Chapter 13 Bankruptcy PA
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Chapter 13 Lawyer in Philadelphia
Chapter 13 Bankruptcy is a repayment plan and is commonly used to stop foreclosure or lower overall monthly expenses.
A Chapter 13 Plan is filed with the court and later confirmed allowing the Petitioner to repay mortgage arrears or only cents on the dollar of their unsecured debts (credit cards, medical bills, personal loans, collection accounts, and certain tax obligations, among others).
A Petitioner usually qualifies for Chapter 13 Bankruptcy protection based on the equity in real estate (house) or based on higher income qualifications, as discussed below.
Schedule a Consultation with a Local Bankruptcy Attorney
Does my spouse or significant other have to be on the call?
Yes. If you live with your spouse or significant other or share finances in any way with another person, please have that person available so we can best answer all questions pertaining to your situation.
Who will I be meeting with?
You will be meeting with an experienced and trusted debt relief lawyer via phone who practices law in Pennsylvania and New Jersey.
How long is the consultation?
The initial consultation phone call is generally 15-20 minutes long.
How much do legal services cost and is there a payment plan?
You will be given a specific legal fee tailored to your situation at the end of the consultation. Please note, our deposit to hire Sadek Law Offices can be as low as $200.00 and we offer each client a payment plan to make legal services most affordable.
Chapter 13 Bankruptcy in Philadelphia Case
– Scenario 1 –
Many people believe incorrectly that filing for Chapter 13 bankruptcy is their only option if they own a home. In fact, homeowners have several options when declaring bankruptcy.
Individual homeowners are entitled to an exemption of $20,200. To clarify, if two homeowners own property and have a mortgage of $100,000, the property must be worth over $140,400 for them to file under Chapter 13.
Otherwise, a Chapter 7 bankruptcy case may be a more viable option. The Chapter 13 bankruptcy attorneys at Sadek Bankruptcy Law Offices conduct free online appraisals to conclude whether or not Chapter 13 is the best option for you.
Chapter 13 Bankruptcy in Philadelphia Case
– Scenario 2 –
Income can also be a major factor in determining whether or not a Petitioner can file for Chapter 13 bankruptcy. Chapter 13 payment plans can be structured around what a Petitioner can afford to pay their creditors monthly rather than what he/she owes.
The Chapter 13 standards, called “means testing,” are similar to the IRS collection standards and often provide Petitioners with significant monthly savings on their debts. Because of these savings, Petitioners can enjoy a higher level of disposable income.
Chapter 13 Bankruptcy also leads to a higher credit score due to an improved debt-to-income ratio, leaving you and your family with better credit terms.
What Is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy, also known as “reorganization bankruptcy,” is a legal process in the United States under the federal bankruptcy code that allows individuals with regular income to develop a plan to repay all or part of their debts over a period of three to five years.
Chapter 13 allows debtors to keep their property and catch up on missed payments through a structured repayment plan approved by the court. This form of bankruptcy is often chosen by individuals who have a steady income but are struggling to manage overwhelming debt, particularly mortgage arrears or tax debts, and want to avoid foreclosure or repossession of assets. It’s important to work with an experienced bankruptcy attorney for your Chapter 13 case.
Secured Debts vs Unsecured Debts in Chapter 13
In Chapter 13 bankruptcy, secured debts, such as mortgages and secured loans, are restructured through a repayment plan, allowing debtors to catch up on missed payments and retain possession of their assets. Unsecured debt may be partially repaid based on disposable income, with remaining balances potentially discharged at the plan’s end, providing a structured path to debt relief and a fresh start. Unsecured creditors may receive partial repayment, but generally not full repayment.
How to File Bankruptcy Chapter 13
As you might imagine, a Chapter 13 case is far more complex than a Chapter 7 case. It’s the type of case no borrower gets through without a lawyer.
There are, for example, a lot more places, reasons, and ways for creditors to make objections when you file a Chapter 13 case. There is a lot more paperwork and there are a lot more steps.
Here’s what to expect.
#1
Initial Consultation
After meeting with and retaining your Chapter 13 attorney, it will be time to sit down and gather all your financial documents.
