Chapter 13 Bankruptcy Process
Most Chapter 13 cases are filed to save the most precious belonging – a home. Like all bankruptcy cases, Patricia Mayer personally handles cases to give debtors the highest quality legal services and the personal guidance necessary to make the process smooth. Help is just a phone call away.
Prior to the Filing
After meeting with you to gather information regarding monthly income, expenses, assets and debts, Patricia will order lien searches, where applicable, on all real estate owned, obtain credit reports and draft a Chapter 13 Petition, Schedules and Plan—the legal papers used to file a bankruptcy case. Prior to the bankruptcy filing, clients must also complete pre-bankruptcy credit counseling and obtain a pre-bankruptcy Credit Counseling Certificate.
Filing the Chapter 13 Case
All Bucks County and Philadelphia cases are filed electronically, so clients immediately obtain bankruptcy court protection the minute the case is filed. Once a bankruptcy case is filed in the United States Bankruptcy Court for the Eastern District of Pennsylvania, the court will issue the automatic stay order to stop any foreclosure actions or law suits. The client will then be required to complete a mandatory Debtor Education Course with a certified credit counseling firm. After the case is filed, Patricia may file special motions to avoid judgment liens on bank accounts or real estate, if necessary.
The Debtor should resume making his or her regular monthly mortgage and car payments the first time they are due after the case is filed. For example, if the bankruptcy is filed on January 14 and the debtor’s mortgage is due on the first of the month, then the debtor shall make his or her monthly payments to the mortgage company, commencing February 1. In addition, beginning 30 days after the filing date, the debtor shall tender monthly trustee payments to the Trustee, either by money order, wage attachment or automatic deduction from a bank account.
Meeting of Creditors
Approximately one month after the case is filed, the debtor is required to attend a Meeting of Creditors. The Meeting of Creditors is conducted by a Chapter 13 Standing Trustee or one of his staff attorneys. Patricia is familiar with the Trustees and she personally prepare her clients prior to the meeting. The trustee’s questions are not complicated, and, as long as the debtor answers truthfully, the process will go smoothly and usually only lasts 10-15 minutes.
Claim Objections and Confirmation Hearing
The creditors will be asked to file a claim with the bankruptcy court. If the debtor disputes the claim, he or she could file an objection to the claim or a portion of the claim. Approximately six to seven months after a case is filed, the Debtor’s Plan will be submitted to a Bankruptcy Judge for approval. Many Chapter 13 plans are like scales and they need to balance. The amount that is paid must equal the amount the creditors say is due and owing. Once a plan is in balance, the Court can approve it.
Once all of the plan payments have been made, usually after three to five years, the Court will grant a Chapter 13 discharge which prohibits the debtor’s creditors from later attempting to collect any discharged debt from the debtor. Any creditor who violates this court order may be held in contempt of court and may be liable to the debtor in damages. If a creditor attempts to collect a discharged debt, the debtor should give the creditor a copy of the discharge order and inform them in writing that the debt has been discharged under Chapter 13. If the creditor persists, the debtor should contact Patricia Mayer. Don’t ignore the matter. Even though a judgment entered against the debtor on a discharged debt can later be voided, avoiding the judgment may require the services of an attorney, which could be costly to the debtor. Debts that are discharged are not taxable for income tax purposes— another benefit of filing a bankruptcy.