Frequently Asked Questions for Chapter 13 Bankruptcy

Bankruptcy is a legal proceeding in which a consumer who cannot afford to pay his or her debts can get a financial fresh start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing bankruptcy can immediately stop all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law. This would include foreclosures.

A Chapter 13 bankruptcy is also called a debt reorganization bankruptcy or a wage earner's plan. It enables individuals or married couples with regular income to develop a plan to repay all or part of their debts. Under this Chapter, debtors propose a repayment plan to make installment payments to creditors over three to five years. The payments are made to the assigned trustee in the case and the trustee will distribute the funds to your creditors. Under certain circumstances, you do not have to pay the full amount of certain debts such as medical bills, credit cards, past due utility bills, and judgments. The minimum your creditors are entitled to depends on a review of the type of claim the creditor has and the value of your property, as well as other factors, including the property exemptions allowed by law.

If the debtor's current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period "for cause." If the debtor's current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years. During this time, the law forbids creditors from starting or continuing collection efforts.

A Chapter 13 bankruptcy can be complex. We can help you develop a plan to address your debts. To find out more about Chapter 13 bankruptcy, please contact us.

Yes. Consumers who file a Chapter 13 bankruptcy are able to save their home from foreclosure as long as they can make the required plan payments. The foreclosure proceeding will stop upon filing a Chapter 13 bankruptcy. Manageable monthly payments will be distributed to your mortgage lender through the plan filed in the case.

But how do you know if the monthly payments are manageable? We can help you determine if your income is sufficient to manage your monthly plan payments.

If you have not been able to work out a deal with your mortgage lender AND you want to keep your home, it will be very important to resolve or stop your foreclosure prior to any scheduled Sheriff’s Sale of your home. If you are already behind on your mortgage payments, you should not delay any further.

To find out more about how you can save your home, please contact us.

First, a Chapter 13 bankruptcy stops the foreclosure action or threat of a foreclosure action by way of the automatic stay laws. Second, you will make payments through the plan that is filed in your case in this manner:

• The on-going normal monthly mortgage payment, which may or may not include your real estate taxes and/or homeowners insurance; and

• The arrearage amount (i.e., default amount) on your mortgage, which is paid over the course of three to five years. Currently, your mortgage lender is probably asking you to pay the arrearage amount quickly and you are unable to do so. The Chapter 13 bankruptcy will spread this arrearage amount over the three to five year time period making it more practical and more manageable for you.

• A Chapter 13 bankruptcy is not just focused on your mortgage situation. It also takes into consideration your other debts. You might have additional benefits in the bankruptcy case that will allow you to free up the funds necessary to pay towards your mortgage default balance. To find out more, please contact us.

The plan must be feasible (i.e., manageable) and you must be able to show the income required to make these payments. Your mortgage lender has the right to file a “proof of claim” in your case. The proof of claim will provide the principal balance owed and an itemized listing of the charges totaling the arrearage amount as of the date your bankruptcy case is filed. You have the right to object to the claim if there is an error. At EDF LAW, we will try to develop a plan that will save your home and do so on your budget. See “What is a Chapter 13 Plan” (Question #17 below) to learn more.

At the end of your Chapter 13 bankruptcy, assuming you have successfully made all of the necessary payments, you will be back on track with your mortgage lender and can re-assume your normal monthly mortgage payments outside of bankruptcy and without the need to modify your loan.

If you have not been able to work out a deal with your mortgage lender AND you want to keep your home, it will be very important to resolve or stop your foreclosure prior to any scheduled Sheriff’s Sale of your home. If you are already behind on your mortgage payments, you should not delay any further.

Note: once you fall behind on your mortgage payments, your mortgage lender has the right to charge fees, including attorneys' fees associated with any legal action. The longer you delay in curing your default, the more money it will cost you. It is important that you not delay should you find yourself already behind on your mortgage payments. If your mortgage lender is not working with you, please contact us. It is a no-lose situation to at least find out how Chapter 13 bankruptcy could help you. We will be able to give you a projected monthly Chapter 13 plan payment. This way, you will have the option to choose whether to modify your loan, file Chapter 13 bankruptcy or follow another path.

Beware of foreclosure rescue scams. These companies prey on struggling homeowners. Do not let them take advantage of you, your situation, your house or your money. The best way to avoid becoming a victim is to get informed and ask a lot of questions. If it sounds too good to be true, it probably is.

If you have experienced a foreclosure service that has mislead you whether recklessly or intentionally, please contact us. Our office will review your case to determine if the “foreclosure company” violated the law and/or your rights and we can seek monetary damages on your behalf. At EDF LAW, in addition to helping people file for bankruptcy relief, we help consumers with other legal matters including seeking damages for negligent or fraudulent representations.

To find out more about Chapter 13 bankruptcy, please contact us.

You can. But only if you can resolve your mortgage arrearage (i.e., default amount) within the five to six months of a typical Chapter 7 bankruptcy. As we have discussed elsewhere on this website, in most circumstances the automatic stay laws prevent or stop collection attempts once your bankruptcy case is filed. This includes foreclosure actions. These laws will remain in effect throughout your bankruptcy case unless your creditors are able to obtain relief from those laws.