During this free consultation, we’ll be working to make sure we don’t miss anything about your financial situation.
Once we’ve made sure everything is in order, and that there are no problems that could threaten your ability to get a discharge, it’s time to file.
#2
Filing & Automatic Stay
The automatic stay goes into effect as soon as you file your case, though it might take your creditors a little while to get their notice.
Once you have a case number, though, you can simply report the case number, along with the name and number of your Chapter 13 bankruptcy attorney, to any creditor who calls or tries to take action against you.
They’ll each receive formal letters notifying them of the stay, but keep your case number handy.
#3
Proposed Repayment Plan
You will have to make payments on your plan before there is a formal 341 hearing thanks to the way federal deadlines are structured.
Just keep in mind the payment your Chapter 13 bankruptcy lawyer proposes, and the first one you make, may not be the payment the trustee ultimately accepts.
#4
341 Meeting
The 341 Meeting of Creditors gives representatives from all of your creditor companies the chance to ask you questions while you’re under oath.
Often, they don’t even attend, but you shouldn’t count on that. The trustee will be able to ask you questions as well. He or she will mostly be trying to determine if the schedule is true, complete, and correct.
Assuming you’ve included everything and are making no attempt to defraud the court, this entire process should go off without a hitch.
#5
Plan Approval
At this point, the trustee and the creditors must approve or object to your payment plan.
This is the first point in the case where you will really need the help of a Chapter 13 bankruptcy attorney.
This is part of the case where people start filing objections and motions, where points of law and procedural issues enter the debate.
#6
Financial Education
You’ll need to complete the financial education course that’s required by law. You cannot get your discharge until you’ve completed this course and have filed the resulting certificate with the bankruptcy court.
Typically you can take the class online. Your Chapter 13 bankruptcy lawyer can point you in the right direction.
#7
Plan Payments
This is the longest part of the bankruptcy. For the next three to five years you’ll make the payments to the trustee.
The trustee will then distribute the money, starting with debts that can’t be discharged, moving on to secured debts, and then finishing off with unsecured, lower-priority debts.
#8
Completed Plan
When you’ve made the final payment the trustee will send you a Notice of Completed Plan Payments.
The court will review all the facts of the case and will make sure there aren’t any facts that might disqualify you from receiving your discharge.
In most cases, the court will issue a Notice of Intent to Enter Discharge. All interested parties will have 14 days to object if they have any objections.
Usually, though not always, any objections have long been met and dealt with by now.
#9
Follow-up
Your attorneys will usually have to nudge creditors to take certain necessary actions at this point.
For example, if you were behind on your mortgage when you went into your Chapter 13 plan then your attorney might have to make sure the mortgage company provides you with a written acknowledgment that your plan is now current.
All of these actions will pertain to secured debts. Unsecured debts have already been 100% dealt with.
#10
Final Decree
Once all the lingering issues of the case have been cleared up the court will issue a final decree, closing the case.
You get to breathe a sigh of relief, knowing you’ve achieved your fresh start.
Chapter 13 FAQS
Can I Purchase a Home While in Chapter 13 Bankruptcy?
Filing for Chapter 13 bankruptcy often aims to save homes, but some consider purchasing one during the process. Securing a mortgage while in Chapter 13 is feasible but challenging. Essential steps include:
- Demonstrate Financial Stability: Maintain timely Chapter 13 payments for at least a year to show progress toward financial recovery.
- Save for a Down Payment: Expect to save around 20% down, as high-risk status disqualifies from zero-down loans. Ensure the source of funds aligns with lender criteria.
- Build an Emergency Fund: Prepare for homeownership costs like repairs, utilities, and taxes. Incorporate a modest savings plan into your bankruptcy budget to reassure lenders.
- Seek Trustee Approval: Obtain permission from your trustee, demonstrating that a mortgage won’t impede Chapter 13 payments or harm creditors.
- Reevaluate Your Decision: Consider waiting or switching to Chapter 7 if it better suits your circumstances. Consult a bankruptcy attorney for guidance tailored to your situation and local housing market dynamics.
Can I Buy a Car During Chapter 13?
