• Chapter 13 allows debtors to keep their property.home 3 image by Stacey Lynn Payne from Fotolia.com
  
  In a Chapter 13 bankruptcy case, you get to keep your toys, meaning that you do not have to give up valuable property in order to receive a discharge of debts from the bankruptcy court. This is one of the biggest advantages Chapter 13 bankruptcy has over Chapter 7 bankruptcy. If you are filing for Chapter 13 in the state of California, the following rules apply to you.
  
  

Requirements

• A Chapter 13 debtor must meet these eligibility requirements: His unsecured debts must be less than $360,000, and his secured debts must be less than $1,081,400 as of June 2010. A debtor planning on filing a Chapter 13 bankruptcy petition must have a steady paycheck coming in for the next three to five years. Chapter 13 is called the wage earner’s plan because the debtor will spend the next few years of his life repaying his debts. The debtor will come up with a payment plan based on his projected future earnings. The debtor must seek credit counseling from a government-approved credit counseling agency within the 180 days prior to filing his Chapter 13 petition. In credit counseling, the debtor will come up with a repayment plan to present to the bankruptcy court for consideration. A means test will determine the length of the debtor’s repayment plan.
  
  

Means Test

• The means test compares the debtor’s family income with the median family income of the state of California for a family of the same size. In California, the median family income, as computed by the Census Bureau, is listed as follows: $64,878 for a family of two; $70,890 for a family of three; $79,477 for a family of four; $68,073 for a family of five; $67,499 for a family of six; and $74,290 for a family of seven or more. If the debtor’s family income is less than the state median, then his debt repayment plan will span three years. If the debtor’s family income is above the state median, his repayment plan will span five years.
  
  

Repayment

• The debtor will have to apply his monthly disposable income towards his debt in the repayment plan. The debtor’s monthly disposable income will be calculated by deducting his allowed monthly expenses from his monthly income. If the debtor misses payments, his case will be dismissed or converted to Chapter 7. Median incomes do change, so the debtor should consult the Census Bureau for the correct figures prior to filing for bankruptcy.