Most consumers who are in trouble with their mortgage payments are already so far behind that the five to six months of protection in a Chapter 7 bankruptcy is not enough time to get caught up on the mortgage arrearages. The automatic stay laws will cease to exist once your Chapter 7 bankruptcy case is closed and this will give your mortgage lender the right to continue the foreclosure action if you still are behind on your mortgage.

In comparison, a Chapter 13 bankruptcy can last from three to five years. During that timeframe you will have the benefit of the automatic stay laws and your lender will not be allowed to continue the foreclosure action so long as you make your monthly plan payments. This will give you the necessary time needed to bring your mortgage current and come out of bankruptcy with your mortgage in good standing.

Note: there are times when consumers fall behind on their Chapter 13 plan payments during the case. In these circumstances, your mortgage lender can request relief from the automatic stay laws by filing a legal document with the court, allowing them to continue the foreclosure action. Even in such situations, you may have options including amending your Chapter 13 plan and getting back on track with your plan payments. To learn more about this situation, please contact us.

There are more reasons than we can list, but we will list a few to give you an idea of the benefits potentially available to you.

Yes. If you decide you cannot afford your mortgage payments or vehicle payments and do not want the burden any longer, you can surrender your home or vehicle in a Chapter 13 bankruptcy. If you receive a discharge in your Chapter 13 bankruptcy case, the balance on the mortgage or vehicle loan can be eliminated in terms of your personal liability. This does not mean you get to keep the asset (i.e., home or vehicle). Before you take any action in this regard, please contact us. We can help you with the legal issues related to surrendering your home or vehicle in a Chapter 13 bankruptcy.

To learn more about surrendering your home or vehicle in a Chapter 13 bankruptcy, please contact us.

This is a good question. From the moment you hire EDF LAW or another law office to help you with your debts, there are Federal and State laws that protect you from your creditors. Once you give them notice that you hired us, your creditors are then obligated to follow these Federal and State laws and stop calling you. The required notice can be given over the phone and we will give you the information needed to inform your creditors when you retain our office. To silence your phone, all that is required is an initial retainer payment, which can be as low as $100.00. To learn more about our affordable monthly payment plans, see “How do I pay my legal fees for a Chapter 13 bankruptcy?” (Question #18 below).

In fact, our office will review your case to determine if any of your creditors have violated the collection laws and we can seek monetary damages on your behalf. At EDF LAW, in addition to helping people file for bankruptcy relief, we help consumers with other legal matters including filing lawsuits for collection law violations by their creditors.

A creditor or collector may not:

Contact us to find out how to silence the collection phone calls.

No. You need to file the Chapter 13 bankruptcy to prevent/stop lawsuits or repossessions. The initial retainer as mentioned above in question #7 will silence your phones while you make arrangements to pay the balance of your bankruptcy legal fees. This will help alleviate the aggravation, stress and anxiety that is caused by the harassing phone calls while you save for your Chapter 13 bankruptcy. In order to prevent/stop lawsuits, it will be necessary to file a Chapter 13 bankruptcy or resolve your debts by other means. We will properly advise you as to when the bankruptcy filing will be necessary in the event you are facing an actual lawsuit, threat of a lawsuit or for any other reason that would require filing sooner rather than later. We start to work for you from the moment you pay the initial retainer, which can be as low as $100.00.

See “How do I pay my legal fees for a Chapter 13 bankruptcy?” (Question #18 below) to learn more.

Yes. In most circumstances, the moment you file the Chapter 13 bankruptcy, your creditors are required to stop all collection efforts. This would include most pending civil lawsuits, threats to begin civil lawsuits, collection letters, collection phone calls, threats of repossession, threats of utility shutoffs, garnishments and foreclosure actions as well as other potential collection efforts.

The reason your creditors are required to stop all collection efforts is because of the automatic stay section of the Bankruptcy Code. This law prevents most creditor collection attempts while the bankruptcy case is pending. In other words, your creditors are “stayed” from continuing their efforts to collect the debt that you owe them. However, there are a few exceptions where the automatic stay laws do not prevent collection attempts. To find out who does not have to abide by the automatic stay laws or general questions regarding the automatic stay laws, please contact us.

Consumers interested in saving their home from foreclosure, please read this. If you have not been able to work out a deal with your mortgage lender AND you want to keep your home, it will be very important to resolve or stop your foreclosure prior to any scheduled Sheriff’s Sale of your home. If you are already behind on your mortgage payments, you should not delay any further. We can help you save your home, please contact us today.

To find out more about the automatic stay laws and how to prevent or stop lawsuits including foreclosures, please contact us.

When an individual or married couple obtain a Chapter 13 discharge, the balance remaining on dischargeable debts is eliminated. In other words, you will no longer be personally liable for the dischargeable debts. Assuming your creditors were not able to properly object to your discharge, they will not be allowed to personally hold you liable for the dischargeable debts and will not be allowed to collect these debts from you ever again. This includes suing you for the debt.

Please note however that certain debts including, but not limited to, student loans, domestic support obligations and certain taxes are not dischargeable. Therefore, you will still be personally liable for all non-dischargeable debts after your case is closed.