Living and working without a car is nearly impossible, especially considering their tendency to break down at inconvenient times and become costlier to repair than replace. If facing Chapter 13 bankruptcy, acquiring a new car is indeed possible, though it involves several steps.
Firstly, assembling a down payment is crucial. While challenging on a Chapter 13 budget, having a down payment can mitigate the higher interest rates charged by bankruptcy-friendly car loan companies, potentially reducing monthly payments and loan terms.
Approval from the trustee overseeing the bankruptcy is necessary. Although not unexpected, this request entails taking on new debt, necessitating assurance that existing creditors won’t suffer, and ongoing bankruptcy payments will continue uninterrupted.
Gathering evidence is essential for the trustee’s assessment. This includes obtaining a financing deal from the dealership detailing the car’s specifics and loan terms, to be submitted with a “Motion to Incur Debt in Chapter 13” filed by one’s attorney.
Upon court approval, finalizing the purchase at the dealership becomes viable. However, unlike other debts, the car won’t be protected by the automatic stay, mandating timely payments to avoid repercussions.
Exploring alternative transportation options such as public transit, carpooling, or purchasing a very cheap car should be considered before incurring additional debt.
Does the Chapter 13 Trustee Monitor Income?
Yes, the Chapter 13 bankruptcy trustee monitors the debtor’s income throughout the bankruptcy process. This includes reviewing the debtor’s financial documents, such as pay stubs and tax returns, to ensure compliance with the repayment plan and to verify that the debtor’s income is accurately reported. Any significant changes in income may require adjustments to the repayment plan, and the trustee may also investigate any discrepancies or issues that arise regarding the debtor’s income during the bankruptcy proceedings.
Will I Lose My House If I File Chapter 13?
In Chapter 13 bankruptcy, you typically won’t lose your house as long as you adhere to the court-approved repayment plan, which allows you to catch up on missed mortgage payments over time. This process enables you to keep your home while restructuring other debts in the bankruptcy estate. However, failure to maintain payments under the plan could result in foreclosure proceedings. It’s essential to work closely with your bankruptcy attorney to develop a feasible repayment strategy and protect your home throughout the bankruptcy process.
Can I Keep My Car If I File Chapter 13?
Yes, you can generally keep your car if you file for Chapter 13 bankruptcy. Chapter 13 allows you to restructure your debts, including car loans, through a court-approved repayment plan. As long as you continue making payments according to the plan, you can retain possession of your vehicle.
How Long Does Chapter 13 Stay on Your Credit Report?
Chapter 13 bankruptcy typically remains on your credit report for seven years from the date of filing. This period starts from the date of the bankruptcy petition, not the date the court approves the repayment plan or discharge.
What Happens to Debt When You File Chapter 13?
When you file for Chapter 13 bankruptcy, your debts are reorganized and managed through a court-approved repayment plan. This plan typically lasts three to five years and allows you to consolidate and prioritize your debts based on your income and expenses. Secured debts, such as mortgages or car loans, are usually included in the plan, enabling you to catch up on missed payments while keeping your assets.
Unsecured debts, like credit card debt or medical bills, may be partially repaid depending on your disposable income, with any remaining balances potentially discharged at the end of the plan. Certain debts, such as alimony and child support payments, are generally not dischargeable through bankruptcy.
Is Chapter 13 Worth It?
For those struggling with overwhelming debt but wanting to keep their assets, such as a home or car, Chapter 13 can be a valuable option. It provides an opportunity to restructure such debts through a court-approved repayment plan, potentially reducing payments and preventing foreclosure or repossession. Additionally, Chapter 13 can halt creditor harassment and give you time to catch up on missed payments while retaining control over your assets.
You may feel hesitant to initiate a Chapter 13 case because of the filing fee, but this is a small price to pay for financial stability. Additionally, you may qualify for a fee waiver in certain circumstances.
More on Chapter 13 Bankruptcy
- What is the Process in a Chapter 13 Bankruptcy Case? [no link]
- Can I Convert My Bankruptcy to a Different Chapter?
- What is the Bankruptcy Means Test?
