Legal Question in Bankruptcy in California

Will Chapter 13 help?

Hello.

A party currently has a judgment against me in small claims court. I've requested to the court to pay in monthly installments of $43.00. However, the other party has told the court that they want $430 per month. I can only afford the $43.00. If it's anything higher, I will have to default on the court judgment because I will simply be unable to pay it. My question is: ''should'' the court demand a higher payment from me (although my Financial Statement clearly shows I cannot afford higher) would it be of any help to file a Chapter 13 and include this judgment & hope that a Bankruptcy Judge will allow me to make a more affordable payment? I have no assets for them to take and I barely make $12 per hour and have the sole responsibility of 2 minor children. The total judgment is for $2610.00. I know that sometimes, in Chap 13, the court will allow up to 5 years to repay a debt and that is the formula I used to come up with my monthly payment of $43.00, not to mention that it's all I can afford at my current income. And do I have any say in the matter once the court responds with the ''amount I'm ordered to pay''? Can I file any motion to argue prior to being in default? Any advice is appreciated.

Thank you.


Asked on 6/17/04, 10:26 pm

1 Answer from Attorneys
Gary Fraley California Bankruptcy Attorneys

Re: Will Chapter 13 help?

Will Chapter 13 help. Yes, and no. You can do a chapter 13 reorganization over 3-5 years but the cost for legal fees, court costs and trustee handling fees far exceed the total amount of the debt. The creditor does not have to agree to take anything on payments at all if they don't want to. HOWEVER having said that there are 2 potential solutions for you. First, you could file chapter 7 straight bankruptcy to get rid of the debt but if it is all you owe you may not want to do that. That is a decision you should consider carefully as you can only do it once every 6 years. On the other hand if there are more debts you may want to seriously consider it. The second option is that if the creditor tries to garnish your paycheck you can go to the agency that serves the garnishment and fill out a form called a "claim of exemption" which includes a budget that you fill out showing that you cannot afford to pay the 1/4 of your paycheck and you may well get the amount you pay monthly reduced or eliminated for 6 nonths. This can be done every 6 months.

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Answered on 6/19/04, 5:15 pm


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