There is a misconception that a Chapter 13 bankruptcy requires a consumer to pay back all of their debts. This is not true for everyone who files a Chapter 13 bankruptcy. The amount of your debts you will be required to pay back will depend on your financial situation. Every case is different and, as a result, a personalized evaluation will be necessary to determine the amount (i.e., percentage) of debt you pay back. To find out how much you would have to pay back, please contact us.

To find out more about whether your debts are dischargeable, please contact us.

In order to file for Chapter 13 bankruptcy, an individual or married couple must be able to show that any proposed plan filed in their Chapter 13 case is feasible (i.e., manageable). Chapter 13 bankruptcy can be complex and it is best to discuss the details of this type of bankruptcy in person. We are confident that after an initial consultation with one of our attorneys, you will not only know whether it is worthwhile to file Chapter 13 bankruptcy, but you will also have an understanding of how Chapter 13 bankruptcy works and your responsibilities in the case.

To find out if you are eligible, please contact us.

Chapter 13 bankruptcy is not right for everyone. However, if you have regular income but are experiencing any or all of these circumstances then filing Chapter 13 bankruptcy might be right for you:

A Chapter 13 bankruptcy cannot cure every financial situation. A Chapter 13 bankruptcy can do wonders if you are in financial jeopardy, but filing is not a decision to be taken lightly. You should gain as much of an understanding of the process as possible before you decide to file a Chapter 13 bankruptcy. If you are experiencing any of these circumstances then filing Chapter 13 bankruptcy might not be right for you:

What is right for one person is not necessarily right for another. To find out if filing Chapter 13 bankruptcy is right for you, please contact us. We will evaluate all aspects of your financial situation. We will take into consideration your property, liabilities, income, expenses, and future goals and advise you on the best course of action. At EDF LAW, we take pride in making sure our clients are comfortable with the decision to file Chapter 13 bankruptcy. The ultimate decision to file for Chapter 13 bankruptcy is yours. Our job is to educate you on your rights and options as well as the consequences so you can make an informed decision. If you decide that Chapter 13 bankruptcy is right for you and retain EDF LAW, we will provide you with personalized and affordable legal representation that maximizes the best possible outcome that the law allows.

You may have heard that bankruptcy should be your last resort. While this can be true for some consumers, it is misleading for others. It all depends on what types of measures you are willing and able to undertake to help your debt situation. What may be a “last resort” for one person will not be for someone else. Consumers have different levels of income and different levels of debt. What works for one person may not work for another. For example:

• Attempting to re-finance your home or obtain an equity line of credit using the existing equity in your home for the purpose of paying towards your unsecured debts and/or lowering your interest rates.

  • Although this might be a fix to your high monthly debt payments via a lower interest rate and/or lower monthly payments, you should be cautious when making such decisions. This is especially true if you are on a fixed income or you do not see your income changing much in the course of your remaining employment years. Keep in mind you are turning unsecured debts into secured debts. If you find yourself having difficulty paying these secured debts in the future, it may be more stressful and difficult to deal with the problems associated with these new secured debts.

• Entering into a credit consolidation program, credit counseling program or debt settlement program you saw on television or found on the internet.

  • These programs require you to pay towards your unsecured debts. You should make sure you have sufficient income to complete such programs. Sufficient income means you can pay the monthly payments required by such programs AND also meet your necessary living expenses for the duration of the program. After you have an idea of what your monthly payment would be in one of these programs, are you still barely getting by? This is a crucial question to ask yourself. What will happen if your furnace breaks or you need new tires for your vehicle or some other unexpected necessary expense arises? The people operating these programs do not always give you the facts or truth about your realistic chances of successfully completing such programs. Nor do debt settlement companies always tell you that you are still at risk of lawsuits while they “attempt” to negotiate settlements with your creditors or that there are potential tax consequences for forgiven debt. You can easily be ripped off by such programs. We still live in a world of buyer beware. Remember, if it sounds too good to be true, it probably is.

• Withdrawing or borrowing from your retirement account (IRA or 401(k)) to pay towards your unsecured debts.

  • This money is for your retirement and most people cannot solely live off of Social Security benefits when the time to retire arrives. This might seem like a quick fix in the present, but could hurt you in the long run. You should give serious consideration before making such a move.

  • Most financial advisers advise not dipping into your retirement plan in order to get out of debt. You should speak with your attorney and accountant before doing so. In addition, most retirement accounts are fully protected in bankruptcy.

• Selling your property to pay towards your unsecured debts.

  • Most consumers who file Chapter 13 bankruptcy are able to keep their property while gaining a discharge from their dischargeable debts.

• Negotiating with your creditors directly.

  • If your debts are low or close to manageable, this option may help. Although there are debt negotiating services, these types of companies are not needed if you are capable of picking up your own phone and contacting your creditor(s) yourself. Creditors are willing to work with their clients if it is in their best interest. If a lower interest rate on your credit card debts would help get you back on track, then it is worth an attempt to call your creditor and ask if they would be willing to lower your rates. Of course, there is no guarantee.

