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Chapter 13 Frequently Asked Questions

This page is intended neither as legal advice, nor does it create nor attempt to create an attorney-client relationship. The person viewing this page is admonished that an attorney-client relationship may only be created with the express consent to the parties to it. Bankruptcy law is complicated and these "FAQ's" should only be used to give the reader a preliminary introduction to Chapter 13 law.  As always, the reader should consult with bankruptcy counsel before taking any action in this regard.  Mr. Rubin is licensed to practice law in PA, NJ & NY (inactive in NY). Referrals can often be made to attorneys in other states. Call Mr. Rubin at (610) 565-6660.

What is Chapter 13?

Chapter 13 is a chapter of the Bankruptcy Code that is structured for wages earners or small businesses. When a person files an initial case, where one has not been filed before, all debt collection activities (wage attachments, mortgage foreclosures, lawsuits, telephone calls, letters, bank setoffs or any kind of collections activity at all are stayed (halted) by the filing of the case.  When the case is filed, or very shortly thereafter, the attorney proposes a "plan" of repayment.  You as the "debtor" must commence payments to the Chapter 13 Trustee within 30 days of your filing date (failure to commence payments may lead to the dismissal of your case). The plan may, in most circumstances, propose payments in an amount less than 100% of your debts. Many, who earn less than the median income for their states, pay much less than 100% of their unsecured debts, and some pay none of those debts.  The actual amount paid is determined by a complicated formula calculated by your attorney called the "means test" more formerly called the Chapter 13 Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income. The purpose of the means test is twofold: to determine the commitment period, i.e. the length of time the debtor must be pay into a chapter 13 plan and the minimum amount the debtor must repay unsecured creditors.  Secured and priority creditors payments are determined by other factors. After a "confirmation hearing,"  the court approves your plan, and it becomes binding upon you and the creditors. After you complete payments under the plan, the court cancels the balance of your unsecured debt (not discharged in chapter 13 are mortgage obligations, certain long term debts, debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor's conviction of a crime). Chapter 13 is used frequently to stop mortgage foreclosures and can save your home; even at the last moment.

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What is electronic filing and how can that help me?

Electronic filing is the best thing that has happened to the court system in years. Electronic filing allows the filing and processing of bankruptcy petitions, as well as subsequent filings of court documents almost instantaneously through the internet. This office went online with the court several years ago, but now we are certified by the court to file electronically. The electronic filing system, known as ECF/ECM became operational in early 2003. We were one of the first to take advantage of this system. What does this mean to you?

It means:

  • No waiting for the mail.
  • No waiting for a courier to get back from the court.
  • Instant case numbers (required to stop sheriff sales).
  • Instant confirmation of filing.
  • Notice to other parties to be served.
  • Cost savings respecting copies; postage and printing costs (multiple copies are no longer needed.
  • The ability to stop a sheriff sale in minutes!

Ultimately, electronic filing could make all the difference in the world for you and your family! What is best is that there is no additional charge for this service.

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What is the "automatic stay" and why should I be concerned about it? Can I recover money for its violation?

You should be concerned about it for two main reasons:

First, it protects you from the barbaric hordes (a/k/a your creditors) that are looking to dismember your financial existence. The automatic stay applies to almost all creditors (see exceptions below) and stays all activities that are intended enforce the repayment of a debt, or to make it uncomfortable or embarrassing for someone in order to enforce the repayment of an obligation. The automatic stay prevents anyone, or any entity, from pursuing legal recourse against a debtor, except for criminal fines or restitution (pay that bad check!). It does not get you out of child support (shame on you for even thinking that)! It does not get you out of spousal support (even if he/she does not deserve it!). It does not stop you for being arrested for not paying a criminal fine. It does not give you criminal immunity (wouldn't that be nice?). It does not get you out of traffic tickets. It may in certain instances apply to parking fines (check with your local attorney first). The automatic stay is "automatic" (and does not need batteries). The court issues it by virtue of the mere filing of the bankruptcy case. You do not have to move for it or apply to the court to get one.

Secondly, violators of the automatic stay can become liable to you for monetary damages, as long as damages accrue to you.. This office has brought many stay violation actions. These actions, depending on the severity, can award a debtor damages for their losses, pain and suffering (if it can be related to a medical condition) actual specific economic losses as well as attorney's fees and costs of the lawsuit (if any; in most such actions there are no additional court fees). Many people are surprised that they can recover money from their bankruptcy case, but the courts have upheld the principal that the debtor will be protected from financial loss where it is found. Some cases have held that where a debtor incurs a financial loss, that loss can be enhanced by intentional infliction of emotional distress where it enhances an actual pecuniary loss. Emotional distress alone does not warrant a recovery where only emotional distress exists e.g. the debtor receives calls only but loses no money.

Read all about what is stayed and what is not stayed here, in 11 U.S.C. §362. This is the application section of the Bankruptcy Code relating to the stay powers of the court. Note that the Bankruptcy Court sits also as a court of equity. Courts of equity can order people to do things, beside just ordering people to pay money. An example of a court that is not a court of equity is your local magistrate.

Furthermore, the protection continues when the debtor receives a discharge in bankruptcy, as to the debts that were part of the case (not debts incurred after filing). This office once brought a motion against a creditor that later paid a debtor $7,500 for a violation of the discharge injunction. Lately, we settled against a bank that thought the debtors' case was dismissed and called every day, causing and infirm individual to be admitted to the hospital. Some actual cases brought against creditors include the following amounts:

