What Happens When I File A Chapter 13 Case
In a Chapter 13 case, you do not have to liquidate assets in order to pay your creditors instead, you develop a plan to repay all or a portion of your debts over time, which allows you to keep most or all of your property. During the period the plan is in effect, you make your regular payments to the trustee assigned to your case who, in turn, distributes the money to your creditors. The applicable commitment period for payment under a Chapter 13 plan is three years for debtors whose familys current monthly income is less than the state median for a family of the same size and five years if it is greater. Your Chapter 13 plan must pay your unsecured creditors at least as much as they would receive if your nonexempt assets were liquidated under Chapter 7. Also, your plan payments for unsecured debts must be equal to your disposable income . In other words, you cannot retain a cash reserve each month.
In order to be eligible to file for Chapter 13 bankruptcy, you must have regular income and meet certain debt limitations for your unsecured and secured debts . Individuals, sole proprietorship businesses, or spouses can file a Chapter 13 Bankruptcy. Just like a Chapter 7 case, filing a petition for Chapter 13 bankruptcy with the bankruptcy court automatically stays most debt collection actions against you. You must file your repayment plan either with your petition or within 14 days after filing your case.
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How Long Does Filing Bankruptcy Stay On My Credit Reports
Short Answer: A bankruptcy filing can stay on your credit for 7-10 years depending on the chapter that you filed under. Chapter 7 bankruptcy stays on credit reports for 10 years, chapter 13 for 7 years.
But that doesn’t mean you can’t re-establish credit for those periods of time! I have many clients that have gotten back on their feet, credit-wise, within 1-2 years. Scores in the mid-600’s are common after that period of time, and scores of over 700 are not uncommon.
How To File Chapter 7 Bankruptcy
The most important factor in filing Chapter 7 bankruptcy is finding an experienced bankruptcy attorney. Once you decide on an attorney, you can refer creditors to your lawyers office. Filing the petition will trigger an automatic stay, which means creditors cant pursue lawsuits, garnish your wages or contact you about your debts. Heres a potential timetable:
If youre qualified, it will take 4-6 months to complete the bankruptcy process.
Here are the steps you must take when filing for bankruptcy:
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Chapter 7 And Chapter 13 Bankruptcy For Funeral Expenses
If you need to file for bankruptcy to discharge debt accumulated after a funeral, the most likely choices for your situation is Chapter 7 or Chapter 13 bankruptcy. As mentioned, Chapter 7 bankruptcy allows a debtor to discharge multiple forms of debt. This is possible because the property of the debtor will be sold in order to pay back their creditors. While your home cannot be sold to satisfy a debt in Chapter 7 bankruptcy, other valuables may have to be sold.
Many petitioners prefer to file for bankruptcy because of how relatively quickly the proceedings will conclude. Chapter 7 bankruptcy filings generally take about 90 days to resolve. Once the bankruptcy proceedings are complete, the debtor will then receive their debt discharge.
Chapter 13 bankruptcy allows a debtor to reorganize their debts to make them easier to pay. Specifically, the total amount of bills or the interest rate of bills will be decreased and consolidated into a single payment for the debtor to pay. Chapter 13 bankruptcies typically last five years. However, if a debtor is in dire financial straits, the court may approve a three-year repayment plan.
It is important to note that if your creditors believe that you can still afford to pay your bills, they may contest your petition for bankruptcy. This means that you should be sure that you have exhausted all other options before you choose to file for bankruptcy.
How Long Does It Take Before We Can Buy A Home After Filing Bankruptcy
Short Answer: After filing bankruptcy, you may think that you will never be able to get a new mortgage to buy a home, particularly if you’ve also lost a home to foreclosure.
But you would be surprised. Even though a chapter 7 bankruptcy can stay on your credit for 10 years from the filing date , the mandatory waiting period to apply for a mortgage backed by Fannie Mae or the Federal Housing Administration is from two to four years.
In fact, it is even possible to apply for an FHA loan while you are in chapter 13 bankruptcy, so long as you have been on your plan for at least one year, and have paid all of your trustee payments timely.
But you should do what you can to repair and rebuild your credit first, in order to get the best interest rate that you can. Just because you can apply for a mortgage loan doesn’t mean you should. You don’t want to get stuck with a lousy interest rate.
So yes, filing bankruptcy is something to be avoided if you can, but if you can’t avoid it, it is not the end of the credit world for you, not by a long shot. If you have serious debt problems call our office at 309-8180 to make an appointment or request information
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How Can Bankruptcy Help Protect My Home In Pa
Fortunately, you can often protect your home by filing for bankruptcy. There is a common idea that bankruptcy is some sort of trap or that bankruptcy will take everything from you. However, nothing could be farther from the truth.
