Regain financial control with a Chapter 13 bankruptcy plan expertly tailored to your unique situation
Chapter 13 is considered a type of “reorganization” bankruptcy because it involves creating a debt repayment plan that reorganizes cash flow and provides relief from creditors. Plans can be created to span up to five years, with the average timeframe being three to five years (though they can be much shorter). They can involve repaying a very small percentage of the debt owed or all of it.
Every plan depends on individual client needs and is tailored to fit the situation before being proposed to the court. Our attorneys specialize in Chapter 13 plans and know exactly what’s required to gain court approval of a very favorable plan.
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How Chapter 13 bankruptcy can help with financial hardships
As with Chapter 7 bankruptcy, Chapter 13 can be used to get rid of unsecured debt such as credit card balances, medical bills, and personal loans. It can also be used to discharge some types of income taxes or even to eliminate debts related to a foreclosure or repossession. It has even been used to discharge debt that people owe to the Social Security Administration so that they can receive their full Social Security benefits again.
Some types of debt are only dischargeable through Chapter 13 and not through Chapter 7. One example is debt owed to a former spouse according to a family court order (but not alimony or child support). This type of debt doesn’t require repayment in a Chapter 13 plan and is permanently forgiven upon completion of the plan.
Chapter 13 can be used to repay a mortgage, real estate taxes, car loan, or secured debt attached to an asset such as an RV, camper, or motorcycle. Even if a foreclosure has started or a sheriff’s sale or tax sale has been scheduled, filing for Chapter 13 bankruptcy freezes the litigation or sale. The person then has the opportunity to repay the debt over no more than five years and keep the asset. This can be a valuable option for someone who has lost their job for a few months and fallen behind on their mortgage but doesn’t want to lose the family home. In that case, they simply restart making the mortgage payments again after filing and then make smaller monthly payments to the Chapter 13 bankruptcy trustee to “cure” the mortgage.
The process for filing Chapter 13 bankruptcy
Filing for Chapter 13 bankruptcy involves submitting a petition (along with other documentation such as schedules and statements) to the federal bankruptcy court. The court issues a case number, appoints a bankruptcy trustee, and sets up a required telephone or virtual hearing.
Creditors have a set period of time to file claims in the case. Our attorneys attend a confirmation hearing to request that the court approve the Chapter 13 bankruptcy plan. In almost all cases, our clients never need to step into a courtroom.
Converting a Chapter 13 bankruptcy to a Chapter 7 bankruptcy
In many cases, Chapter 13 bankruptcy plans can be converted to Chapter 7 if a person’s circumstances change. For example, a Chapter 13 case may have been filed to keep someone from losing their home to mortgage foreclosure. The person may have also been carrying substantial credit card debt.
If the mortgage lender later agrees to modify the mortgage loan directly with the client, then the mortgage foreclosure is considered resolved. The person could then ask the court to convert the case from Chapter 13 to Chapter 7 and discharge the credit card debt without having to make any more monthly payments required in the original Chapter 13 plan.
How RQP Law has helped clients maximize Chapter 13 bankruptcy benefits
Chapter 13 bankruptcy is most powerful when the benefits are combined — and our attorneys craft plans that are designed to maximize the benefits and address multiple financial issues at once wherever possible. Here are just a few real-world examples from our own clients (names changed for privacy reasons):
Ashley owed $6,000 in back taxes to the IRS and $30,000 in credit card debt and was facing foreclosure for being $6,000 behind on her mortgage.
We set her up with a plan to keep her home while eliminating all unsecured debt by restarting her mortgage payment and making a monthly Chapter 13 bankruptcy plan payment of $200 — providing $6,000 to the IRS and $6,000 to the mortgage lender over a period of five years.
Stewart was four months behind on a $15,000 payment for the car he used for work purposes and was concerned that it would be repossessed.
He also had an outstanding personal loan of $20,000. By submitting a payment of $250 a month through the Chapter 13 bankruptcy plan we created, he would be able to keep the car, pay off the loan on it over a period of five years, and eliminate the personal loan.
Benjamin and his wife owed $12,000 in past-due real estate taxes and had been notified that there would be a tax sale on their home the next month.
They also owed the IRS $8,000 from five years prior. With our plan, they were able to keep their home from being sold by paying $200 a month over a period of five years to the Chapter 13 bankruptcy trustee for the real estate taxes. And the IRS debt was discharged without payment.
Understanding your options when filing for bankruptcy
Learn about the bankruptcy options available to you and how we can help.
Chapter 7 Bankruptcy
Learn about unsecured debt and if Chapter 7 makes the most sense.
Chapter 13 Bankruptcy
Reorganize cash flow and provide debt relief from your creditors.
Filing for bankruptcy isn’t always the best solution for debt relief.
Schedule a FREE Consultation
Our attorneys are here to answer your questions about Chapter 13 bankruptcy in Pennsylvania. We represent clients in Pottstown, Norristown, West Chester, Reading, and the surrounding areas. Contact our Pennsylvania debt relief law firm today to learn how we can help you.
We are pleased to meet with you in either of our Pennsylvania offices to discuss your financial challenges.
192 South Hanover Street
Pottstown, PA 19464
Lancaster, PA 17603