  • $500.00 in counsel fees, $200.00 in damages and $100.00 fine to the court after a court hearing based on one collection letter;
  • $750.00 against Cavalry Investments, a New York debt collector for requesting a balance due in a letter after the debtor's discharge (settlement-$500 counsel fees; $250 in damages).
  • $800.00 against a business card printing firm which, after being warned twice, sent the debtor yet another collection letter (settlement).
  • $1,000.00 for one collection letter received by client (settlement).
  • $1,000.00 against Kohls and a collection agency for attempting to collect a debt after the discharge in a chapter 7 case.
  • $1,250.00 for two letters (settlement);
  • $1,500.00 for two letters (settlement);
  • $1,500.00 for a letter sent by CapitalOne to the debtor's relative, which was addressed to the debtor, after the debtor received his discharge. (settlement);
  • $1,525.00 to a debtor-landlord after Bank of America told the debtor's tenants that foreclosure was imminent and that they, the tenants, would be evicted. The threats by Bank of America caused the debtor to lose her tenants (after trial).
  • $1,750.00 for letters and phone call to business client (settlement);
  • $2,000.00 for second mistaken collection effort after settling first case for $1000 (settlement). In this case, the same creditor was sued twice and paid a total of $3,000.00 to the debtor;
  • $3,000.00 for several letters and several calls to client with two calls involving client's child (settlement).
  • $3,000.00, consisting of counsel fees of $1300.00, $1,000.00 in vehicle damage, $200.00 in lost wages, and $500.00 for humiliation, recovered against Horton Brothers Towing, a vehicle repossessor in Delaware after it repossessed the debtor's car despite being showed a copy of her filed bankruptcy petition. (settlement)
  • $7,500.00 for repeated post (chapter 7)-discharge violations against a large bank. The bank told a discharged debtor that she was being "processed for fraud" and that was "not how things were done" in America. The debtor was a US citizen that had been born in Portugal. The debtor had lived in the US since she was an infant. This is the actual text of the message. (settlement).
  • $20,000.00 against a popular consumer finance bank (for a national consumer electronics chain) after about 20-30 calls for collection even though the collectors were told that a bankruptcy case was filed. As a result of the calls, the debtor was admitted to the hospital for dangerously high blood pressure (settlement of adversary proceeding, i.e. a bankruptcy lawsuit).
  • Case withdrawn: A case was brought against Household Retail Services and Weinstein, Treiger & Riley, P.S. a law firm in Seattle, Washington. Weinstein represents Household, which does financing for Best Buy. Ever buy on credit in Best Buy? Be aware that Best Buy claims a security interest in your stuff! This means that if you go into bankruptcy, they or their law firm will send you a letter like this one. This issue sued upon is whether this letter violates the stay. Courts have held that it is legal to ask a debtor to reaffirm a debt (see below-reaffirmation means that you will still be liable after you get a discharge). But does this letter really just suggest reaffirmation, or does it go much further? Look at the letter. It is in PDF (Adobe Acrobat) format. The letter suggests that they will "pursue" the merchandise. How? Through further legal action? We believed and our experience shows that neither Best Buy nor Household ever seeks to "repossess" collateral (the things you bought) by force or by legal means. We believe the threat is an "empty gun" to the heads of an unsophisticated debtor. We believe this is wrong. We attempted to get the court to punish Weinstein and Household, however, due to lack of resources on part of the debtor, the case was withdrawn.
  • $11,000 punitive damages, $2,500 in counsel fees plus actual damages in the amount of $160 against Palisades Collections, LLC.  Read the decision and Bankruptcy Court opinion here.  Palisades ironically claimed they were not served with the motion, however, earlier tried to settle the case with a $1,000 offer.  After collection efforts started, Palisades settled the claim for a lump payment of $11,000, which was paid.  We were later informed that Palisade's attorney, who made the initial offer of $1,000 is "no longer with the company."

These were actual cases brought with no money advanced by the client and no court costs requested. The above cases were all settled and the client, with one exception, never went to court. Most of these cases were brought against large corporations. Some have required clients to not reveal the settlement, so names of participants have not been listed.

Most of the above cases represented abuses by creditors who then sought to blame "their systems" for an "unintentional error." Needless to say, our office did not buy this excuse and our client's rights were vindicated.

Any attorney can file a bankruptcy case. It requires a vigilant attorney to recover money for the client in a bankruptcy case. We don't just file and forget cases. We watch for stay violations and prosecute vigorously.

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Who can file a Chapter 13?

The Bankruptcy Code says that any individual with a regular income, i.e. a person with a stable income regular enough to allow him or her to make payments under a chapter 13 plan, can file a chapter 13 case. You do not need to have a job to file. You need only to have some source of regular income. You may not file a chapter 13 if a creditor has requested relief from the automatic stay in a prior bankruptcy that you filed, and you voluntarily dismissed the case. This bar continues for 180 days from the date you dismissed your case. You may also be barred from filing for the 180 day period if your case was dismissed for willful failure to abide by orders of the court, or to appear before the court in proper prosecution of his case. See this section of the Bankruptcy Code for further explanation: 11.U.S.C. §109(e) and (g). Please note that the law as quoted on this link may not be updated. The limits are currently even higher (see below).

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My father/mother's home is in foreclosure and he/she has recently died. I was supposed to inherit the home. Can I save it?

That depends upon whether title has passed to you. Estates cannot file chapter 13s. Deceased persons cannot file chapter 13s. Persons who have inherited real estate can. The phrase "have inherited" is important. If you received title through an estate, there is no problem; you can file. If the estate is open and the home is in the name of the decedent., have the executor transfer the home to you and then file.

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Is there a limit on how much I can owe?

Yes, but you probably don't meet it. Beginning April 1, 2010, the eligibility debt limits for Chapter 13 pursuant to 11 USC 109(e) were $360,475 of unsecured debt and $1,081,400 of secured debt.  You do not qualify for a chapter 13 if you owe more than $360,475 in unsecured debts (e.g. credit cards, signature loans, other non-collateralized liability) and $1,081,400 in secured (mortgages, new car loans, etc.) debt.  The chances of it being raised in the future again are almost a certainty.

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Who notifies the creditors that I have filed?

The court notifies the creditors. It usually takes about two to three weeks. Some creditors may not "notice" that you have filed due to their size. They may continue to call you and send bills after you have filed. This may be because the address you give to your attorney may be just a billing service. Many creditors use these billing services instead of doing it themselves. There may be incompetent people working for the services. It is therefore important that you list the address given for reporting billing errors and not the payment address. The "errors" address usually goes to more competent people, since they need to know how to comply with federal law on billing errors.

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Can a Chapter 13 save my home from foreclosure?

In most cases, yes! One of the main purposes of a Chapter 13 is to enable a homeowner to cure the default owed to a mortgage company. In other words, to reinstate a mortgage to its pre-default status. This is done through payment of a Chapter 13 "plan." Under this plan, the debtor makes payments to a trustee usually over a 36 - 60 month period, which sum includes sufficient funds to reinstate the loan to current status. The actual time depends very much on what is called the "means test."  Simply stated, if you earn more than the median income for your state, your plan will usually, buy not always be 60 months.  During this time period, the mortgage company cannot sell your home, or in any way continue with the foreclosure action if one is pending. If a foreclosure action is not commenced when you file, the mortgage company cannot begin one after you file (while the case is pending).  The exception is where the mortgage company obtains Bankruptcy Court permission to proceed with a foreclosure, which usually comes about if you fail to make mortgage payments after you file your case.

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...But I can't afford my mortgage payments. Can Chapter 13 eliminate, extend or reduce them?

One of the primary requirements of the Bankruptcy Code relating to Chapter 13 plans is the so-called "antimodification clause." There is presently legislation that proposes to modify this requirement, but it has not passed as of this writing.  This states that a chapter 13 debtor must provide for full payment to a mortgage company which maintains a lien on the residence of the debtor where that lien is the only security held by the mortgagee (e.g. the mortgagee's lien is not on the house and personal - not real estate - property).  Therefore, your mortgage payment cannot be changed, stayed or eliminated, except that mortgage arrears only may be paid over the life of the plan.  This is a maximum of 60 months.  There is one exception:

Can mortgages be eliminated under any circumstances?