The very goal of the Bankruptcy Code is to assist debtors in restructuring and managing excess debt in order to avoid financial catastrophe and help creditors get paid. Over the years, bankruptcy has made economic recovery possible for millions of Americans.
Furthermore, the bankruptcy process has allowed many people to protect their homes against foreclosure actions from their creditors. You may wonder how you can protect your property from foreclosure by filing for bankruptcy in Pennsylvania. Fortunately, bankruptcy laws contain a series of protections to help debtors pay back what they owe.
As soon as you file for bankruptcy, you obtain the protections provided by an automatic stay. An automatic stay is a legal mechanism that prevents your creditors from engaging in debt collection actions or foreclosure while your bankruptcy case is underway. The effect of this protection is immediate, and your creditors will not be allowed to take your home away from you starting the moment the stay is activated.
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What Is Debt Negotiation Or Debt Settlement
Debt negotiation, also called debt settlement, can be an alternative to bankruptcy for many people. In debt negotiation, your attorney negotiates with your creditors with the goal of reaching a settlement for significantly less than the full amount owed. Under the right circumstances, debtors have settled debts for a fraction of the initial balance. Although not all cases are appropriate for debt negotiation, it can be a valuable tool in dealing with creditors. > > More
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Are There Benefits To Filing Bankruptcy With My Spouse
Exempt property is the property that you do not have to forfeit when filing for Chapter 7 bankruptcy. A joint filing may entitle the couple to double the amount of some exemptions. For instance, the Florida exemption for a motor vehicle is only $1,000 in an individual bankruptcy case. However, when filing jointly, the exemption doubles to $2,000. Additionally, the personal property exemption of $1,000 increases to $2,000 when filed jointly. See In Re Hawkins. It is important to note the remaining exemptions will remain the same and not increase by filing a joint petition. Therefore, a couple may be able to claim more exemptions by filing separate, individual petitions for bankruptcy.
The number of exemptions you are eligible for may significantly impact whether or not to file jointly. Depending on the circumstances of your case, all of your property may be exempt from the bankruptcy. On the other hand, you may be forced to liquidate precious assets if you file for Chapter 7 bankruptcy, and your property does not qualify for an exemption.
Chapter 7 Vs Chapter 13 Bankruptcy
Bankruptcy cases filed under Chapter 7 and Chapter 13 can get rid of debts. However, there are some substantial differences between the two chapters of bankruptcy.
A Chapter 13 bankruptcy is a voluntary repayment plan. You reorganize your debts into a monthly plan based on your income, expenses, debts, assets, and other factors. Most Chapter 13 plans are 60-month plans. However, some individuals might qualify for a three-year plan. A Chapter 13 bankruptcy case may be best if you need to stop a foreclosure or repossession. Chapter 13 plans can also be used to pay tax debt or catch up on domestic support payments.
A Chapter 7 bankruptcy in Pennsylvania is quicker and less costly. Most no-asset Chapter 7 cases are discharged and closed within four to six months after filing the bankruptcy petition. Most unsecured debts are discharged in Chapter 7 without the need to pay any more money to the creditors.
However, Chapter 7 bankruptcies do not have repayment plans. Therefore, if you are behind on your house payments or car payments, a Chapter 7 case might not help you save those assets.
On the other hand, you can get rid of those debts by surrendering the assets. You would not need to worry about a deficiency judgment in Chapter 7. A deficiency judgment is money that you owe a creditor even after the creditor takes your home or vehicle and sells it to repay the debt.
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How To File A Motion To Extend The Automatic Stay
If you want to extend the automatic stay, you must file a motion with the court. In your motion, you’ll explain why your previous bankruptcy was dismissed and why the court should extend the stay in your current case. You’ll have to prove that you filed the subsequent bankruptcy in good faith .
The specific procedures for filing a motion to extend the automatic stay depend on the rules in your jurisdiction. But the following are typically the most common steps you must take:
Find and complete the appropriate forms. Each bankruptcy district has forms for specific motions and notices. Check with your local bankruptcy court to find all paperwork related to motions to extend the automatic stay. But be aware that your jurisdiction may not have a standard form to fill out. In that case, you will have to create the motion and declarations. You can find your court’s website using the Federal Court Finder tool.
Obtain a hearing date and file the motion. In most cases, you will need to obtain a hearing date from the court before filing the motion . Keep in mind that the filer must complete the hearing before the stay expires, so typically you must file your motion immediately after filing your case. You’ll tell the court why your first bankruptcy was dismissed and explain why this case is filed in good faith. Then you’ll serve the paperwork on the bankruptcy trustee and your creditors .