  • Since you are on this website, chances are likely that your debts are beyond manageable and you need professional help. In such cases, this option may be a waste of your time and just prolong your anxiety and fears. To find out if negotiating with your creditors could be an option, please contact us.

• Resolving your home foreclosure without bankruptcy.

  • You may have other options besides bankruptcy to resolve your foreclosure. Some of these options may include: loan modification, a forbearance plan, stipulated foreclosure with no deficiency, short sale, deed in lieu of foreclosure, government assistance or paying the reinstatement amount your lender is seeking. Depending on your situation, these options may help. That said, beware of foreclosure scams. In order to avoid becoming a victim of a foreclosure rescue scam, you should ask a lot of questions and know the company you plan to do business with.

  • Having so many options can result in a stalemate on how to effectively resolve your foreclosure situation. Why? Because with so many options, you may become overwhelmed. This may prevent you from taking immediate action to resolve your foreclosure situation. You should be proactive and become well informed regarding each of your options to prevent wasting time and worsening your situation. The longer your foreclosure situation remains unresolved, the more fees you are likely to incur. In addition to the missed monthly mortgage payments, your mortgage lender may charge additional fees including attorneys’ fees for the foreclosure action, only adding to your financial burden.

  • Some of your non-bankruptcy options do not take into consideration your overall financial condition. You need to determine the true cause for your mortgage payment problems. Was it because of a loss in income, other debt payments (a “robbing Peter to pay Paul” scenario), health issues, divorce or some other ascertainable reason?

  • You also need to determine if you truly want to keep your home. Depending on your situation, some of these options are not practical if your intent is to keep your home. If you have not been able to work out a deal with your mortgage lender AND you want to keep your home, it will be very important to resolve or stop your foreclosure prior to any scheduled Sheriff’s Sale of your home. In comparison, Chapter 13 bankruptcy is not just focused on your mortgage situation. It also takes into consideration your other debts. You might have additional benefits in the bankruptcy case that will allow you to free up the funds necessary to pay towards your mortgage default balance. See questions #2-6 above to learn more about how Chapter 13 bankruptcy can help your foreclosure situation.

  • At EDF LAW, we offer a free confidential consultation with an experienced attorney who will take into consideration your overall financial situation to determine if Chapter 13 bankruptcy is an appropriate option to resolve your foreclosure situation. We will also calculate a projected monthly plan payment so you can have a general idea of whether Chapter 13 bankruptcy is realistic to resolve your foreclosure situation.

  • If you are close to foreclosure or already in foreclosure, you should not delay any further. It is a no-lose situation to find out how Chapter 13 bankruptcy can help you. The consultation is free, personalized and confidential and you are under no obligation to sign a retainer agreement afterwards. Filing Chapter 13 bankruptcy will always be your decision and we will not pressure you into that option. We can assess your overall financial situation and give you the information needed to determine if Chapter 13 bankruptcy should be one of your options. Contact us today.

  • Beware of foreclosure rescue scams. These companies prey on struggling homeowners. Do not let them take advantage of you, your situation, your house or your money. The best way to avoid becoming a victim is to get informed and ask a lot of questions. If it sounds too good to be true, it probably is.

    • Beware of anyone who says they can “save” your home if you sign or transfer over the deed to your house.

    • Beware of anyone who says you do not need a real estate professional or title company when selling your home.

    • Beware of anyone who asks you to pay a fee in exchange for a “negotiating” service or modification of a delinquent loan.

    • Beware of anyone who attempts to pressure you into signing papers immediately.

    • Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage lender to forgive your debt.

    • Never make a mortgage payment to anyone other than your mortgage company without their documented approval.

    • There may be other signals that should raise a red flag. Make sure you ask a lot of questions. Again, if it sounds too good to be true, it probably is.

These measures are just some of the ways consumers have attempted to resolve their debt problems to avoid bankruptcy. But before you decide to take such measures, you should take a moment to think about what you are about to do and whether it is practical and beneficial based on your current level of income and level of debt. Just like your decision to file bankruptcy, these measures should also be carefully weighed so you know it is the right choice for you. Consumers are often tempted to borrow money, take out a second mortgage or consolidate credit cards, but doing so may actually be more expensive and counterproductive in the long run. It is not out of the realm of possibilities that, after you take such measures, you will still need to file a Chapter 13 bankruptcy at a later date.

To find out if Chapter 13 bankruptcy should be your “last resort,” please contact us.

The typical Chapter 13 bankruptcy case will last between three and five years from the initial filing to the closure of the case. Your Chapter 13 bankruptcy cannot be more than five years and in unique circumstances can be less than three years.

It is unlikely that you will see the inside of an actual courtroom if you file a Chapter 13 bankruptcy. During your initial consultation, your bankruptcy attorney would be able to better advise you if there are any circumstances in your case that might make it more possible that you would have to go before a judge in a courtroom.

