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Chapter 13 Bankruptcy

If you are considering filing Chapter 13 bankruptcy, our legal team of Pennsylvania bankruptcy attorneys may be able to help. Please take a few moments to look over the information on this page to learn more.
 

What is Chapter 13 Bankruptcy?

In the US, there are two options for filing bankruptcy that are typically employed by individuals: Chapter 7 and Chapter 13. Chapter 13 bankruptcy allows you to repay your debts rather than eliminate them. Each month, you pay a portion of your income to your court appointed trustee, who will distribute the payment to your creditors. Filing for a repayment plan allows you to keep most of your property while reducing your monthly payments so you can catch up by extending loan payment periods for up to 5 years.
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Who is eligible for Chapter 13 Bankruptcy?

The requirements for Chapter 13 bankruptcy are as follows:
  • You must reside or do business in the United States or a municipality
  • You can’t have tried to file bankruptcy in the last 180 days and been denied.
  • You must have a regular income.
  • Your total debts cannot exceed $1,162,075 (secured debts cannot exceed $871,550 and unsecured debt cannot exceed $290,525).
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How long will Chapter 13 Repayment Plans last?

In most cases, Chapter 13 Repayment Plans last for up to 36 months, though under certain circumstances, they can be extended to 60 months. Once the repayment period ends, most debt is forgiven. The debts that will remain include child support and alimony, student loans, criminal fines, long term debt like home mortgages, and other miscellaneous debt.
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What are the steps to declaring bankruptcy?

  1. Choose to file bankruptcy. You should only file bankruptcy if you have no other options. If you decide to go ahead, you must choose between filing either Chapter 7, which involved liquidating your assets, or Chapter 13, which requires setting up a repayment plan.
  2. Hire an attorney. In most cases, you’ll want to speak with an attorney before you file for bankruptcy. An attorney will explain the bankruptcy process and help you deal with creditors. New Jersey law prohibits creditors from harassing you, calling you at unreasonable hours or at work, or telling your friends, relatives and employers about your debt. Once you retain a lawyer, creditors may only speak to your lawyer.
  3. Start bankruptcy filings. To file for bankruptcy, you must go to the courthouse and fill out bankruptcy forms detailing your financial history. There is a $150 case filing fee and a $39 administrative fee.
  4. Work with a Trustee. When you file for a repayment plan, you must allocate how much money you can pay monthly. This will be based on your income, your monthly living expenses, and the total amount of your debts. Your court-appointed trustee will manage the distribution of those funds to your creditors.
  5. Work with Creditors. Once your Chapter 13 plan is approved, creditors are required by law to stop most collection actions against you or your property. Creditors cannot initiate or continue lawsuits against you, continue with foreclosure proceedings on your home, or call you to demand payments. Between 20 and 50 days after you file for Chapter 13 bankruptcy, your trustee will hold a meeting with creditors where you will answer questions about your repayment plan and financial situation under oath.
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Do I need to hire a bankruptcy lawyer?

Under most circumstances, if you file bankruptcy, you will benefit from consulting with a bankruptcy attorney. Your lawyer will help you calculate the value of your assets, evaluate options to keep your home, car, and other personal assets, and keep creditors from calling you directly. Once you hire an attorney, creditors are required by law to only contact your attorney.
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What is the new bankruptcy law and when did it take effect?

In April 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Most of the changes from this law went into effect on October 17, 2005, or 180 days from the time the bill was signed into law. Under the new law, bankruptcy applicants must meet certain eligibility requirements. If your current monthly income is less than the median income in your state, you are eligible for Chapter 7. However, if your current monthly income is greater than the median income of your state and you can afford to pay 25% of your debt, you are not eligible for Chapter 7 bankruptcy and must file Chapter 13 proceedings.
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If I file for bankruptcy, will I need to go through credit counseling?

Yes. The new bankruptcy law requires that applicants must undergo credit counseling in a government-approved program before they file for bankruptcy. Once applicants file for bankruptcy, they must also participate in a government-approved financial management program to learn the basics of personal finance.
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What happens to my home, personal property, and other assets?

Once you file for bankruptcy, all the property you own at the time of filing and certain other types of property you may receive in the future becomes the property of the bankruptcy estate. However, once your Chapter 13 repayment plan is approved by the court, your property will be returned to you. A major benefit of Chapter 13 bankruptcy is that it allows you to keep your home. If you are behind on your mortgage payments, your repayment plan will include ways to catch up on any back payments.
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What happens to my credit rating when I file for bankruptcy?

Chapter 13 bankruptcy filings will stay on your credit report for up to 10 years. Once you file for bankruptcy, it can take up to 2 years to rebuild your credit. If you still have monthly debts like your mortgage or car payments, consistently paying them on time every month will help build your credit.
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What are the attorney’s fees?

Your initial consultation is free. Once you have spoken with one of our lawyers, we will estimate a fee based on the nature and complexity of your case. We offer flexible payment plans and can accommodate the needs of most people.
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How do I get started?

Please fill out the Free Case Evaluation form on the top right side of this page and we will respond within 24 hours.
If you wish to speak with someone immediately, call our client-intake specialist, Ken Cooper, at (856) 308-5426.