What is the Timeline for a Chapter 13 Consumer Bankruptcy Case in Pennsylvania

Filing for bankruptcy is nobody’s idea of a good time, but it is often a necessary solution to serious debt problems. Chapter 13 bankruptcy is one potential option, and the timeline for filing might vary based on your circumstances.

Chapter 13 bankruptcy is a good fit for those with a steady income. You should meet with an attorney and discuss your situation in depth, which might take days, weeks, or longer, depending on your financial situation. The actual signing and filing of your case are relatively fast, usually taking only about a day. Getting a payment plan approved might also take time, depending on whether creditors disagree with our proposed plan. It would be best if you began making payments on your debt payment plan within 30 days of filing your case, and your plan should be final and confirmed within 60 days. Completing the process is also time-consuming, as it takes several months to get a final report from the trustee. Overall, the Chapter 13 bankruptcy process may take 3 to 5 years or more.

Schedule an initial case evaluation for no charge with our Pennsylvania bankruptcy lawyers at Young, Marr, Mallis & Associates by calling (215) 701-6519.

Who Can File for Chapter 13 Bankruptcy in Pennsylvania?

If you are experiencing severe financial troubles and debt, you should speak to our Pennsylvania bankruptcy attorneys about possibly filing for bankruptcy. People tend to think of bankruptcy as something to be ashamed of or a punishment for making financial mistakes. The truth is that bankruptcy is intended to be a solution to debt problems, not a punishment. Chapter 13 bankruptcy is one such option available to many people, although it tends to be a better fit for those with a steady income.

Chapter 13 Bankruptcy Debt Limits

The great thing about Chapter 13 bankruptcy is that anyone might be eligible. You can file under Chapter 13 whether you are an individual, self-employed, or even operating an unincorporated business. However, restrictions exist on how much debt you can have to be eligible.

You may not file for bankruptcy under Chapter 13 if your combined secured and unsecured debts are $2,750,000 or more. To be eligible, your debt must be less than this sum. For many, this is a very high limit that does not pose a problem to their case. However, particularly high earners might be very close to this limit.

It might be difficult to determine where your debts fall in relation to this limit. Many people have unfortunately lost track of some of their debts and need help accounting for everything. Even if you are unsure whether you are eligible to file under Chapter 13, you should still meet with an attorney to discuss your situation.

What if I Do Not Qualify for Chapter 13 Bankruptcy?

If your debts are too great or you do not meet various other eligibility requirements for Chapter 13 bankruptcy, do not despair. There are multiple bankruptcy chapters to choose from, each designed for different kinds of people in different financial situations. Talk to your attorney about which chapter fits your needs the best.

Some possible bankruptcy options other than Chapter 13 are Chapter 7 and 11. Chapter 7 is a popular option among individuals filing for bankruptcy, while Chapter 11 is geared more toward business entities.

Under Chapter 7, a person may liquidate various assets and properties to help pay debts. For example, if you own vehicles, a home, and other properties or have financial assets, they may be sold off. While losing assets and property is not ideal, the trade-off is that Chapter 7 bankruptcy may be completed relatively quickly. In many cases, petitioners have their assets liquidated and their debts paid or discharged within a few months.

Chapter 11 is very similar to Chapter 13 in that they both focus on reorganizing debts rather than liquidating assets. Petitioners filing for Chapter 11 bankruptcy may remain in possession of their business and continue operations as normal while reorganizing and paying debts over time. This might be a good fit if you need to file bankruptcy for a business rather than yourself.

Pre-Filing for Chapter 13 Bankruptcy in Pennsylvania

You do not simply decide to file for bankruptcy, go down to court, and file your claim. Our Philadelphia bankruptcy lawyers put a lot of work and preparation into your case before it is filed. Bankruptcy cases are often fraught with legal and financial complications, and you should work with an experienced lawyer on your case. How much time is spent during this “pre-filing” stage may vary based on your circumstances.

One of the most important aspects of your case you and your lawyer need to nail down before filing for bankruptcy is determining the extent of your debts. People filing for bankruptcy often have numerous, significant debts. Some debts are secured, while others are unsecured. Debts might be a mix of large sums (e.g., student loans, mortgages, medical bills) and smaller debts (e.g., credit cards, utilities, late fees).

Your eligibility for Chapter 13 bankruptcy might be in jeopardy if your debts exceed the limit mentioned above, which is why you, your attorney, and possibly a financial advisor should meet and take a full accounting of your debts and assets. Depending on your situation, this might be quick or very time-consuming.

You should also consult a Chapter 13 bankruptcy lawyer to determine if bankruptcy is the right option. You might find that after accounting for all your debts and assets, you have enough assets to cover many of your debts, and bankruptcy might not be necessary. Alternatively, you might find you have no significant assets, and bankruptcy is your only way out. The more complicated your finances are, the longer it might take to sort out your case before you file.

Chapter 13 Bankruptcy Signing and Filing in Pennsylvania

Once your case has been sufficiently prepared, you and your attorney may file your petition with the court. While people often focus on the actual filing of the lawsuit, this process does not take up much time. Generally, the filing process may be completed in as little as a day. Even so, this process does have a few important steps you should take with your attorney.

