Before filing Philadelphia Chapter 13 bankruptcy, also known as a reorganization bankruptcy, it is helpful to become familiar with the finer details of this process. In short, this type of bankruptcy will allow you to pay back partor all of your debt over a three to five year period, via a repayment plan. The amount of the payments and the length of the plan are determined based on your individual situation.
This is not the same as Chapter 7 bankruptcy, in which most of your unsecured debts are discharged, but in some cases you may have to surrender some assets to pay your creditors.
Are you Eligible?
In Chapter 13 bankruptcy, you are using your income to repay creditors. For this reason, you must show the court that you will earn enough money to meet your monthly repayment plan obligation. If you do not have a salary or earn enough money, other sources of income, such as pension, social security benefits, disability income, workers’ compensation payments, unemployment, part time work, spousal income, family support, and other types of regular income may be used.
If your debt is too high, you will find yourself ineligible. Your unsecured debt cannot exceed more than $383,175 and your secured debt cannot exceed $1,149,525.
Getting Started with Chapter 13
Once you understand the benefits of what a Chapter 13 bankruptcy can accomplish and you have determined that you are eligible to file, then it may be time to move forward.
It is best to hire an experienced bankruptcy attorney to guide you through this process. Though the Bankruptcy Court does not require this, it can go a long way in relieving you of a lot of stress and preventing you from making serious mistakes which can jeopardize your bankruptcy case as well as your property. It is very easy for an inexperienced individual to make a mistake. Even attorneys that file bankruptcy hire an experienced bankruptcy attorney to represent them when they file for bankruptcy.
You are required to receive credit counseling from a United States Trustee’s office approved agency before filing for Chapter 13 bankruptcy. The counseling typically lasts about forty five minutes to one hour and is usually done either on the telephone or online. A certificate will be sent to you and your lawyer indicating that you have done the counseling.
Along the way, you will work with your attorney to implement a repayment plan that you can afford. This will describe in great detail how you will pay your debt. From how much you will pay each month to the total amount of time (typically three to five years). The plan will indicate if you are paying back money owed on the mortgage, paying off a car, paying back any taxes, and any payments being made on other bills.
There is a lot that goes into a Chapter 13 bankruptcy filing, so it is best to consult with a qualified Philadelphia bankruptcy attorney as soon as you realize that this may be the right decision for you. We are here to answer your questions and help you decide if filing would be in your best interest and help you start enjoying life again.