Douglass, West & Associates

Chapter 13 Bankruptcy

In a Chapter 13 case, you, the debtor, file a PLAN showing how you will pay off some of your past-due and current debts over an extended period, normally three (3) years. This is different from Chapter 7 bankruptcy, where you ask the court to wipe out (discharge) your debts.

The most important thing about a Chapter 13 case is that it will allow you to keep valuable property – especially your home – which might otherwise be lost.

You should consider filing a Chapter 13 plan if you:

  1. own your home and are in danger of losing it because of money problems;
  2. are behind on debt payments, but can catch up if given some time, and
  3. have regular income (including government benefits such as social security or public assistance).

SECURED CREDITORS

Certain creditors may have a SECURITY INTEREST in some of your property – that is, a right in your property to make sure you pay your debt. When you borrow money, the lender may take a security interest in some of your property (collateral). If you don’t make your loan payments, the lender may be able to foreclose on or repossess that property.

Other creditors may not have any security interest in your property. Such creditors are called unsecured or general creditors. Secured creditors generally have greater rights to your property than unsecured creditors.

A creditor may have a security interest or other claim against property which you claim as exempt. You may be able to keep this property in some situations.

DISCHARGE

If everything goes normally in a bankruptcy case, the final thing the court does is to grant you a DISCHARGE, which excuses you from paying all of your debts (except possibly for the few mentioned above). The discharge order also forbids creditors from doing anything to try to collect a debt that has been discharged.

The court can refuse to grant a discharge, but only in very limited cases if you have done something improper, such as: trying to cheat a creditor by hiding your property; giving false information to the court; refusing to obey a court order, etc.

WILL BANKRUPTCY AFFECT YOUR CREDIT?

There is no clear answer to this question. The fact that you’ve filed a bankruptcy can appear on your credit record for 10 years. But since bankruptcy wipes out your old debts, you should be in a better position to pay your current bills, so you may be able to get credit.

OTHER INFORMATION

* Utility Service – public utility, such as an electric company, cannot cut off service because you have filed for bankruptcy. However, the utility can require a deposit for future service.

* Discrimination – a government agency cannot discriminate against you because you have filed for bankruptcy.

* Driver’s license – if you lost your license solely because you couldn’t pay court-ordered damages caused in an accident, bankruptcy will allow you to get your license back.

* Co-signers – if someone has co-signed a loan with you and you file for bankruptcy, the co-signer may have to pay your debt.

REMEMBER: The law often changes. Each case is different. The above information is meant to give you general information and not to give you specific legal advice.

CREDIT COUNSELING (Before You File)

Please remember you must complete credit counseling before we file a bankruptcy on your behalf.

  • Access Counseling, Inc. – (DWA Attorney Code is A5EC231) Access Counseling, Inc. is approved to issue certificates evidencing completion of our personal financial management instructional course in compliance with the Bankruptcy Code in all jurisdictions except North Carolina and Alabama. Approval does not endorse or assure the quality of a Provider’s services.
    • $ 14.95 ONLINE – 1st Course: Pre-filing Credit Counseling, Single or Joint Filers (per Household)
    • $ 25.00 by PHONE – 1st Course: Pre-filing Credit Counseling, Single or Joint Filers (per Household)
    • Same fees for Single or Joint-filers
    • Available in English or Spanish
    • Use DWA Attorney Code is A5EC231
    • Website: www.accesscounselinginc.org
    • Toll Free: 800-205-9297

Other Approved Credit Counseling Agencies – A comprehensive list of alternative Eastern District of Pennsylvania credit counseling services that have been approved by the U.S. Department of Justice. Visit the website: http://www.usdoj.gov

FINANCIAL MANAGEMENT COURSE (After You File)

You must complete an approved course Financial Management Course with the certificate of completion being filed with the Court with in 45 days of your 1st scheduled 341 hearing (the hearing has not been scheduled). This course will take approximately two hours to complete. Check the website for the United States Trustee Program office at www.usdoj.gov/ust for a list of organizations . We believe the least expensive courses provided online are:

We believe the least expensive courses provided online are by:

  • Access Counseling, Inc. – (DWA Attorney Code is A5EC231) Access Counseling, Inc. is approved to issue certificates evidencing completion of our personal financial management instructional course in compliance with the Bankruptcy Code in all jurisdictions except North Carolina and Alabama. Approval does not endorse or assure the quality of a Provider’s services.
    • $ 9.95 ONLINE – 2nd Course: Post-filing/Pre-discharge Debtor Education, Single or Joint Filers (per Household)
    • $ 15.00 by PHONE – 2nd Course: Post-filing/Pre-discharge Debtor Education, Single or Joint Filers (per Household)
    • Same fees for Single or Joint-filers
    • Available in English or Spanish
    • Use DWA Attorney Code is A5EC231
    • Website: www.accesscounselinginc.org
    • Toll Free: 800-205-9297

You must avoid using any type of credit (charge cards, etc.) without the permission of the Court. If you have not done so at this point, it’s  best to destroy all of your credit cards.