In most Chapter 13 bankruptcies, the only forum where your attendance will be required is the 341 Meeting of Creditors and Confirmation Hearing, which is held at the same date and time. The 341 Meeting of Creditors and Confirmation Hearing is where the Chapter 13 Trustee’s Office has an opportunity to ask you a few questions under oath. The Chapter 13 Trustee’s Office is staffed with professional and decent people who are not out to get you or embarrass you. Your creditors have a right to attend this meeting but it will depend on the circumstances of your Chapter 13 case as to whether any of your creditors will send a representative to the meeting. Usually, the meeting will consist of you, your attorney and the trustee or staff member. Most of the time, this meeting will be a short and simple procedure where you will be asked a few questions under oath about your bankruptcy forms, plan and your financial situation.

In a Chapter 13 bankruptcy, your attorney likely will have to show up for a court hearing. You will not be required to attend these subsequent hearings and your attorney will be able to handle the matters by himself/herself. This is why it is not a good idea to attempt to file a Chapter 13 case without legal representation. In fact, it does not matter which Chapter of bankruptcy you file, it is never a good idea to represent yourself regardless of how much “research” you do in a law library or over the internet. The low fees charged by most bankruptcy attorneys is well worth it. Let an experienced bankruptcy attorney handle your case so you can concentrate on other aspects of your life. Hiring an attorney will dramatically improve your chances of a successful outcome. Bankruptcy is not just about plugging information into forms. Bankruptcy can be a very complex process that should only be handled by those with knowledge of the law. Your creditors are represented by attorneys and you should be too.

This is a document the debtor must file in a Chapter 13 bankruptcy showing the debtor's proposal for repaying debts and it must be approved by the court at a confirmation hearing. Typically, a Chapter 13 plan requires the debtor to make set payments once or twice a month, which the bankruptcy trustee uses to pay creditors. The plan must last for three to five years, and the debtor must devote all disposable income to the plan. A Chapter 13 bankruptcy is known at a “wage earner’s plan” because it enables individuals with regular income to develop a plan to repay all or part of their debts. A Chapter 13 bankruptcy is also known as a “reorganization” because debts are re-adjusted according to the plan based on applicable law.

The debtor’s creditors have a right to object to the plan if they are not paid properly or classified properly. Creditors could also object if the payments offered under the plan are less than creditors would receive if the debtor's property were liquidated or because the debtor's plan does not commit all of the debtor's projected disposable income for the three or five year commitment period. Creditors are required to file a “proof of claim” in a Chapter 13 bankruptcy case evidencing the amount and classification of the debt owed by the debtor. The debtor in turn has a right to object to such claims if there are legal grounds to do so. There are three types of claims: priority, secured and unsecured.

Priority claims are those granted special status by the bankruptcy law, such as most taxes and the costs of the bankruptcy proceeding. Secured claims are those for which the creditor has the right to take back certain property (i.e., the collateral) if the debtor does not pay the underlying debt, such as mortgage claims and vehicle claims. In contrast to secured claims, unsecured claims are generally those for which the creditor has no special rights to collect against particular property owned by the debtor, such as credit card debts or medical bills.

A plan may be approved or confirmed if:

• The plan is proposed in good faith.

• The plan need not pay unsecured claims in full as long it provides that the debtor will pay all projected "disposable income" for the three or five year commitment period and as long as unsecured creditors receive at least as much under the plan as they would receive if the debtor's property were liquidated under Chapter 7.

• If the debtor wants to keep the collateral securing a particular claim, the plan must provide that the holder of the secured claim receive at least the value of the collateral. If the obligation underlying the secured claim was used to buy the collateral (e.g., a vehicle loan), and the debt was incurred within certain time frames before the bankruptcy filing, the plan must provide for full payment of the debt, not just the value of the collateral (which may be less due to depreciation). Payments to certain secured creditors (e.g., mortgage lenders) may be made over the original loan repayment schedule (which may be longer than the plan) so long as any arrearage is made up during the plan. You should consult a bankruptcy attorney to determine the proper treatment of secured claims in the plan.

• The plan must pay priority claims in full unless a particular priority creditor agrees to different treatment of the claim.

• The debtor will be able to make all payments under the plan and comply with the plan.

• The bankruptcy petition was filed in good faith.

• The debtor has filed all applicable tax returns.

• There may be other factors that affect the approval or confirmation of the proposed plan. These other factors will be discussed at your initial consultation in the event they are relevant to your situation.

A confirmation hearing will be scheduled to decide whether the plan is feasible and meets the standards for confirmation set forth in the Bankruptcy Code. In the Western District of Pennsylvania, this hearing is scheduled at the same date and time as the meeting of creditors (discussed elsewhere on this website).

If the court confirms the plan, the Chapter 13 trustee will distribute funds received under the plan "as soon as is practicable." If the court declines to confirm the plan, the debtor may file a modified plan. The debtor may also convert the case to a liquidation case under Chapter 7. If the court declines to confirm the plan or modified plan and instead dismisses the case, the court may authorize the trustee to keep some funds for costs, but the trustee must return all remaining funds to the debtor (other than funds already distributed or due to creditors).

Occasionally, a change in circumstances may compromise the debtor's ability to make plan payments. For example, a creditor may object or threaten to object to a plan or the debtor may have inadvertently failed to list all creditors. In such instances, the plan may be modified either before or after confirmation. Modification after confirmation is not limited to an initiative by the debtor, but may be at the request of the trustee or a creditor.

