What Bankruptcy Chapter is Used to Reorganize Debt in Pennsylvania?

What Bankruptcy Chapter is Used to Reorganize Debt in Pennsylvania?

When you file for bankruptcy in Pennsylvania, you’ll naturally have many questions to ask your Philadelphia bankruptcy lawyer. One of the very first questions you should discuss with your attorney is which type, or chapter, of bankruptcy is most appropriate for you. If you are trying to reorganize your debts, you will most likely want to file for Chapter 13 bankruptcy, assuming you are able to meet the eligibility standards for doing so. Sadek & Cooper Law Offices explains how Chapter 13 is used to reorganize debts in Pennsylvania, and discusses a few of the basic requirements involved in a Chapter 13 reorganization plan.

chapter 13 lawyers

Chapter 13 Reorganization Definition

Chapter 13 bankruptcy is easier to understand if you have a little background information about its counterpart Chapter 7, which is the most commonly used type of personal (non-business) bankruptcy in Pennsylvania.

Chapter 7 bankruptcy is called “liquidation” because a court-appointed trustee is charged with the task of selling off any assets the debtor has not protected with the federal bankruptcy exemptions or Pennsylvania bankruptcy exemptions (which Pennsylvania residents can choose between, unlike residents of many other states). This doesn’t necessarily mean Chapter 7 debtors lose all of their belongings – for example, it makes no financial sense for the trustee to sell the debtor’s home if, as is frequently the case, the house has no equity – but it does open up possibilities for liquidation, which many debtors will understandably want to avoid wherever possible.

If you want to file for bankruptcy, but are also determined to keep your home, car, and other assets, Chapter 13 may be a viable alternative to Chapter 7. In contrast to Chapter 7, which is a liquidation bankruptcy, Chapter 13 bankruptcy is a reorganization bankruptcy, meaning the debtor – ideally with assistance from an experienced Chapter 13 lawyer – will propose a plan to restructure his or her debts in such a way that he or she is able to make monthly payments over a three- to five-year period (36 to 60 months). This allows the debtor to keep his or her belongings, unlike Chapter 7. Some debts do not need to repaid at all, while others must be repaid in part, and still others repaid in full. It depends on whether the debt is classified as a priority debt, a secured debt, a nonpriority debt, or an unsecured debt.

The federal court system describes a plan of reorganization as a “detailed description of how the debtor proposes to pay creditors’ claims over a fixed period of time.” The reorganization plan only exists in Chapter 13 bankruptcy, and is not a feature of Chapter 7.

Chapter 13 Plan Requirements

While each Chapter 13 reorganization plan is different, every plan shares a few basic traits and requirements in common. To begin with, each reorganization plan must be submitted to, and approved by, the bankruptcy court administering the case before the debtor is permitted to move ahead. The debtor’s proposed reorganization plan is not considered confirmed or valid until it has been approved by the court.

Form 2300B (or, as it is sometimes written, B2300B) is the formal name for the bankruptcy document that confirms a Chapter 13 plan of reorganization. Since bankruptcy cases are governed primarily by federal rather than state regulations – with some exceptions, such as bankruptcy exemptions, which vary from state to state – Form 2300B is used in every state, including Pennsylvania. The form clearly lists:

  • The amount of each payment.
  • The due date for each payment.
  • How many months the payments will continue.
  • The name of the trustee to whom the payments will be made.

Upon receiving your payments, the trustee will distribute the proceeds to your creditors. As a debtor, all you have to worry about is making your payments in full and on time; the trustee will take care of making sure the funds reach the right recipients in a timely fashion.

In order for a plan to be approved, the debtor needs to meet certain requirements. Because Chapter 13 requires debtors to make three to five years’ worth of monthly payments toward various debts, any Pennsylvania resident who wishes to file Chapter 13 must prove that he or she has adequate income to cover a Chapter 13 plan. Otherwise, it may be necessary to file under Chapter 7.

This is determined through a process known as “means testing,” which quite literally tests the debtor’s financial means. If you intend to declare Chapter 13 in Pennsylvania or elsewhere, you must submit:

  • Form 122C-1 – This form is used to a) provide a statement of your current monthly income, and b) calculate how long your “commitment period” (the reorganization plan) should last based on your income and other factors.
  • Form 122C-2 – This form is used to calculate how much disposable income you have. Your disposable income is what you will use to make the payments set forth by your reorganization plan. All of your disposable income must go toward the plan.

south philly bankruptcy lawyer

Philadelphia Chapter 13 Bankruptcy Lawyers for PA Residents

If you’re thinking about filing for Chapter 7 or Chapter 13 bankruptcy in Pennsylvania, the Chapter 7 bankruptcy lawyers of Sadek & Cooper Law Offices can help. With years of experience assisting thousands of men, women, married couples, and business owners with bankruptcy petitions in Philadelphia, Bucks, Delaware, and Montgomery Counties, our Pennsylvania bankruptcy attorneys have the knowledge and skill you depend on to make sure your bankruptcy case goes smoothly.

To talk about your bankruptcy options, or the potential alternatives to bankruptcy, in a free and confidential legal consultation with a Montgomery County Chapter 13 attorney, contact our law offices at (215)-545-0008 today.