Will I Have To Go To Court When I File Bankruptcy
Short Answer: In most bankruptcy cases, you only have to go to a proceeding called themeeting of creditors, which is a short and simple meeting where you are asked a few questions by the bankruptcy trustee. While the meeting is held at the courthouse, the meeting doesnt take place in a courtroom.
Occasionally, if complications arise, you may have to appear at a hearing in front of a bankruptcy judge. In a Chapter 13 case, you may have to appear at a hearing when the judge decides whether your plan should be approved . If you need to go to court, you will receive notice of the court date and time from the court or your attorney who will help you prepare for your appearance.
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What Can I Do To Improve My Credit
Short Answer: Many of my clients want to improve their credit. The best things to do: pay your debts on time use credit only when necessary, and only have a small number of credit cards use only a small percentage of your available credit. The credit scoring systems look at your “utilization ratio” to try to tell if you are using credit responsibly, or if you are “maxed out” check your credit reports at least annually for free at, which is the official website sponsored by the three major credit reporting agencies. Dispute inaccurate or obsolete information.
If you are currently “swamped” with debt, consider filing bankruptcy to get a fresh financial start. Your credit can recover quickly if you follow the above advice after the bankruptcy. I have clients whose credit score is over 650 after one year after bankruptcy and 700+ after two years. You really can recover your credit after a bankruptcy. Weve heard that from many of our past clients over the years.
A Chapter 13 Bankruptcy In Pennsylvania
For those who make above the income limit for Chapter 7, debt relief can still come through a filing a Chapter 13 bankruptcy. A Chapter 13 Bankruptcy in Pennsylvania case allows you to restructure your debts into an affordable monthly plan. By restructuring debts, many people can afford to keep their homes and vehicles under Chapter 13.
Chapter 13 stops foreclosures, repossessions, and wage garnishments. Chapter 13 bankruptcy also allows you to pay back mortgage payments, past-due car payments, and tax debt over three to five years through a bankruptcy plan. In addition, Pennsylvania may also allow you to reduce unpaid child support and alimony. However, you must resume your normal domestic support payments to remain in Chapter 13.
In a Chapter 13 plan, some debtors can lower their car loan payments and erase second mortgages, if they meet certain requirements.
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Chapter 13 Bankruptcy In Pennsylvania
By working with your creditors to create a payment plan you can actually afford, Chapter 13 bankruptcy will allow you to retain your most important assets, including your home. At the end of your three- to five-year payment plan, your remaining debt will be discharged. There are only a handful of Chapter 13 trustees in Pennsylvania. As a result, a Pennsylvania Chapter 13 bankruptcy attorney sees the same trustees over and over. Pennsylvania bankruptcy lawyer knows their procedures inside and out as well as the procedures of the Pennsylvania bankruptcy courts.
Moreover, each bankruptcy district in Pennsylvania has a unique Chapter 13 plan. You need a PA Chapter 13 lawyer who knows the specific Chapter 13 plan provisions so your Chapter 13 bankruptcy will be successful.
What If You Didn’t Receive A Discharge In The First Case
In most situations, you can file again and receive a discharge in the second bankruptcy if you didn’t receive one in the first matter. But that’s not always the case. Also, you lose the full benefits of the automatic staythe order that stops creditors from collectingwhen you file multiple bankruptcies in quick succession.
The court dismissed the first case
- Unless the court orders otherwise, you can file again. A 180-day waiting period may apply if you failed to obey a court order or appear in the case, or you voluntarily dismissed the case after a creditor filed a motion for relief from the bankruptcy stay.
The court denied your discharge
- You might be able to file again, but you probably won’t be entitled to a discharge of the debts listed in your first case. This is another unusual circumstance wherein you would be wise to seek the advice of an experienced bankruptcy lawyer.
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Using Bankruptcy Exemptions To Protect Property
When you file a Chapter 7 or a Chapter 13 case, your property becomes a part of your bankruptcy estate. However, this does not mean that you will lose any of your property. Congress provided federal bankruptcy exemptions within the Bankruptcy Code so that debtors could protect certain property from creditors and the court. By using bankruptcy exemptions, you can prevent your property from being sold by a Chapter 7 trustee. You can also reduce the amount you must pay to unsecured creditors in a Chapter 13 repayment plan by exempting the equity in your property.
However, you must claim the exemptions in your bankruptcy filing for them to apply. Claiming the exemptions requires you to list each of the exemptions you claim with the corresponding property on Schedule C of your bankruptcy forms. An amendment may correct improperly scheduled exemptions or omissions that were mistakes. Nevertheless, if the trustee believes the debtor was committing fraud by attempting to hide property, he could object to the amended exemptions. Therefore, it is extremely important to work with an experienced Daytona bankruptcy lawyer who understands how to use bankruptcy exemptions to provide the greatest protection of property afforded by law.