How to File for Chapter 13 Bankruptcy in Pennsylvania

Filing for Chapter 13 bankruptcy in Pennsylvania can be an effective way to manage debt while retaining your assets. This process, often referred to as a "wage earner's plan," allows individuals with a regular income to create a repayment plan to pay back all or part of their debts over a specified period. If you are considering this option, follow these key steps to navigate the process smoothly.

1. Understand Eligibility Requirements

Before filing, it’s essential to understand the eligibility criteria for Chapter 13 bankruptcy in Pennsylvania. You must have a regular income and less than a certain amount in unsecured and secured debts, which is updated periodically. In 2023, the limit for unsecured debt is $465,275, while secured debt must not exceed $1,395,875. Ensure you meet these requirements before proceeding.

2. Gather Financial Documents

Compile all necessary financial documents, including your income statements, tax returns for the past two years, and a list of all debts and assets. This documentation is crucial for accurately filling out your bankruptcy petitions and schedules, which detail your financial situation.

3. Complete Credit Counseling

Before filing for Chapter 13 bankruptcy in Pennsylvania, you must undergo credit counseling from an approved agency. This counseling session, which should last at least 60 minutes, will help you understand your financial options and develop a budget. After completing the session, you will receive a certificate that you need to file with your bankruptcy petition.

4. Fill Out Bankruptcy Forms

Next, you need to complete the official bankruptcy forms. In Pennsylvania, these forms include the Voluntary Petition for Individuals Filing for Bankruptcy and various schedules listing your debts, assets, and income. It’s wise to consult with a bankruptcy attorney during this stage to ensure that all forms are completed accurately and that you are making the best choices for your financial situation.

5. File the Petition

Once you have completed your forms, you must file them with the bankruptcy court in your jurisdiction. In Pennsylvania, this can be done either in person or online through the e-Filing system. Pay attention to the filing fee, which is currently around $313, although you may qualify for a fee waiver under certain circumstances.

6. Attend the Meeting of Creditors

After filing, you will receive a notice of the meeting of creditors, also known as the 341 meeting. This meeting typically occurs about a month after your petition is filed. You must attend this meeting, where the bankruptcy trustee and creditors can ask you questions regarding your financial situation. Be prepared to answer honestly and provide any additional information that may be requested.

7. Create Your Repayment Plan

As part of the Chapter 13 process, you will need to propose a repayment plan that outlines how you will pay back your creditors over three to five years. This plan must generally prioritize secured debts, such as mortgages and car loans, and ensure that unsecured creditors receive as much as they would have in a Chapter 7 bankruptcy. Submit your proposed plan to the court for approval.

8. Confirm Your Plan

Once your plan is submitted, the court will schedule a confirmation hearing. At this hearing, the judge will review your repayment plan and approve it if it meets the required criteria. If any objections arise from creditors, you may need to modify your plan before it can be confirmed.

9. Make Plan Payments

Upon plan confirmation, it’s crucial to start making regular payments as set forth in your repayment plan. Payments are typically made to the bankruptcy trustee, who will then distribute the funds to your creditors. Staying on track with these payments is essential for successfully completing your Chapter 13 bankruptcy.

10. Complete Your Plan

After you have made all required payments over the duration of your plan, you must file a final report with the court. Once the court verifies that you have completed all payments, it will issue a discharge order, wiping away any remaining dischargeable debts.

Filing for Chapter 13 bankruptcy in Pennsylvania can be a complex process, but with careful preparation and understanding of the necessary steps, you can regain control over your finances and work towards a debt-free future.