Filing Chapter 13 in Pennsylvania

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If you are unable to afford to pay your monthly bills and are overwhelmed by debt, you may want to consider filing for bankruptcy. In Pennsylvania, consumers can file for either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is also called liquidation because the bankruptcy trustee sells all the debtors non-exempt assets to repay the debtor’s creditors. An exempt asset can include the debtor’s car and house. Unlike Chapter 7, Chapter 13 bankruptcy allows a debtor to pay off debts under an installment plan administered by a bankruptcy trustee. During the installment plan, the debtor retains control of all assets.

Filing for Chapter 13 Bankruptcy in Pennsylvania

To file for Chapter 13 bankruptcy, the debtor must have regular income to make the installment payments. The debtor’s income must be regular for at least six months prior to the debtor filing for bankruptcy. The source of the debtor’s income is less important. The income can come from family support obligations, disability benefits or a retirement account. The court is only concerned with whether the debtor’s income is reliable and available to the debtor each month. The court may ask the debtor to provide past tax statements or pay stubs as evidence of the reliability of the debtor’s income.

In a Chapter 13 bankruptcy, the debtor must submit a repayment plan for approval. The repayment plan does not discharge the debtor’s unsecured debt immediately, but allows the debtor to develop a plan to repay the debt. The repayment plan may last from three to five years depending on the debtor’s income and debt. The debtor’s attorney will work with the debtor to create a repayment plan the debtor can afford. The plan will be based on the debtor’s income and how much disposable income the debtor has remaining each month after paying all necessary bills. After the debtor submits the repayment plan, the bankruptcy court confirms the debtor's repayment plan at the confirmation hearing. The debtor’s creditors may also appear at the confirmation hearing and file an objection to the proposed repayment plan.

As in Chapter 7 bankruptcy, a debtor must complete a credit-counseling course 180 days before the debtor files for bankruptcy. The U.S. Trustee provides a list of approved credit counseling organizations. The debtor must complete the course with an approved organization and receive a certificate of completion. The debtor includes the certificate of completion with the bankruptcy petition when the debtor files for Chapter 13 bankruptcy.  

Chapter 13 Discharge

The bankruptcy trustee’s role is to ensure that the debtor makes all monthly payments on time and in full. If the debtor makes all monthly installments on time and completes the repayment plan, the debtor will receive a bankruptcy discharge. All debts included in the repayment plan will either be paid or discharged. Debts not included in the bankruptcy do not receive a discharge. In addition, a debtor must also complete a debtor education course before receiving a bankruptcy discharge. The debtor education course provides the debtor with skills and a monthly budget for the debtor to utilize after the bankruptcy.

Getting Legal Help

If you have questions about filing for Chapter 13 bankruptcy in Pennsylvania, contact an experienced bankruptcy attorney. An attorney can explain the bankruptcy process to you and help you file a bankruptcy petition.