Certifying and Signing That the Documents Are Accurate

After preparing your case, you and your lawyer must review everything and verify that all paperwork, forms, and everything else is in proper order. Certifying your documents is crucial because it can be surprisingly easy to miss small mistakes that come with huge consequences.

For example, you might mistakenly leave out information about certain debts or assets. To you, this might be a minor oversight and easily fixable. To the court, this might seem like you are trying to hide important financial information. It is not unheard of for desperate people to try to hide assets from courts during the bankruptcy process, and it never goes over well. Fixing such a mistake might also mean trying to get back into the court’s good graces.

File with Bankruptcy Court

Filing your case sounds fairly simple. In many cases, the act of filing involves simply dropping off and stamping paperwork with the court clerk. While this seems like a no-brainer, it is a critical step that must be handled carefully.

First, you need to make sure you are filing your claims in the right court. You cannot walk into just any courthouse and file for bankruptcy. Since bankruptcy is a federal issue, ordinary state courts have no jurisdiction. You need to make sure your case is filed in bankruptcy court. Your lawyer should know where the court is and how to submit your case.

Automatic Stay Goes into Effect

Another important part of the filing process is the automatic stay that immediately goes into effect. The automatic stay is implemented to stop creditors from trying to collect on your debts while your bankruptcy petition is pending. Although this is temporary, it is often a huge relief to people being hassled by creditors.

Part of the automatic stay means that creditors must cease demanding payment, at least for the time being. If credit card companies, banks, or bill collectors are still trying to contact you, tell your attorney immediately.

Another aspect of the automatic stay is that creditors cannot take adverse action against you. If creditors threaten to repossess property, sue you for unpaid debts, or foreclose on your home, they must refrain from doing so until your bankruptcy case is complete. By that time, your debts might be cleared or discharged.

Submitting Chapter 13 Bankruptcy Documents to a Trustee

Once your documents are filed, they must be submitted to the bankruptcy trustee. The trustee is the person the government appoints to represent your estate in bankruptcy proceedings. Trustees are often in charge of assessing your debts and assets and recommending what to do next.

It may take up to 21 days before the trustee has the bankruptcy documents from your filing. Once the trustee has your documents, they can begin working on your case and with creditors to help discharge and eliminate your debts. If more than 21 days have passed since you filed your case and you have not heard from a bankruptcy trustee, talk to your lawyer immediately.

Chapter 13 Debtor Starts Making Payments

Under Chapter 13, bankruptcy petitioners reorganize their debts and develop payment plans to help reduce them over time. While it might take a while before your case is finalized, you should begin making payments on your payment plan no later than 30 days after you submit your case to the court. The plan might be altered later, but you should make payments sooner rather than later.

Creditor Meetings

Before your case is finalized, your bankruptcy trustee may have several creditor meetings where they meet with creditors’ representatives to review your potential payment plan. Since creditors have a fairly significant stake in your bankruptcy case, they can weigh in on your tentative payment plan. These meetings often happen about 30 days after you submit your case.

Plan Objections

As mentioned, creditors who hold your debts may weigh in on your case. Since they have an interest in getting the money they are owed, they may accept or reject your payment plan. Sometimes, creditors might vote on whether to accept a proposed payment plan. Other times, they might voice objections, and we can work with them to make sure everyone is happy.

Plan Confirmation

Once your payment plan has been discussed and debated with your creditors, it must be approved. Your plan should be approved no less than 60 days after it is submitted if there are no objections. If there are objections, we might have to go back and forth with creditors longer.

Chapter 13 Bankruptcy Plan Duration

Overall, the time it takes to plan, submit, and discuss your payment plan may take between 36 and 60 months. You should be working to keep up with payments even if your plan still needs to be finalized. The plan may be modified, and your attorney can help you prepare for various possibilities and eventualities. People with higher debts that creditors do not want to let go of might spend more time trying to get the plan finalized.

Completion of Pennsylvania Chapter 13 Bankruptcy Plan

Once your payment plan has been fulfilled and completed, we need to formally complete your case so you can finally move on. The trustee should issue a final report regarding the completion of your payment plan. The report might take time to assemble, and you might have to wait a few weeks to a few months, depending on the situation.

Once the court has the final report, it might discharge certain debts. Often, courts are willing to discharge certain debts if petitioners have faithfully adhered to the payment plan, made timely payments, and creditors have approved the plan and potential discharge. The final decree and closing often occur within about 2 weeks of the last discharge.

How Long Does the Chapter 13 Bankruptcy Process Take to Complete in Pennsylvania?

The entire bankruptcy process for those filing under Chapter 13 takes about 3 to 5 years in many cases. However, if your case presents certain complications, it might take longer. For example, if creditors are uncooperative and refuse to approve a payment plan, we might spend more time working out that issue before your case can move forward.

Although spending several years working on a bankruptcy case might seem daunting, remember that the outcome is in your best interest. Once your case is over, your remaining debts should be under control while others are discharged. The biggest advantage of Chapter 13 is that petitioners often do not have to liquidate assets, so they can keep their homes, vehicles, and other properties.

Contact Our Pennsylvania Bankruptcy Attorneys for Assistance with Your Case

Schedule a confidential case review for no cost with our Bucks County, PA bankruptcy attorneys at Young, Marr, Mallis & Associates by calling (215) 701-6519.