- Why You Must Understand the Difference Between Chapter 7 and Chapter 13
- Chapter 13 Bankruptcy Offers Tax Deductions for Filers in Pennsylvania
- What is the Process in a Chapter 13 Bankruptcy Case? [no link]
- What You Need to Know About Car Repossessions in Pennsylvania
- Will Declaring Bankruptcy Give the Court Access to My Bank Account?
Top 25 Questions about Your Chapter 13 Bankruptcy
1. When do I start making my chapter 13 plan payments?
Your chapter 13 plan payments begin the month following the month in which your case is filed. For example if your bankruptcy is filed January 1, 2026, your first plan payment must be made February of 2026.
2. How do I make my Chapter 13 Plan payments?
There are several ways to make your Chapter 13 Plan payment. We will provide you detailed information on how to make payments, but briefly:
- You can make manual electronic payments online on your Trustee’s website using the “Epay” link;
- You can register with TFSBillPay.com to make either manual payments or to schedule how often you would like the payments deducted from your bank account or paystub;
- Our office can file a Wage Order with the Court which will allow your employer to deduct the payment from your paystub;
- You can mail payments to the Trustee via a secured P.O. Box, though this is not recommended for security reasons. If you must mail in payments, please note that we cannot guarantee the safe arrival of any payments mailed to the P.O. Box and strongly suggest that you use a tracking number.
3. What date is my Chapter 13 Plan Payment due?
The Chapter 13 Plan payment is due once per month. While the Bankruptcy Code states it should be paid by the first, as there are no late fees, penalties or interest that can accrue, there is no specific date the payment must be made by.
Please keep in mind that electronic payments can take 5-7 business days to process, be cleared and applied, so we strongly recommend that payments are made no later than the 15th of the month in which it is due. Please also keep in mind that payments made on a Friday, over the weekend or on a holiday will not be processed until the next business day. This can delay your payment being received by the Trustee. Therefore, be certain to make all payments in a timely manner to ensure that they are received and applied as quickly as possible.
If you are on a fixed income, such as Social Security or Pension, please make sure that your Chapter 13 Plan payment is made as soon as the funds are available.
4. What happens after I file?
The 341(a) Meeting of Creditors will be scheduled to be held approximately 30 days after your case is filed. This hearing is conducted via Zoom and you participate in this hearing. While you can be at work, you cannot be actively working. If you are in a vehicle it cannot be moving, even if someone else is driving. During the hearing the Trustee will ask you about your income, assets and expenses. They will also advise if any additional documents are needed. After the hearing, the Trustee will send our office a list of anything additional that is required or file an Objection to the Confirmation of your Plan. We will contact you regarding anything we need from you.
A Confirmation hearing will also be scheduled to be held approximately 45 days after your case is filed. You do not need to participate in this hearing as we will appear on your behalf if necessary. You must be current on your Chapter 13 Plan payments before the date of this hearing and all outstanding documents and/or amendments must be filed.
5. How can I see what Proofs of Claim have been filed in my case and what disbursements the Trustee has made?
You can access information regarding the Proofs of Claim filed by your Creditors, as well as payments you have made and how the funds have been disbursed at www.ndc.org.
6. If I was behind on my mortgage or car loan payments before filing, when do I resume making my mortgage and/or car payments after my case is filed?
You must resume your mortgage and/or car payments the 1st of the month following the month in which your bankruptcy is filed. For example, if your bankruptcy is filed January 1, 2026, your first car or mortgage payment must be made in February 2026 by the due date.
Note that if your payment is made after the contractual due date you will be liable for late fees. You are responsible for making your car loan and mortgage payments to the lender after the date of the filing of your case. If you fail to make timely payments, the lender will take action in your Bankruptcy.
7. If I am current on my car or mortgage, why do they have to be listed as creditors? And why can’t I pay them online anymore?
When a Bankruptcy is filed, all assets and all liabilities must be listed. This includes mortgages and car loans, even if you are current on the payments. Once the Automatic Stay goes into effect, none of your creditors can take any collection activity. This includes automatic deductions from your bank account for car and mortgage payments. Additionally, because online access to your car loan or mortgage account will list due dates, amount due and balance on the loan, this information may be construed as an attempt to collect on a debt. Therefore, the lender will most likely limit or even block your online access to account information and ability to make payments online.
