt included in the plan. The attorney also confirms that the mortgage servicer treats the loan as current, which avoids surprises after the case closes.
How The Somal Law Firm handles Chapter 13 cases
The Somal Law Firm is attorney Bob Somal's boutique practice in Pleasanton, serving the Tri-Valley, Alameda and Contra Costa Counties and the wider Bay Area. Chapter 13 sits alongside the firm's other practice areas, including foreclosure defense, loan modification and IRS disputes, which matters because many Chapter 13 filers are dealing with a mortgage or tax problem at the same time. You can also compare the two main chapters in our guide to Chapter 7 vs Chapter 13.
Frequently asked questions
Can Chapter 13 stop a foreclosure sale in California?
Filing before a scheduled trustee's sale generally stops it through the automatic stay. Keeping the home long term depends on a confirmable plan that cures the missed payments.
Is there a debt limit for Chapter 13?
Yes. The Bankruptcy Code sets eligibility limits on secured and unsecured debt, which are adjusted periodically. An attorney can check whether your debts fall within them.
What if I miss a plan payment?
Tell your attorney right away. A single missed payment can often be addressed, but repeated defaults can lead to dismissal.
When you call, Bob Somal will look at your income, your home and your debts, explain whether a Chapter 13 plan appears workable, and describe what the next few years would involve. Call (415) 754-0115 to book a free consultation, or use our contact page.
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.