A Chapter 13 bankruptcy case can be complex and you should speak with an experienced bankruptcy attorney in the event you want to know how this type of bankruptcy could help you.

To find out more about a Chapter 13 plan and how your debts could be re-adjusted, please contact us.

At EDF LAW, you may pay your legal fees in one of two ways. First, you may pay your fees by paying an initial retainer which is usually 50% of the overall fees. The balance of the legal fees is included in the plan and paid as affordable monthly payments. At EDF LAW, we will quote you our fees to file a Chapter 13 bankruptcy at the end of your initial consultation and help you brainstorm how to obtain the funds necessary to pay the quoted fees.

If you cannot pay your initial retainer in one payment, no need to panic. That is because we offer affordable monthly payment plans. We understand that not everyone will be able to pay their legal fees quickly. At EDF LAW, we can assist you in implementing a plan that helps you obtain the necessary funds to pay your legal fees.

To find out more about our affordable monthly payment plans and to find out how much it costs to file Chapter 13 bankruptcy, please contact us. We have competitive rates and there are no hidden fees. Your quoted legal fees will include the court filing fee of $274.00 for Chapter 13 bankruptcy.

Please note: if you decide to pay your legal fees via the monthly payment plan, the Chapter 13 bankruptcy will only be filed after the initial retainer is paid-in-full. We will evaluate your case to determine which payment option is right for you based on the circumstances surrounding your financial situation.

Making a payment towards your initial retainer allows you to tell your creditors that you have hired EDF LAW for the purpose of filing for bankruptcy relief. Your creditors, after proper notice, are required to stop calling you based on Federal and State laws. We will take your creditor calls while you save for your Chapter 13 bankruptcy. This will help silence the phone while you make payments toward the balance of your initial retainer.

Please note: if you decide to pay your legal fees via the monthly payment plan, the Chapter 13 bankruptcy will only be filed after the initial retainer is paid-in-full. We will evaluate your case to determine which payment option is right for you based on the circumstances surrounding your financial situation.

If you would like to know more, please see questions #7 & #8 above or you can contact us.

Yes, but how much of an affect will depend on your current financial situation. A Chapter 13 bankruptcy will show up on your credit report and may remain there for up to 10 years. To what degree it negatively affects your credit score depends on your current circumstances and your current credit score. If your credit score is good (i.e., over 640 FICO score), then filing a Chapter 13 bankruptcy will negatively affect your credit score. However, many people who are thinking of filing bankruptcy do not have such a high credit score. If you have been delinquent on various credit accounts for a period of time, chances are good that your creditors have been reporting your delinquent accounts to the credit reporting agencies and your credit report is reflecting those negative accounts. In such scenarios, the Chapter 13 bankruptcy might only have a minimal negative effect on your credit score.

Determining your credit worthiness depends on many factors, including, but not limited to, your debt-to-income ratio and debt-to-available credit ratio. A financial institution that is deciding whether to issue you new credit will review your credit history to determine your risk level. A Chapter 13 bankruptcy will have a negative impact on your ability to obtain new credit for the foreseeable future. However, sometimes a Chapter 13 bankruptcy filing can help your credit worthiness faster than continuing to struggle with your current debt situation. This is because a Chapter 13 discharge wipes out your eligible unsecured debts, thus improving your debt-to-income ratio.

Claims are made by non-bankruptcy debt resolution companies, including credit consolidation companies and debt settlement companies, that filing a Chapter 13 bankruptcy will ruin you and prevent you from ever gaining future credit. They use this tactic to steer consumers away from looking into Chapter 13 bankruptcy as an option for their debt situation. These claims are not true.

Although there is a general understanding of how a Chapter 13 bankruptcy will affect your credit score, you should not rely solely on this general understanding because the affects on credit will vary from consumer to consumer. In order for us to give you a more accurate analysis of how a Chapter 13 bankruptcy will affect your credit score, we will need to know your current credit score and your current financial situation. Please contact us if interested in obtaining a more specific analysis tailored to you.

Yes. But you will be required to obtain court approval to do so. The credit you wish to obtain will have to be for a just cause, affordable and reasonable given your current financial situation. If you meet this criteria there should not be a problem in obtaining new credit during your existing Chapter 13 bankruptcy. For example, your vehicle is inoperable and you need a new vehicle to travel back and forth to work. This is a necessary expense and as long as the vehicle payments are reasonable and affordable and your plan payments remain manageable, obtaining a new vehicle should not be an issue in your case.

To learn more about the process of obtaining credit during a Chapter 13 bankruptcy, please contact us.

Yes. You may have to wait a few years before you are eligible to apply for certain types of loans, but filing Chapter 13 bankruptcy will not destroy your ability to obtain new credit for the rest of your life. Your ability to obtain new credit after a Chapter 13 bankruptcy discharge is based, in part, on your risk level (i.e., the risk that you will default on the new credit issued). Sometimes a Chapter 13 bankruptcy will help your credit worthiness by improving your debt-to-income ratio. Your debt-to-income ratio is improved by eliminating your debts that make you appear to be a higher risk in your current pre-bankruptcy financial state.