8. If I cannot make payments to my mortgage or car loan online, what am I supposed to do?
Unfortunately, because the Automatic Stay is in effect as discussed above, you will most likely need to call your car loan or mortgage lender and make the payments by phone. In some cases, you may even be required to mail your payments. Please contact the lender and they will advise how to proceed.
9. Can my mortgage company charge fees after filing?
Yes, some mortgage companies will charge fees for retaining counsel to represent them in your bankruptcy. The lender can charge for their attorney to review your case, filing a proof of claim, drafting motions and other responsive pleadings that may need to be filed in your case. These amounts must be paid by you directly to the lender before the end of your bankruptcy.
10. Will my bankruptcy plan payment amount change?
It is possible that during the course of your bankruptcy, the plan payment as proposed at the time of preparation of your Petition and Plan may change. This can be caused by various factors including creditors’ claims coming in higher than anticipated, higher disposable income or excess equity in assets. If a change to your Plan payment is required, our office will discuss this with you in detail.
11. Can the IRS or State of New Jersey charge interest on taxes that are paid off in my bankruptcy?
Yes, the state or federal tax agency will calculate interest only through the date of the filing of your bankruptcy. Therefore, if they choose, after the discharge or successful completion of your bankruptcy they may notify you that interest remains due from the date of filing to the date of discharge. This amount will need to be paid directly to the taxing authority as it is not a part of the bankruptcy once discharged.
12. Can post-petition debt be included in my Chapter 13 bankruptcy?
No, post-petition debt, which is anything incurred after the date of filing, cannot be included in your Chapter 13 bankruptcy to either be paid or discharged.
Note that if your bankruptcy is converted from a Chapter 13 to a Chapter 7, then post-petition debts may be included in the converted case. In such cases, please advise our office of any post-petition debt so that we can review and discuss with you.
13. Can I finance a car or refinance my home while in bankruptcy?
Yes, but only with permission from either the bankruptcy Trustee or the Court. You must discuss this with our office before taking any action as the timing of the needed financing impacts how the matter would be handled. Please call our office for more details if you are considering financing a car or refinancing a home while in Bankruptcy.
14. Do I need to include all of my debts?
Yes, all creditors including credit cards, medical bills, personal loans and any other debt must be included on your bankruptcy petition. You will not be able to keep any of the credit cards for future use.
Please note that you must provide our office with all creditor information that is available to you. We are unable to obtain copies of medical bills, utility balances, MUA or property tax arrears, HOA arrears or other debts that are not reported on your credit report. If this information is not provided at the time of filing, you must do so immediately as certain priority debts may affect your Plan payment amount.
15. Why do I have to provide so much information, even after my case is filed?
All documents requested by our office are required by the Federal Bankruptcy Code as well as your Chapter 13 Bankruptcy Trustee. All documents must be provided to our office timely. If documents are not provided, your bankruptcy may be dismissed for failure to provide required information to the bankruptcy Trustee.
16. What if I fall behind on my Trustee payments or secured creditor payments such as my car or my mortgage during the course of my Bankruptcy?
If you fall behind on your Chapter 13 Plan payments or payments to secured creditors (such as mortgage or car loan), a Motion for Relief of the Automatic Stay or a Motion to Dismiss your case may be filed. If this occurs, our office will contact you to discuss how you intend to resolve the arrears. Please be advised that our office can take no action on your behalf without speaking with you. Therefore, it is imperative that you continue to provide our office with your most current phone number and email address, so we can contact you easily.
17. What happens if my financial circumstances change after my case is filed?
If your financial circumstances change, such as job loss or retirement, please contact our office to discuss the impact that this may have on your Bankruptcy. In some instances amendments may be needed that can allow for a change to your Plan payment or even possibly convert your case to a Chapter 7. If the change in circumstances is temporary, a motion may be filed to suspend or reduce Plan payments for a brief period.
Please contact our office so that we can assess the circumstances and determine the best course of action.
