Chapter 13 Bankruptcy
It’s not easy to live with the constant fear that your car will be repossessed, that your home will be foreclosed on, or that your utilities will be shut off due to unpaid debts. If you’re having trouble keeping up with your monthly payments, and are worried about losing your property or belongings because you owe creditors money, ask the experienced Philadelphia bankruptcy attorneys of Young, Marr, Mallis & Associates what Chapter 13 bankruptcy can do for you financially. Our Chapter 13 lawyers have helped thousands of debtors file bankruptcy in Pennsylvania, and are ready to put our experience to work to get you the debt relief you’ve been seeking.
Chapter 13 bankruptcy can wipe out your debts, give you extra time to make payments, and protect your property from being seized. By getting your debts under control, Chapter 13 can also set you up for a better credit score in the future. To learn more about filing Chapter 13, contact us online for a free consultation, or call Young, Marr, Mallis & Associates at (215) 701-6519 today.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is one of the most common types of personal bankruptcy – not only in Pennsylvania or New Jersey, but among millions of people throughout the United States. The term “Chapter 13” comes from the U.S. Bankruptcy Code, whose thirteenth chapter contains the laws that regulate this type of bankruptcy.
Chapter 13 is sometimes described as a “wage earner’s plan” or called “reorganization” bankruptcy. The reasons for this become clear once you understand how Chapter 13 works.
When a debtor files for Chapter 13 bankruptcy, one of the first priorities is creating a document called a “plan of reorganization.” The reorganization plan is essentially a contract, lasting three to five years depending on the situation, between the debtor and his or her creditors. In it, the debtor agrees to repay specific amounts to specific creditors, whether on a weekly, bi-weekly, or monthly basis. A court appointee called a “trustee” handles distributing these payments toward different creditors, depending on how the debts are prioritized and secured.
The debtor makes the payments using his or her disposable income, which is why Chapter 13 is called a “wage earner’s plan.” If the debtor does not have sufficient income to fund a reorganization plan – for instance, if he or she is unemployed – it may be necessary to file Chapter 7 instead. Sources of income that can help to fund a reorganization plan include:
- Government benefits (such as disability, welfare, and Social Security)
- Spousal support (alimony)
- Wages or salary and/or commissions
Once the debtor completes the Chapter 13 plan, the bankruptcy court will wipe out, or “discharge,” many of the debts that have not been accounted for. Therefore, these debts are called “dischargeable” debts. Dischargeable debts in Chapter 13 bankruptcy include debts arising from:
- Credit card bills
- Income tax debt, under rare circumstances
- Medical bills, dental bills, and hospital bills
- Personal loans
- Small businesses
- Student loan debt, under rare circumstances
- Utility bills
Reasons to File Chapter 13 in Philadelphia
While Chapter 13 is not for everyone, certain debtors can benefit greatly from filing. Benefits of filing for Chapter 13 bankruptcy include the following:
Freedom from Debt
You can wipe out the debts listed above, plus many others, after completing your reorganization plan.
Improved Ability to Build Good Credit
While a bankruptcy will initially cause your credit score to decrease, it will also free you from numerous debts. This will make it easier for you to keep current on payments and build healthy credit going forward.
Opportunities to Stop Foreclosure and Repossession
Your car and your home are likely to be two of the biggest purchases you will ever make – and losing either can be emotionally and financially devastating. The Chapter 13 reorganization plan allows you to catch up on missed mortgage payments and missed car loan payments, which could prevent home foreclosure and vehicle repossession. Chapter 13 can also protect you against other stressful collection activities by your creditors and debt collectors, such as wage garnishment, utility-shutoffs, liens, and eviction.
Our Chapter 13 Bankruptcy Attorneys Can Help
Living with debt can take a heavy psychological toll – but it doesn’t have to be that way. Say goodbye to the sleepless nights of worrying how you will feed your family, hold onto your business, or keep a roof over your head. With personalized, step-by-step bankruptcy guidance from the Chapter 13 lawyers of Young, Marr, Mallis & Associates, it only takes a phone call to get on the road to debt relief.
If you’re worried about your finances and think Chapter 13 could be an option for you, please do not hesitate to contact us. You can reach us online using our contact form, or call (215) 701-6519 for a free consultation. Calls are answered 24 hours a day, seven days a week.