In the Third Circuit (PA, DE, NJ) the Court of Appeals decided a case called In re: MacDonald. Although the court preserved the antimodification clause of the Bankruptcy Code, it did decide that where a second mortgage is wholly unsecured, it may be treated as unsecured. This example will clarify the point. Mr. and Mrs. Homeowner purchase their first home for $100,000. They borrow $90,000 from Greedee Savings Bank. They hold the house for 10 years and decide it needs windows. Over the years, the market and the neighborhood go to pot and their home is now worth $85,000. The balance on the mortgage is still about $89,000 because Greedee Savings Banks mortgage rate was $12%.

They are approached by Window Wiz Window Co. The salesman says, "I can give you new windows for only $300 a month; surely you can afford that! These windows will increase the value of your home by $20,000!" The homeowner says, "Yes indeed we can. Why, we would be fools not to take this deal! And don't call me Shirley (sorry about that joke-I can't resist). The Window Wiz guy does not tell them that the $300 a month creates a mortgage and the payments go on for 30 years, making the price of the windows $90,000, which is more than the value of the house. Homeowner then decides that Window Wiz gave them a bad deal and decides to sell the house. They are rudely awoken by the huge second mortgage on the place. The only solution seems to be arson. Do Homeowners risk prison?

The above case says that Homeowners can legally cancel the lien of the second mortgage if they complete their Chapter 13 Plan. This is because Window Wiz Co. has no real equity in the place anyway. That is, the first mortgage eats up all the equity in the home, and then some. The court felt that the second mortgagee only had an unsecured loan in fact, anyway.

This office has to date eliminated mortgages in four cases. The home owners have saved hundreds of dollars in wasted second mortgage payments which would never increase the equity in their real estate. If you are in this position, be sure to mention it to us if you visit our office.

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Can a Chapter 13 get my repossessed car back?

In many cases, the answer is also yes. However, if the car has been sold, or if you simply wait too long after repossession, it may be difficult or impossible to recover the vehicle. You must check with your attorney at the time you file for a more definitive answer. Most vehicle loan companies will return a car voluntarily after you file a chapter 13 (provided the car is not sold) if you show adequate insurance. This insurance usually must include collision and name the finance company as a loss payee, meaning the policy must specifically mention the loan company as the person/company which gets paid first in the event of a loss.

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Can a Chapter 13 get my house back after a sheriff sale?

This is a good reason why one should not to wait until the last minute to file. The short answers is "almost never." The long answer is "sometimes." Generally once your house is sold at a sheriff sale, there is no sense filing a chapter 13 to try to save it. The filing of a case will not, in and of itself, set aside or vacate a sheriff's sale held in a regular manner in accordance with the law. Sometimes, and this is rare, the state court may set aside the sheriff's sale if the sale was conducted in an illegal manner, or without proper notice. It is usually very difficult to get a court to set aside the sale. Therefore, once the "hammer falls," you had better start looking for another place to live.

Actual case in point (last minute filings): This office handled clients who already had filed "pro-se" on July 20, 2001 (before this office got their case). "Pro-se" generally means that the client filed without legal counsel. The clients decided to file on July 20, 2001 because their sheriff's sale was ... you guessed it, on July 20, 2001 at 11:00 a.m. At that time, they sought to save attorney's fees and do the filing themselves. They arrived at the Bankruptcy Court at 9:30 a.m. By the time they got finished with their paperwork, they claimed it was 10:45 a.m. According to wife's testimony before the Bankruptcy Court in a motion filed by the mortgage company against the debtors, she handed the paperwork to the clerk, who did not get to her case until 1:15 p.m. to stamp it in. The debtors' home was sold between 11:00 a.m. and 1:00 p.m. that day. At trial this office argued that it was the time of handing the papers to the clerk that counted. The mortgage company argued that the debtors were not to be believed, and the time of "stamping" that was determinative. The clerk testified that 27 people filed cases before the debtors that day; that papers are never held more than an hour and a half before stamping; and this is on the busiest days. The clerk said there were 81 people filing that day and the busiest day that month had 175 people filing. This was not the first bankruptcy that the debtors had filed. In fact, they had filed chapter 13's twice before and had not completed payments under their plans. The Bankruptcy judge found that the debtors were not unsophisticated in filing cases, that they should have known this was the probable outcome and were, in short, not to be believed. The debtors unfortunately were not able to save their home. The moral? 1. Bankruptcy Court is not a place for procrastination. 2. Attorney's fees are a lot cheaper than a new home.

Those insurance companies are crooks. I let my fire insurance lapse. That's my business, right?

Right, however... It is also the business of the chapter 13 trustee who will move to dismiss your case (throw it out of court) for refusing to protect the rights of your mortgage company and your other creditors. A destroyed home makes lousy collateral for a mortgage, puts the debtor out on the street and generally has a negative impact on future chapter 13 plan payments. You must have and maintain a current and valid fire insurance policy on all real estate to stay in bankruptcy.

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How much will I have to pay in a Chapter 13 plan?

That depends upon several factors. First consider the commitment period and minimum amount you must pay under the means test (see above). Once at least the minimum amount under the means test is paid, then you can proceed as stated herein.

When your mortgage is in default (applicable also to defaulted vehicle payment which is figured in a similar manner, except there is no sheriff's sale), your payment will depend upon the amount you have to cure (bring your mortgage current). This will not be the number of payments missed times the payment amount due divided by the length of the plan (e.g. The plan is NOT calculated like this: arrears = $6000, plan is 60 months, therefore plan is $100 a month). The amount to cure the default may be calculated as follows (these figures do not represent your personal figures-they are hypothetical and by way of example only):

Your regular mortgage payment (example only) $1,500.00
Your late charge $75.00
Times number of mos. late 10.00
Base amount due  $15,750.00
Add attorney's fees for bank (estimated) $2,000.00
Add court fees for foreclosure (est.) $300.00
Add reasonable fees for sheriff sale if scheduled (estimate only) $2500.00
Add misc. costs (bring down, BPO, etc) $1000.00
Payment for attorney under plan, est. $2000.00
Total est. amount to cure in chap. 13 plan $23,550.00
Paid over by 60 months $392.50
Payment for mortgage with est. trustee commission (usually 10%) $436.11
In addition to the above figure there is usually some payment to unsecured creditors (credit cards, unsecured loans, etc.). This is determined by the Means Test and the amount of "excess income" you are left with after ordinary expenses on Schedules I & J. Therefore, unsecured creditors usually receive pro-rata payments, only if they file claims. Plus a pro-rata percentage to the unsecured creditors.

As you can see, the longer you wait, i.e., the closer you get to sheriff's sale, the more the plan will be. Therefore, the best time to file a chapter 13 is before a foreclosure starts. Plans may not exceed 60 months. Some creditors may include interest over the life of the plan. This may also increase the amount you are paying. Interest over the life of the plan is sometimes allowed if there is sufficient equity in the property (i.e. the amount you would realize after final sale).