Beware of predatory lending. The term predatory lending first evolved from unethical mortgage lending practices, but now has expanded to include payday lenders.

After obtaining a Chapter 13 discharge you may start to receive offers for new credit. Why? There are companies who target people fresh out of bankruptcy for new credit. They offer programs specifically geared to consumers who have received a bankruptcy discharge and are looking to reestablish their credit. Please be careful when accepting such offers. You could find yourself back in an uncontrollable debt situation. It will be important to assess your ability to pay future loan obligations prior to seeking new credit. In today’s market, it has become more difficult to obtain credit regardless of good credit or bad credit. Hopefully through responsible lending and mindful borrowing you will be able to leave your debt problems behind you. We can help you manage life after bankruptcy. Please contact us.

The main negative consequence to filing a Chapter 13 bankruptcy is the effect it will have on your credit score. A Chapter 13 bankruptcy can show up on your credit report for up to 10 years. As a result, a Chapter 13 bankruptcy could affect your ability to obtain credit including favorable interest rates in the future. Factors that are considered are your future risk level including your debt-to-income ratio and the current market as well as what type of credit you are attempting to obtain.

However, the affect a Chapter 13 bankruptcy has on your credit score will depend on your current financial situation. If your credit score is good (i.e., over 640 FICO score), then filing a Chapter 13 bankruptcy will negatively affect your credit score. If your credit score is bad or on the brink of going bad because of missed payments to your creditors, then a Chapter 13 bankruptcy may not have the negative effect you might think. Please read questions #20 - #22 above to find out more on this topic or  contact us.

The bottom line is that you should weigh your options and compare whether the benefits of filing a Chapter 13 bankruptcy outweigh the negative affects of having a bankruptcy show up on your credit report and vice versa. We often hear clients say they are sick of credit and are just glad to be done with the hassle of dealing with their uncontrollable debts. There may be challenges after filing for bankruptcy, but for most consumers, these challenges are a welcome change to the reality of a lifetime of debt.

Other negative consequences may include, but are not limited to:

• Not being able to complete the plan and as a result not receiving your discharge.

• Needing court approval to obtain any new credit during the Chapter 13 case.

• Having your wages attached to pay your plan payments.

• Not gaining the benefit of a discharge from an otherwise dischargeable debt because you incurred that debt within a certain timeframe prior to filing bankruptcy. This scenario typically involves credit card debt. Some consumers mistakenly think they can use their credit cards as much as they want because they are going to file bankruptcy. This is wrong. If you are still using your credit cards and thinking of filing bankruptcy soon, you should stop using the credit cards and contact a bankruptcy attorney.

• Transferring or selling assets for substantially less than the fair market value within a certain timeframe before filing bankruptcy. This can lead to problems for you and/or for the individuals involved in the transfer. There are too many scenarios to list so your best option is to contact a bankruptcy attorney to discuss the transfer you made, if any.

• To find out if any of these negative consequences or other negative consequences would apply to your situation or if you have a different question or concern, please contact us.

Finally, it is worth mentioning that our clients are required to be truthful and forthcoming about everything we ask them and they must fully disclose the value of all their property and all sources of income. Not telling the truth or attempting to hide income or assets can only lead to negative consequences. If you are caught, you could face more than just losing your right to a discharge of your debts. You could face penalties and/or a possible criminal referral to the Department of Justice. The best advice we give our clients is to be truthful. As long as you are truthful, we are able to properly assess whether bankruptcy is right for you and whether it will work for you.

The previous paragraph was not meant to scare you, but it probably did. Most people are honest, law-abiding citizens. Please do not confuse making an honest mistake with the intent to defraud a creditor. Honest mistakes are not the same as intentionally hiding assets or income. Honest mistakes can be corrected without the harsh consequences mentioned in the previous paragraph. We are all human and we all make mistakes. An amendment to your paperwork and a possible re-assessment of your eligibility to obtain a Chapter 13 discharge might be necessary, but it is correctable. After you have retained our office, if you realize you made a mistake, contact us right away so the mistake can be corrected in your file or case.

A Chapter 13 bankruptcy could have negative consequences in exchange for the elimination of your dischargeable debts. But these negative consequences should be carefully weighed against the idea that you will gain relief from certain debts and possibly re-adjust other debts. In the initial consultation, we are able to assess your eligibility to file a Chapter 13 bankruptcy and it is our goal to properly advise you of the consequences in filing for such relief. You will not be left in the dark as to what will happen next. We just ask that you be truthful and commit to full disclosure. We’ll take it from there.

To find out more about how a Chapter 13 bankruptcy will affect your life, please contact us.

Our experience has been that consumers on fixed incomes who are already struggling with their debts do not perform well with credit consolidation and debt settlement programs. Why? There are many reasons for failing to successfully complete a credit consolidation program or to successfully settle your debts through a debt settlement company. The main reason for failure is that an individual’s income is not sufficient to allow for success. This is not to say that consumers were not helped by such programs. You should realistically determine if these programs can realistically resolve your current debt situation based on your current income. Most consumers would rather solve their debt problems without filing a bankruptcy and they can be blinded by the promises of companies that offer alternatives to bankruptcy. Make sure you do your homework and plan accordingly. Remember, if it sounds too good to be true, it probably is.