18. What happens if my Chapter 13 case is dismissed?
If your Chapter 13 case is dismissed for failure to make Chapter 13 Plan payments or failure to provide documents, our office will contact you with options in order to resolve the deficiencies or arrears. Options may include a Motion to Vacate Dismissal where feasible or a refiling.
If your case is closed without a motion to vacate the dismissal order, a new bankruptcy will need to be filed on your behalf. Additional fees and costs will be incurred.
19. Will I incur additional attorneys’ fees and costs during the course of my Chapter 13 bankruptcy?
It is possible that additional fees and costs may be incurred by our office during our representation of you. This can happen if our office is required to file motions on your behalf, such as selling property or requesting approval for a loan modification. Additionally, fees and costs can be incurred if our office is required to respond to motions filed by creditors in your case. This can include motions for relief of the automatic stay, Trustee’s motions to dismiss and certifications of default for failure to make plan payments. Fees incurred post-petition by our office can be included in your Plan payment or paid directly to our office with permission of the Court.
20. What if I win a lawsuit or receive an inheritance?
If you win money from a lawsuit, receive a settlement or receive an inheritance during the course of your Chapter 13 bankruptcy, you must notify our office. Any funds you may receive may not be fully exempt and therefore may be a part of the Bankruptcy Estate. This means that any windfall may need to be paid into your Chapter 13 Plan as an additional distribution to unsecured creditors.
21. Can I pay my Chapter 13 plan off early?
There are occasions where a Plan may be paid off before the proposed length of between 36 and 60 months. If this is something that you are considering, please notify our office so that we can discuss in more detail.
22. If I am filing a bankruptcy on my own, why does your office require information about my spouse or long-term partner’s income and expenses?
As per the Federal Bankruptcy Code, the United States Trustee’s Office and the Chapter 13 Trustee, proof of income for all contributions to the household must be listed on your Chapter 13 schedules, as well as overall household expenses. Therefore, even if you are filing an individual bankruptcy, your spouse and/or partner’s income and expense information is required to be provided. This is true even if you are not legally married to your partner.
23. Can I sell my house or other real property while in bankruptcy?
Yes, you can sell your house or other real property. The process is complicated and requires approval from the Bankruptcy Court. You cannot go to Settlement and Close on the property without a Court Order. Additionally, you will need to get approval for your realtor and any legal counsel you retain to represent you in the sale to be paid at the time of Closing. Therefore, we would ask that you contact our office as soon as you decide you want to proceed with the sale of the property.
Note that we do not represent you in the sale and do suggest that you retain real estate counsel to assist you with the process.
24. Can I request a Loan Modification or deferment from my mortgage company?
Yes, you can request a loan modification from your mortgage company while in Bankruptcy. If you are approved for a Final Loan Modification, a Partial Claim/Deferment or other such relief, you must notify our office immediately. A Motion for Approval of Final Loan Modification must be filed with the Court and, once approved, amendments to your Schedules and Plan will be required.
Therefore, please contact our office to discuss this matter in detail.
25. What happens when I am done making all of my Chapter 13 Plan Payments?
Once you have successfully completed making all of your required Chapter 13 Plan payments and the funds have been disbursed to creditors and cleared, the Trustee will issue a Plan Complete Letter. We will reach out to you at that time with detailed steps needed to finalize your Case. Once done, the Court will administratively review your matter and, if there are no outstanding issues, will issue your Discharge. The process from your last payment to the Discharge Order being issued by the Court can take several weeks.
Please note that while the above is a list of certain facts that may impact you and your Chapter 13 Bankruptcy, this is not a comprehensive list of all issues that may arise. Further, while online resources can be helpful, much information found via AI and other online sources is frequently incorrect. Additionally, every Debtor filing for Bankruptcy has different needs and requirements to make their case successful. Therefore, if you have any questions not addressed here, please contact our office to discuss in more detail.
Work with Our Dedicated and Experienced Bankruptcy Lawyers
Sadek Bankruptcy Law Offices, LLC has a dedicated team of lawyers who help clients achieve the benefits of bankruptcy in Pennsylvania and New Jersey. Our lawyers have over 75 years of combined experience and have filed more than 5,000 successful bankruptcy cases.