Don't have any secured debts? If you are not curing mortgage or vehicle payment arrears, then your payment is governed by several rules: The payment must be the debtor's "best effort," that is, all of the debtor's projected disposable income that is earned in the three-year period will be applied to make payments under the plan. "Disposable income" means income which is received by the debtor and which is not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor; including a small charitable contribution not to exceed 15% of the debtor's gross income. Click here for the Bankruptcy Code on the subject. Also, the payment may not propose to pay less than the (unsecured) creditors would get if the debtor filed a Chapter 7. This means what they creditors would receive after you took your bankruptcy exemptions.

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When are my Chapter 13 plan payments due and how are they payable?

Generally, unless otherwise provided for by the plan (speak to your attorney about this), you payments are due 30 days after you filing date. They are generally payable every month at that time. All payments are payable by money order or certified funds only. No personal checks are ever accepted. You, not your attorney, are responsible to keep track of your payments. It is suggested that you keep a careful record of your payments, in case of a dispute. Always retain the money order receipt, or other proof of payment. This office has prepared a form that you can use to keep track of the payments. Get our payment record form here. It is suggested that you attach your receipts directly to this form as you make them. Feel free to copy this form as much as you wish.

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I do not have a job. Can I file Chapter 13?

Generally, any individual with a regular income can file a chapter 13. A regular income can come from social security, SSI, SSDI, private disability insurance, retirement income, government assistance (welfare), or any source of regular and dependable income. Some courts even allow assistance from relatives to be counted. Check with your local counsel to determine the rule in your district.

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What if my mortgage company or other creditor overcharges me? Do I have to accept what they say?

Just because you filed a bankruptcy, your creditors, and even and especially, your mortgage and car finance companies do not have the right to double charge, overcharge or charge without a reasonable explanation an sum amount in their proof of claim. A "proof of claim" is the document filed by a creditor stating what they believe you owe. It is not infallible. As a matter of fact, it is very often wrong. Mortgage companies are notorious for adding unwarranted additional charges for all kinds of things, e.g. the mortgagee will bill for sheriff's charges and not give you credit for money they receive back from the sheriff when you file bankruptcy. Think this is just pocket charge? Think again. The refund from the sheriff is sometimes $1,000 or more. You pay it in the claim, and then the mortgagee gets it again! Fortunately, there is a way to handle any objection to any amount claimed from the debtor in bankruptcy. It is called an Objection to Proof of Claim and it can be filed for any claim. We handle many of these every week. They almost always yield favorable results. We recently objected to a $24,000 mortgage claim; the claim was later reduced to about $17,000. The debtor saved close to $10,000! This was accomplished even without the debtor taking the witness stand. Of course every case stands on its own merits, but it is worth discussing if you file.

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Must I have credit counseling before bankruptcy?

Yes!  This is unfortunate because in the opinion of this attorney (and many judges as well) it almost never helps the debtor.  So, if you are thinking, "Is this then a needless waste of time that increases the chances of my losing my home?", the answer would be, "yes... yes, it is."  Are you then wondering why the (Republican controlled) US Congress in 2005 wanted you to move into your mom's house; did they hate me?  Of course not, silly, they hated all poor people equally.

The new Bankruptcy Code (BAPCPA) 11 U.S.C 109(h) presently requires credit counseling prior to filing a bankruptcy case. Failure to obtain counseling will almost always lead to dismissal of your chapter 13 case (in fact, you are not even considered to be a debtor if you don't have counseling. A case dismissal means loss of the filing fee, possibly your attorney's fee, and perhaps even your home to a sheriff sale (if one was pending). Credit counseling can be had online, over the internet.  For a list of approve credit counselors, check the website of the US Trustee Program.  Since credit counseling can be done over the internet, any person reading this can obtain such counseling.  It does not matter if you get the certificate before filing, as long as you have completed the counseling.  Of course, a certificate from the counselor must be filed in your case within a short time after the filing. 

Don't tell a court, "I could not get an appointment," for counseling; it won't work!  Courts are very strict about this requirement.  Do it online!  It only takes about an hour or 90 minutes. 

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I see a lot of "reduce your debt" ads on television. I even get incessant calls from these companies. Why do they "care" about my financial well being so much?

There is one thing for certain: No one cares about your financial well being other than your family, your cpa and your attorney.

Case in point: Ameridebt. Ameridebt claimed they were "A Trusted Non-Profit Organization." Well, they are certainly an "organization." That is about where the truth ends, says the Attorney General of the State of Missouri, Jay Nixon. Mr. Nixon has filed a Petition to Revoke Authority to Conduct Business, enjoin and to assess civil penalties against Ameridebt. Mr. Nixon alleges the following:

  • That Ameridebt holds itself out as a non-profit ("we operate at cost" and that the company needs "contributions" because otherwise they could not "cover their costs.").
  • That is actually a for profit corporation.
  • That its written materials and oral statements are deceptive, misleading and omit or suppress several material facts;
  • That Ameridebt represents that it does not charge any advance or up front fees in their advertising.
  • That Ameridebt actually charges an up front fee of 3% and that the average up front fee is $327;
  • That a consumer's first monthly payment is retained by Ameridebt as a "voluntary contribution" to their organization, and that request for a "voluntary contribution" has the effect of concealing the fact that the money is simply pocketed by Ameridebt. This payment or "contribution" is neither voluntary nor a contribution. It is simply a payment solely for the benefit of this "non-profit" organization. Of course, consumers believing that the first payment is for the creditors are much more likely to be hit with a late charge (which is not disclosed by Ameridebt.
  • That Ameridebt charges monthly fees of $7 per creditor with a $20 minimum (average fee of $33). These fees are falsely represented as "voluntary contributions." They are really strictly profit for this "non-profit" organization.
  • That Ameridebt says that they, as a "non-profit" organization will provide services and obtain benefits for the consumer. Actually Ameridebt turns over all those tasks to another for profit company called DebtWorks, Inc. DebtWorks, Inc. is run by a man named Andris Pukke as his alter ego, the suit alleges (see actual averments here). The suit alleges that Mr Pukke and DebtWorks, his alter ego, failed to disclose that he and DebtWorks were handling the services that Ameridebt claimed it was handling to the consumer, and that Pukke and DebtWorks were earning large profits doing so. The suit claims that to fail to disclose this is an unfair business practice and fraudulent under Missouri law.
  • The Attorney General of Missouri goes on to allege that credit counselors hired by Ameridebt are not counselors at all, but just salesmen, and that they receive no training in credit counseling and that these "counselors" receive monetary incentives based upon their sales of "debt management plans."

This is not a complete statement of the entire case. It is also not representative of Ameridebt's side of the story. All allegations of the Missouri AG must be proven in court and an allegation alone is never proof of anything. We only suggest that you be very careful before you engage such a company and to take no one's word as gospel. It is always best to contact a competent attorney in your state and locality before agree in to such a contract.

Update: The Federal Trade Commission has file a complaint in federal court against Ameridebt, DebtWorks and Andrew Pukke on similar grounds. If you have been defrauded by Ameridebt, have lost money or just need information, call the FTC at 877-862-0886. The case is ongoing and if you have information that will help the FTC, you are encouraged to call them. Help the FTC stop Ameridebt from piling on financial misery to those who can handle it least.