What can end up happening is that you waste hundreds, if not thousands of dollars, while at the same time prolonging your agony, only to end up in a bankruptcy attorney’s office seeking help. We often hear our clients who have unsuccessfully attempted credit consolidation or debt settlement programs say they wish they had spoken with a bankruptcy attorney before entering into such a program.

Chapter 13 bankruptcy can offer a consumer more options than a credit consolidation or debt settlement program. In a Chapter 13 bankruptcy, you pay your general unsecured debts such as credit card debt at 0% interest, you may be eligible to reduce the interest rate or the principal balance owed on your vehicle, or you may be eligible to eliminate a 2nd mortgage on your home as well as other potential benefits. To learn more, please contact us.

It is a no-lose situation to contact an experienced bankruptcy attorney to find out if Chapter 13 bankruptcy should be considered as one of your debt resolution options. It is free and confidential and there is no obligation to file a Chapter 13 bankruptcy just because you came in for a consultation. EDF LAW takes pride in ensuring that our clients are comfortable and well-informed before making the final decision to file a Chapter 13 bankruptcy. It is your life and your debt and, as a result, it should be your final decision on how to attack those debts. At EDF LAW, we give you the facts and information necessary to make the proper decision and we do it for free. There’s no sales pitch and if we feel there is a better option for you than bankruptcy, we will let you know. It is never easy to accept that bankruptcy is your best option, but when it is, we will be there to help you through it, to help you keep your chin up and to help you gain a financial fresh start.

The Federal Trade Commission (FTC) advises to stay away from any company that makes untrue claims:

• Promises that unsecured debts can be paid off for pennies on the dollar. The truth is that there is no guarantee that any creditor will accept partial payment of a legitimate debt. Your best bet is to contact your creditor directly as soon as you are having problems making payments.

• Requires substantial monthly service fees and demands payment of a percentage of what they’ve supposedly saved you. The truth is that most debt relief companies charge hefty fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee – a percentage of the money you’ve supposedly saved.

• Tells you to stop making payments to or communicating with your creditors. The truth is that if you stop making payments on a credit card, expect late fees and interest to be added to the amount you owe each month. If you exceed your credit limit, expect additional fees and charges to be added. Your credit score also will be hurt by not making payments.

• Claims that creditors never sue people for not paying their unsecured debts. The truth is that creditors may have the right to sue you to recover the money you owe. And sometimes, when creditors win a lawsuit, they have the right to garnish your bank accounts or put a lien on your home.

• Claims that they can remove accurate negative information from your credit report. The truth is that no company or person can remove negative information from your credit report that is accurate and timely. It is illegal to remove such information.

Read more at www.ftc.gov.

To find out if you should choose Chapter 13 bankruptcy over credit consolidation or debt settlement, please contact us.

This is simply not true. Not everyone who files bankruptcy is the type of person who recklessly and frivolously spends money knowing they have a way out after all the fun. If that were the case, then why do over 1 million Americans file bankruptcy each year? The reality is that most people who file bankruptcy are good people who had an unfortunate circumstance in their life or their family’s lives. Most consumers who file bankruptcy suffer from a loss of income, health issues, divorce or some other legitimate reason that has caused their current financial situation.

Shame should not be the sole reason why you do not look into bankruptcy as an option for your debt problems. It is understandable that you may have apprehension in speaking with a bankruptcy attorney. Keep in mind we are professionals that help people with their debts on a daily basis. We will not judge you and reprimand you. We will listen to you and give you the help you need. If we cannot help you, we will be honest with you. Regardless of the outcome, coming into our office for a free consultation is confidential and there is no obligation to sign up and file a bankruptcy case just because you came in to learn how it could help you. It will always be your decision. We supply you with the information needed to make that decision.

To find out whether a Chapter 13 bankruptcy is right for you, please contact us.

Deciding to file a Chapter 13 bankruptcy is a serious decision. Who you hire to represent you as your attorney can be just as important. The right attorney can make all the difference in the world. You will want advice from a quality bankruptcy attorney who knows the bankruptcy laws. You will also want a bankruptcy attorney who has the time for you. Not all attorneys service bankruptcy cases in a professional manner. Being able to trust that your attorney will guide you down the right path to obtain the results you are seeking is crucial. Also of importance is the level of respect and attentiveness that your attorney shows towards you. Attorneys are not just advocates for your rights - they are also counselors. The right attorney will be able to address your concerns and help you through this difficult time.

At EDF LAW, you will receive the attention, compassion and professionalism you deserve. We will not take your financial situation lightly nor will we treat you as just another number. We will develop a plan that keeps your best interests in mind and that helps you obtain the financial relief you are seeking. We will maximize the benefits that the bankruptcy laws allow and we will go after your intended result, which is a financial fresh start. All we ask of you is that you are truthful and commit to full disclosure of all the information we need to properly assess your case. We take pride in not only making our clients feel at ease, but also in properly preparing your case so everything goes as smoothly as possible. Contact EDF LAW today and sleep better tonight.