GET YOUR FREE CONSULTATION

superlawyers_badge

SEEWHAT OUR CLIENTS ARE SAYING

Thomas Wright
Thomas Wright
15:09 24 Apr 18
Sadek and Cooper Law did a great job on my bankruptcy case. I really appreciate their assistant. Thank you
Kelly McKenna
Kelly McKenna
11:57 19 Apr 18
This form - specifically Yoninah Orenstein and Patrick Cooper are PHENOMENAL. They were great to work with, very fair with legal fees, and successful in getting an excellent settlement for my divorce (short term marriage
Dessiana Cruz
Dessiana Cruz
13:11 04 Apr 18
I was nervous about bankruptcy, but from the moment I stepped in your office I felt at ease. This process was so easy with your help, that yesterday I was talking to my coworkers about it and recommending your firm to them. You make something that’s scary seem easy and I thank you so much for helping me!
Valerie Nesbitt
Valerie Nesbitt
14:51 03 Apr 18
Sadek and Cooper have been excellent. Everyone has been extremely helpful and patient. The lawyers I have worked with, Matt and Brad, are extremely knowledgeable. I felt very comfortable with them handling my case.
Marlena Lucas
Marlena Lucas
16:08 02 Apr 18
Very simple. Any time I had questions, they were answered quickly. The lawyers are just great. Just a fast painless process.
James Smith Sr
James Smith Sr
13:19 14 Mar 18
Everything has been great. Really awesome job with my case... You and your staff have done a perfect job in my opinion.
Michkel Davis
Michkel Davis
17:02 09 Mar 18
Mr. Sadek was the best and most thorough lawyer I’ve ever met. He’s very human and caring about our case. His whole staff is great too. Highly recommend...
Tamika Richardson
Tamika Richardson
14:56 01 Mar 18
My bankruptcy went very smoothly with your firm. No issues. You are all very nice. That’s why I recommend my sister to your firm and your now helping her too! Thanks again.
Geraldine Ross
Geraldine Ross
14:14 28 Feb 18
This is an Excellent firm to work with; my questions were answered in a timely manner and I felt very supportive in handling my bankruptcy. I would highly recommend this firm to others who have found themselves in a position like mine.
Lavern Baker
Lavern Baker
17:03 23 Feb 18
You are all super lawyers. Brad and Matt made me feel comfortable. Every one in your office so nice and just made it easy. You’re the best!
peter b
peter b
19:42 21 Feb 18
Thank you, Sadek and Cooper Law offices for your dedication on my behalf. I appreciate Matthew and Patrick and your staff and all that everyone did to support me in this legal matter. You took an embarrassing, sad experience, for me, and turned it into a successful solution without all the emotional pain expected. After dealing with a loan modification company for over eighteen months without going to an attorney first that is the biggest mistake anyone can make. The Modification Companies set out to sell you lies, broken promises and dilute the homeowner's assets with no knowledge of any kind of law. I can't stress enough stay away from Modification companies, as a Military Veteran and family man, protect you or your family best interest. Go directly to Sadek and Copper you will not regret it! This firm moves with Super speed and diligence protecting you and your family's the entire process, even after watching some of these other attorneys in the courtroom appearing to mishandled their clients’ cases before the Trustee. You made it easy and I’m finally getting my financial life back on track! Thank you for your prompt replies to me, your clear information and preparation needed when at the courthouse. I would of course recommend you to others and I am glad you were the one who had my case. Kind genuine law firm who treats you like family. God bless you all and I pray for your continued success in your field of expertise. This firm is Super Lawyers for a reason. They are the best at what they do! Pete
Doug Tinlin
Doug Tinlin
06:55 15 Feb 18
Brad Sadek gave me hope when he decided to handle my mortgage for enclosure defense. I had exactly 10 days left of the 30 days ultimatum given me, but he was able to bargain for an extra 30 days for me to pay up. That duration turned out just right.
Jacinth Jacinth
Jacinth Jacinth
16:07 31 Jan 18
Excellent service. Brad and Matt were outstanding and friendly. They helped me through this. I’ve never met attorneys like these. Thank you!
julie njoku
julie njoku
12:29 24 Jan 18
Brad Sadek is excellent!. He understands and he's fair. You feel like you have someone fighting for you. The staff is friendly, professional, and courteous. These guys are the best at what they do !
Owen Black
Owen Black
20:14 09 Jan 18
Thanks for the great service! I would recommend this firm highly. Throughout the years I have been helped by this firm greatly and very much appreciated.
Steven Rychalsky
Steven Rychalsky
15:30 09 Jan 18
Sadek and Cooper law office was a wonderful experience to work with. Bankruptcy is a difficult experience but they helped with the stress so much and made it easy. I would recommend Sadek and copper too anyone.
Chris Kourelias
Chris Kourelias
19:09 28 Dec 17
Working with both Brad & Matthew was a pleasure. Both gentlemen are extremely knowledgeable and helpful in providing me the right assistance needed to make the correct decision to benefit me in the long run. I would recommend both candidates to anyone looking for assistance with a reputable law firm.
Jennyfer Santana
Jennyfer Santana
21:17 21 Dec 17
Highly Recommended. Matt & Brad assisted with my case. I felt comfortable throughout the entire process. Matt was very understanding, patient, and ensured he answered all my questions! Both great guys and very friendly! It was a pleasure working with Matt and Brad.
Next Reviews Write a review
Call Us Now