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When should I consider filing a Chapter 13??

You should consider filing a chapter 13 if:

  1. Your house is being foreclosed upon.
  2. You have received a notice from your mortgage company that they intend foreclosure at any time in the future.
  3. You need some time to catch your breath, so that you can regain control of your life from your creditors.
  4. You are in severe financial difficulty and have tried, but cannot work other arrangements with your creditors.
  5. You have property (real or personal) that you need to protect and are in danger of losing to a creditor.
  6. You have committed a wrongful act respecting the debts (misrepresentation, fraud, etc.) and you feel that a creditor would object to your discharge in a chapter 7.
  7. You have income to pay less than 100% of the debts you owe and would like to make (in most cases) interest-free payments to unsecured creditors.
  8. You have an honest desire to not "run away from" your creditors, but are not in a financial position to pay all the debt, or all the debt and all the interest on that debt.
  9. You should also consider filing if you have already been in a chapter 13 and the case was dismissed for almost any reason. Refiling is usually possible. You do not have to stay with the same attorney if you did not like him or her.

You should be aware that payments to mortgage creditors generally cannot be reduced or modified.

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How can I pay for an attorney if I am "bankrupt??

There are a number of different manners of payment. One should consider that he will not be paying a significant portion of his indebtedness so that in itself, may free up funds for counsel fees. Sometimes, some or even most of the fee may be paid through the chapter 13 plan without interest. You will then have up to five years to pay. This will increase your plan payments only marginally. Many people still would want to pay prior to filing because the plan payments will be less.

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When should I file?

In the State of Pennsylvania, it is possible, at present, to stop a sheriff's sale before it takes place, and cure your mortgage arrears in a Chapter 13 Plan. This does not mean you should wait for a sheriff's sale. On the contrary, you should not wait for several reasons:

(1) The longer you wait, the greater your chances are of missing a critical deadline.

(2) The longer you wait, the higher the fees and costs will be to cure the arrears.

(3) The longer you wait, the more mortgage payments you will miss; consequently your bankruptcy plan payment will be higher.

(4) The law may change. Some explanation is in order. Currently, in the State of New Jersey, the law is that once a mortgage foreclosure judgment is entered, it may not be cured through a chapter 13 bankruptcy plan. While this is not the law in the State of Pennsylvania, one cannot anticipate when or if the law will change. Note that a judgment is not a sheriff sale. The judgment comes approximately 20 days after service of the complaint, unless you answer it. You will need a lawyer to do so. No answer is required if you file a bankruptcy. Filing means filing with the court. It does not mean starting your case in this office.

Therefore, the earlier you file, the more likely it will be that you successfully save your home.

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How can I stop creditors harassing you or your family?

Filing a Chapter 13 acts as a stay (which means an Order of the court preventing this) of ALL creditor activity, including all collection action. This includes, suits, phone calls, letters, "friendly reminders" of indebtedness or visits from bill collectors. This includes legal papers, of course. Please note that it is the Bankruptcy Court that notifies your creditor. Therefore, just because you have filed bankruptcy, it does not mean that all your creditors will know immediately. It may take a few weeks for them to learn of the filing through the court. If a particular creditor is getting on your nerves, let me know and I will contact them. The harassment should then cease. If it does not, you may have the right to bring legal action against them.

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What if I owe the electric company, will they shut off my power?

The Bankruptcy Code prohibits your local power, water, telephone, or any utility company from discriminating against you because you have filed a bankruptcy. It cannot shut off your power, water or phone service or refuse you any utility service just because you filed. You should be aware that your local utility company may request a deposit from you for continued service.

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What about my credit record?

Fact: Bankruptcy will hurt your ability to obtain credit for some time to come. That you have filed a chapter 13 will appear on your credit record for seven years. In some circumstances, i.e. credit transactions in excess of $50,000, the credit record can reach back even further. Generally, the best (and probably the only) way to get good credit is to pay your bills, or at least the minimum amount due, when they become due. A chapter 13 will be listed on your credit record as just that; a chapter 13 bankruptcy. Your creditors may also be able to see if you completed your plan successfully, which is certainly to your advantage.

Some people may be fortunate enough to find a creditor willing to overlook their bankruptcy. This may or may not be you; the question is left entirely up to the individual creditor. By the way, the bankruptcy trustee will require you to cut your credit cards in half and return them to the creditors. 

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I wrote a bad check to a creditor. Can that be discharged in a chapter 13?

Issuing a bad check is a crime in most, and probably any state. A bad check may be defined differently in individual states. Most states will give you a chance to cure a bad check before prosecution. Pennsylvania allows you 10 days to repay the money and costs. The bankruptcy will not protect you from criminal prosecution and will not discharge criminal liability for restitution, costs or fines. In addition, you can be arrested, notwithstanding the bankruptcy. It is strongly recommended that you satisfy all bad checks before you file.

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My vehicle finance company asked me to reaffirm (agree to be liable after bankruptcy) my debt to them. Do I need to reaffirm any of my debts?

The Bankruptcy Code code requires a debtor to do the following with a secured debt: reaffirm, redeem or surrender the collateral.  If the collateral is a vehicle and the debt is not reaffirmed, most finance companies will still not repossess the vehicle if payments are continuing, but they could do that is certain states.  Contact your local attorney to determine a proper course of action on the subjects.  Many state's laws allow for work-arounds that are acceptable to most debtors.  Again, it depends on your state and the decisions of the Bankruptcy Courts in your state.  You should always seek out legal advice from a bankruptcy practitioner on the subject.  Since bankruptcy is a special area of the law, seek out a lawyer who handles more than just a few cases a year.

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My vehicle finance company stopped billing me after I filed chapter 13. My lawyer must have got me a free car, right?

Unfortunately, bankruptcy courts do not give away cars. Filing bankruptcy may stop your creditors from billing you monthly. This may not be a bad thing. For those who depend on a bill every month, have your attorney contact the vehicle loan company and request a bill. Some lenders require a reaffirmation (see question above) in order to bill. Many banks have auto payments that you can set up online. It is only important that the bill gets paid, it does not matter how. Unfortunately, you may just need to remember to pay the bill yourself.

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What exactly is expected of me in a Chapter 13 case?

The following are among the most important obligations you have in a chapter 13 case:

  1. Be truthful to all authorities involved, including myself. Lying in a bankruptcy proceeding is a federal crime and is punishable as such. It is often the case that a debtor can accomplish better results by truthfully disclosing unfavorable facts than by lying about them.
  2. Pay the plan faithfully. I will tell you the amount of your plan payments. If you miss two consecutive payments, your case is subject to dismissal. You may wish to request a wage attachment. If you do, the payments will come directly from your pay and you will not have to worry about payments, as long as your employer is making them. Of course, if your employer stops making payments for any reason, it is your responsibility to continue them. By the way, your first plan payment will be due the first full month after you file your bankruptcy. Retain your money order receipts as proof of payment.
  3. Attend court when directed to do so. Your court appearances will be minimal. Most debtors only appear one time, at what is called a "section 341" Meeting of the Creditors. Click here for the meeting locations in the Philadelphia area. At that meeting, the creditors are allowed to attend and ask questions, although it is rare that they actually do.
  4. PAY YOUR MORTGAGE! You may have been told of this obligation, but it cannot be stressed enough. Current monthly mortgage payments must be maintained. Payments must commence the month after filing your case. Pay the regular monthly amount to your mortgage company unless you are instructed to do otherwise. Should payments be refused by your mortgage company, report this fact to me at once. You are never excused from making current monthly mortgage payments. Your failure to comply with this requirement will eventually cost you your home. Be sure to retain your canceled checks as proof of payment. It is usually a good idea to enclose a copy of your bankruptcy petition with your first check to your mortgage company as proof of the filing of this case. They will need to know that you are in a chapter 13 case in order to begin accepting payments again.
  5. Obey all orders of the Bankruptcy Court.

N.B. If you do not pay your mortgage payments (post-petition) and the mortgage company gets relief from the stay (is allowed to proceed with or commence a foreclosure), you are not allowed to just dismiss your case and start over. If you dismiss your case after a motion for stay relief is filed, then you must wait 180 days to refile. If the trustee dismisses your case, then the 180 day period is not applicable, however if you file a case within a year after the dismissal the automatic stay will expire after 30 days unless the court extends it for good cause shown. There is no way to know exactly when a motion for stay relief will be filed by the mortgage company. It is best to stay current.

Pay your car payment! If you fail to keep this current, your car is subject to repossession after relief from the stay is obtained. You must also keep your car fully insured.

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(Revised) What exactly is the "Meeting of Creditors" and what will happen there?

The Meeting of Creditors sounds scary, but really it is not. It should not be dreaded by the ordinary debtor. Most of the time, no creditors actually show. If they do, your attorney should be easily be able to handle them. The creditor's meeting is not a "free for all" where creditors get to yell and scream at the debtor. Creditor's, if they do show, may only make a limited inquiry as to relevant and material issues. No one will ask you to pay any debts. The trustee will, however, ask you questions about the reasons for filing and he will verify essential facts. It is therefore important that you come prepared. You can get a checklist as to what to bring (this is actually for the Eastern District of Pennsylvania, your district may differ) here. It is in Adobe Acrobat format, see below for a link to get a free reader.

  • Generally, these are the items that you will need to bring to a meeting of creditors (check with your attorney, the items in your jurisdiction may be different:
    • A copy of your last tax return must be in the trustee's possession at least 7 days prior to the creditor's meeting,
    • Proof of ID (a government picture ID) and social security number (original documents-other documents below may be copies-see this link for a complete checklist).
    • Proof of your income (pay check stubs, etc.).
    • Proof of income from rent (leases or other agreements to pay you).
    • Proof of real property value.  Most houses are listed on Zillow.com.
    • Proof of outstanding balance on secured debt (if applicable - mortgages, car loans) .
    • Proof of insurance for all vehicles and for your home (fire insurance or proof that the same is being paid through your mortgage payment) .
    • IRA, stock and mutual fund accounts, annuities, savings account statements (if any).
    • Copies of lawsuit complaints for pending matters.
    • If your house is presently being sold, copies of listing agreements.
    • Copy of your most recent tax return and any other items requested by the trustee.
    • Copies of your bank statements from the month you filed your case.

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What are the chances of my bankruptcy "not being accepted?"

For some reason, many clients are under the impression that "their bankruptcy has to be accepted." The truth is that once the case is filed, it is "accepted" by the court and the debtor receives relief from all debt collection activities, including, but in no way limited to:

  • The immediate stay of any litigation, excepting criminal and child support (also certain family matters);
  • Harassing phone calls;
  • Requests for payment;
  • Repossessions;
  • Electrical, water, telephone or other utilities being shut off;
  • Most types of setoff activity.

While it is true that your plan must be confirmed (i.e. made binding upon the rights of your creditors) by the court, your creditors do not have to accept the plan if:

  • It is your best effort;
  • It provides for a payment to unsecured creditors in an amount at least as much as they would receive if you had filed a Chapter 7 bankruptcy;
  • It provides that secured creditors will retain their liens; and
  • It otherwise complies with the minimum requirements for a chapter 13 plan under the law;

Of course, the statements above are simplified for the lay person's understanding. This is not to say that there may be other issues for the attorney to consider.

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I have an expensive car or house, which I bought when I was making a lot more money. My payments are really high, but I want to keep these items. How will this fact affect my bankruptcy plan?

Although there is no reason one cannot continue payments to the creditors after the case is file, if the payments are too high, e.g. over $500 a month for a car, or over $1,500 a month for a home (and these are just personal estimates, they are not "law"), a chapter 13 trustee, or even the court may begin to think that you are not giving unsecured creditors your "best effort." That is, you are beginning to spend way too much supporting an extravagant former life-style at the expense of your creditors. Personally, we represented a debtor with a mortgage payment of $4,000 a month. A local bank, PNC, which was unsecured, objected, stating that the debtors were busy supporting an extravagant life-style, while the debtors' creditors were being denied a reasonable return in the chapter 13 plan. Put another way, people who need to file chapter 13s may not live as they lived before, if that style of living got them to where they are now. While it is true that the vast majority of persons do not have this issue, it is something that some debtors need to seriously consider before filing.

We also recently represented a debtor whose vehicle payments amounted to over $1,500 a month. By comparison, their home payments were $1,100. The trustee refused to confirm that case unless the debtor offered 100% to his creditors. The debtor refused and the case was dismissed. The debtor maintained several higher end vehicles and a motorcycle for recreational purposes. The trustee claimed that the excessive vehicle payments were actually at the expense of his other creditors who would be, in reality "financing" the vehicle.

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I work "under the table." I just to earn enough to feed my family. Will the court tell the IRS about me?

Maybe, but even if it does not, IRS will find out about you anyway. The IRS is very serious about non-filers. No plan can be confirmed if taxes are unfiled. The way the IRS sees it, it is a worse sin to not file than to not pay. If taxes returns are outstanding, the IRS will object to your plan and your case will be dismissed. This office can assist you in filing taxes, but we do charge fees for that service, in addition to bankruptcy fees. It does not matter that you were getting a refund. If you do not file taxes in the year you should get a refund and you owe taxes for another year and wait too long before filing, the IRS will keep you money and not even apply it as a credit against taxes you may owe for later years! By the way, if you work under the table, do you ever hit your head when you get up?

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I have not filed my tax returns for the last (or possibly other) years. My creditors should not care, should they?

Your creditors may not, but the trustee and the court will. It is essential that all tax returns be filed for all years if you wish to have your plan confirmed. Under new bankruptcy legislation, it may be a condition precedent to filing a bankruptcy case. For now, the IRS will object to your confirmation, or may file a claim for estimated taxes which will (I guarantee) shock you with its size and you will have to pay it at the rate of 100%!

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Now that I completed my taxes, should I send them in to the IRS Service Center where I usually file my returns?

No! The Service Center is very slow to process returns. The case may actually be dismissed even though you filed returns. And may be because of the IRS's delay! You need to speak with us or your attorney and have him or her send the returns in to the Special Procedures Unit of the IRS for immediate processing. Many attorneys do not realize this (we do).

If you are filing in the Eastern District of Pennsylvania (3rd Circuit), you may file late returns here:

Internal Revenue Service Compliance Service IE:3:1

Insolvency Section I

Attn: C Bishop

PO Box 12051 Philadelphia PA 19105-2051

Fax 215-861-1620 Ms. Bishop 215-861-1510

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What if I want to sell my home (or real estate), and I have already filed a Chapter 13?

Sometimes, the debtor(s) in a chapter 13 case realize that the best way out of their problems is to liquidate (sell) their home or other real property owned by them at the time of filing. Many times the debtor(s) do not realize that all real estate owned at the time of the filing is subject to the jurisdiction of the court. Some courts in certain jurisdictions feel that, or allow plans that, revest complete ownership of the property when the plan is confirmed. Most of the time, however, the debtor(s) need to get permission of the court to sell their property.

After a sale, most times the trustee will take control of the proceeds after the liens are paid. The realtor and attorney(s) will need to get court approval of their fees in order to get paid from the sale. Realtors need to be appointed first in many if not all jurisdictions. The realtor, therefore, cannot just appear at the settlement or closing of title and ask that the title clerk or closing attorney withhold his fee. Furthermore, all sales prices are subject to approval of the court. If the court feels that the sales price is inadequate, then the court will disapprove the sale. If the court disapproves the sale and the sale takes place anyway, then the purchaser may not have valid title (thus creating a major headache for the purchaser and his title company).

In summary, when you sell real estate in a chapter 13, your creditors may get paid before you do. This depends greatly on the exemptions you and your counsel claim when you file. Bankruptcy law, although federal, is greatly dependent upon the jurisdiction of filing, so please check with your local counsel to verify whether the above is the law in your particular jurisdiction.

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After I file, how can I determine the status of my case?

As a debtor's attorney, we can obtain instant case status through the Internet. You can get a print-out of your case status at any time simply by calling us. This is a free service we are happy to afford you. If you have email, these case reports may be e-mailed to you. The public also has access to PACER data. PACER is Public Access to Court Records and is available here. However, it does not have trustee case reports. It does have docket reports and claims registers (so you can see who filed claims). You need to establish an account to use it though. This data is open to anyone, even nosey busy-bodies who have no real reason to see it except to dig up dirt up their neighbors. They call that democracy. I call it $0.07 a page.

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I lost my job or cannot make my plan payments for another reason. What can I do?

If you are paying for arrears on your mortgage as a result of a foreclosure or threatened foreclosure, or for any reason, then your plan may already be at a minimum and may not be able to be reduced. If your plan calls for a certain percentage to unsecured creditors (e.g. credit cards, etc.), which percentage was based upon a wage figure that you can no longer support, then the plan can be reduced accordingly, as long as you provide for full payment for your mortgage arrears and any other arrears (e.g. vehicle payment arrears) that you need to pay.

If your plan has no secured creditors, then you can modify the plan to reduce it to any reasonable level that the court will approve. Often, you attorney will need to file a motion to have the new plan approved.

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I screwed up and my case was dismissed. Should I bite on my cyanide capsule?

Whoa! This is usually not the end. May times dismisses cases can be reinstated (this is not the same as refiling-see below) upon a motion filed with the court. If you have a good reason for non-payment of your plan, your attorney can usually get the case reinstated at least one time, perhaps more than one time if you have a good enough grounds. This determination is left up to the bankruptcy judge.

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I screwed up and didn't make my payments to my mortgage company after I filed. The mortgage company moved for relief from the stay. What can I do?

As has been stated above, you MUST make current mortgage payments to the mortgagee after you file. This means immediately after you file. That is, if a case would be filed January 16, 2004, you must make a mortgage payment for February, 2004. Having said that, what if you don't? Will you be thrown from your living room out your new plate glass bow window onto the street. Yes! If you live in Bulgaria. But here in the US the mortgage company will file a motion for relief from the stay. The purpose of this motion is to allow the mortgage company to commence or continue the foreclosure action in state court. The Bankruptcy Court will never evict someone from their home. A state court may, however. Should you panic if this happens (stay relief motion, that is)? Not really, but you and your lawyer must take action. You can very often settle such motions by astipulation or agreement to spread the post-petition arrears over a short period and pay the arrears in addition to your regular payment. For instance, if you are in arrears in the amount of $6,000 and your mortgage payment is $1,000, then your new payment might be $2,000 ($1000 a month for six months plus the $1000 regular payment).

Stipulations should not be taken lightly. By entering into a stipulation, you often give up the opportunity to be late ever again in the bankruptcy case. That is, if you are late again, ever, even after you have paid back all the arrears, the bank will get immediate relief and take action against you in state court. Some people get a false sense of security, having "completed" payments on a stipulation. Don't be fooled. These can be a trap for the unwary.

If you missed payments and your mortgage company filed this motion, do not make any other payments to the mortgage company. Consult your lawyer for advice as to where to send payments first! Payments should generally (at least the first payment) go to the attorney for the mortgage company. Payments should clearly be marked "for post-petition arrears only," unless your attorney advises you otherwise. In short, you MUST have competent counsel to assist you! This is not "People's Court!"

One last note: Even after a mortgage company has relief, a good attorney can petition the court to reconsider the relief. This is no guarantee of results though. Of course, this depends upon your district.

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I just got some extra money. Can I pay off my chapter 13 plan early?

The answer is yes, but only if you are willing to pay your creditors 100% of their claims. Most courts will require a debtor to be in a chapter 13 at least for 36 months. The reasoning is that if the debtor has the money to prepay the plan, he maybe really did not need a break anyway. The debtor will be expected to continue to make his or her plan payments for at least the balance of the plan or a minimum of 36 months. The plan is not a loan that can be "prepaid."

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What happens when I complete my Chapter 13 obligations?

After you have completed payments under the plan, and if no objections to discharge are filed, you will be receiving your discharge in bankruptcy. You are not be required to appear in court to get your discharge order. The discharge, as you know, "cancels" certain debts that you had at the time the bankruptcy was filed. It does not affect the lien of secured claims, however, it will cancel the personal liability only, on those debts. This means that if you owe money on the secured debt after you receive the chapter 13 discharge, your collateral is still subject to repossession, unless you remain current with that creditor.

If no objections to discharge are filed, you can expect to receive an order, signed by the Judge, in the mail after your completion of the plan. When you receive the discharge order, you should put it in a safe place with your other valuable and important papers because you may have to show it to creditors later.

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What is the effect of a bankruptcy discharge?

You must understand several things about your bankruptcy discharge:

  • ONLY DEBTS LISTED ON YOUR BANKRUPTCY SCHEDULES can be discharged. If you have a debt that you owed at the time that the bankruptcy was filed, but do not have it listed, it will not be discharged. If you have such a debt, speak with me immediately and I will file amendments to the schedules and amend the plan, if required.
  • ONLY DEBTS OWED FROM THE PERIOD BEFORE THE BANKRUPTCY WAS FILED WILL BE DISCHARGED. This bankruptcy discharge will not discharge debts that you became obligated to pay during the bankruptcy. Your discharge will only cover your personal obligation to pay debts. It will not cover co-signers on your debts and it will have no effect on most security interests, like home mortgages and encumbrances on motor vehicles.
  • If you want to REAFFIRM A DEBT, AVOID A LIEN, OR REDEEM PROPERTY, you must do so BEFORE THE CONFIRMATION ORDER IS SIGNED. Therefore, you should tell me now if you want to do this. An explanation is in order:
    • Certain liens (judgments, levies, non-purchase-money interests in household goods) can be eliminated entirely by asking the court to do so. There is an additional fee for this service. If you are interested in this service, let me know and I will quote a fee.
    • Other liens, like mortgages, motor vehicle encumbrances, and purchase money security in other goods cannot be eliminated.
    • If you think that any of these agreements or motions should be filed in your case, or if you want additional information, contact me.
  • Remember: You can pay anybody you want after your discharge however, few debtors do. Depending on the length of your plan, you may not receive a discharge for 3 to 5 years.
  • The bankruptcy code prohibits the discharge of certain types of debts. Upon your request, I can describe to you in detail the types of debts that cannot be discharged. These debts include, but are not limited to: educational loans that first became due less than seven years ago, child support, certain taxes, including income taxes less than three years old. Furthermore, your taxes may not be dischargeable even if they are more than three years old in certain circumstances. These are, but are not limited to the following: (i) If you did not file a return, or (ii) if you did not file a return on time. In many instances, income taxes over three years old may be DISCHARGEABLE, however, to be sure, you must review your specific case with me.
  • It is important that you know the significance of your discharge order. If a debt is discharged, that creditor cannot force you to pay that particular debt. This means that the creditors cannot legally file an action against you (for that debt), continue an action that it had filed before the bankruptcy, send you collection letters or harass you in any other way. If this type of harassment occurs, you should contact me immediately, and I may be able to sue the creditor.
  • This information sheet is intended only as a summary of certain points of interest regarding your bankruptcy discharge. The terms used in this information sheet are intended to be simple so that they can be understood, the law is much more detailed. This information therefore is not "the law" and is only a summary designed to help you understand this phase of your bankruptcy.

Each bankruptcy is unique. Your case may have special facts making further discussion necessary. Do not be afraid to raise any issue if you feel uneasy about it. I will be pleased to answer any question you may have.

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I received a chapter 13 discharge just recently but I fell behind on my mortgage again and they are foreclosing.  Can I refile and get another discharge?

The Honorable Bruce Fox, judge of the Bankruptcy Court for the Eastern District of Pennsylvania used to like to say,"...this court is unlike all other businesses, we don't like repeat customers," and this is very true.  Notwithstanding Judge Fox's admonition, what if you get your discharge and within a year or so, you are back in foreclosure.  It may not be your fault, things like this occur all of the time.  What now?  Do you need to lose your home?  Probably not.  Even though you are not able to secured a chapter 13 discharge for 4 years after your last, you can still file a case to propose a cure of the defaulted mortgage.  In this kind of filing, the debtor is not seeking a discharge, but only seeks to impose a "cure plan" on the mortgagee (the bank).  Once the plan is completed (you still only have 5 years, maximum), your mortgage will be reinstated and you will be out of default status.  Speak to your local counsel who has the information about this kind of chapter 13 plan.   

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Where are section 341 Meetings of Creditors held in the Delaware Valley, PA region?

For a list of meeting locations, click here.

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What if I forgot to list a creditor?

It is usually not a problem if it is caught before the confirmation hearing. This can be done even after the plan's confirmation. There is a Bankruptcy Court fee of $26. Your attorney may also charge a small additional fees for the service.

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(Revised) The trustee dismissed my case; can I just refile it?

Under most circumstances, the your case can be refiled however there are limits on obtaining a new automatic stay (see below). If a case is refiled, it starts from the beginning; you have to attend a meeting of creditors again and the creditors must file new claims. Any relief the court granted you in the first case is not effective in the second.

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(Revised) Is there a limit to the number of times I can refile my case?

There is indeed. If a first (that is, the debtor is filing case #2) case is refiled with a year after a dismissal, then the automatic stay will expire 30 days after the filing unless it is extended for good cause shown. If a second case is filed within that time period (i.e. case #3 or more), the there is no stay unless the court imposes it. The debtor would need to file a motion with the court to obtain the stay.

This means:

  • Pay your plan!
  • Pay your current mortgage payments!
  • Attend the meeting of creditors!
  • And generally follow the advice of your attorney and the court directives, whatever they may be. If you cannot follow a court order, get your attorney to ask the judge to change it. He may accommodate you.

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How can I hire you as my attorney to file a Chapter 13?

Yes. But you really should be local to my office in Media, PA. There is no sense in hiring me if you live someplace really distant. You can download a form of retainer agreement here. Note that fees are omitted because they are subject to review and are dependent upon the complexity of the individual case. Most fees are standardized, however expedited or complex matters may be charged accordingly. The agreement is in Adobe PDF format which can be read by the free Adobe Acrobat reader. Click the button below to get a copy.

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I think I need to file right away. How do I start?

Normally, we do not require clients to fill out a myriad of forms before a case is filed. Our method of case preparation is to subject the client to as little "busy work" as possible and the interview is usually accomplished orally. However, if you wish to get a jump on the process and accelerate the filing process, then you may complete our bankruptcy interview form by clicking here. please note the form is in Adobe PDF format. Get your free adobe PDF reader by clicking their icon above.

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What do I need to bring to my first meeting with you, as my bankruptcy attorney?

We have prepared a short checklist for your convenience.Go here for a printable list.

 

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I did not understand these questions/answers; it is all written in legal mumbo-jumbo.

I have heard that sometimes, the above explanations may not be understood, or that they are written in too much "legalese." There are a couple of things you can do. You can download a fee agreement/rights explanation. You can review it then to your heart's content, or you can call (610-565-6660) or email me. If you email, you must include your jurisdiction. If you do not tell me where you are writing from, the email may be disregarded. The reason is that I cannot make any statements without knowing whether our local laws apply or not. If you already have a lawyer, please direct the questions to him or her. This applies even if you cannot get to that lawyer or if you are not satisfied with that lawyer. We will only address people who are unrepresented at the time the question is asked.

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Hey, who's the geeky superman kid at the bottom of the page?

Uh... would you believe, Tom Cruise?

I didn't think so....

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Lawrence S. Rubin, Attorney

610-565-6660

Fax 610-565-1912

"Grandson, that camera is exempt under Sec. 522(d)(5)!"

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