How Long Is a Person in a Chapter 7 or Chapter 13 Before Discharge?

A Bucks County Chapter 7 case is generally discharged within four to five months and a Bucks County Chapter 13 usually takes a five year repayment plan to be fulfilled before discharge. On occasion, a Bucks County debtor may opt for a three year repayment plan.

Typically, in a Chapter 7 case, after the Bucks County Trustee's Hearing/341 Hearing, the Bucks County trustee will recommend a discharge. Provided a debtor completes their post-filing debtor eduction requirement, they will receive a discharge within 90 days of the hearing. At a minimum, the debtor will have to wait 60 days, as creditors have 60 days after the 341 Hearing to object to the discharge of their debt.

If the Chapter 7 Bucks County Trustee does not recommend a discharge at the hearing, they will normally "hold the case open" for a period of time. Holding a case open generally means that the Trustee has questions regarding a person's case and requires additional information. For example, I have had trustee's request "cash value statements" regarding life insurance policies, pictures of a doll collection (to make sure they were not valuable), or for additional bank statements. Normally, if the debtor is diligent about providing their Bucks County Bankruptcy Attorney with the requested documentation, a delay to discharge does not occur.

Typically, in a Chapter 13 case, if timely payments are made pursuant to the bankruptcy plan, a debtor will receive a discharge at the end of 60 months/5 years.

What is a Priority Claim?

Although not much of an issue for many Bucks County bankruptcy filers for Chapter 7 or Chapter 13, priority claims do pop up from time to time.

The public policy behind priority claims are that not all unsecured claims are equal. There is an order in which claims are paid. This is called “Priority”. Examples of priority claims are: unpaid child support, bankruptcy administrative costs, unpaid employee wages up to $10,950 per employee and unpaid contributions of employee pension plans.

All priority claims must be paid in full before other lesser claims in a Chapter 13. In a Chapter 7, these debts are not discharged, though the attempt to collect is temporarily halted under the 'Automatic Stay' provision.

Most frequently, unpaid taxes and child support are encountered most frequently when people meet with a Bucks County bankruptcy attorney. Just remember -- You will still be "on the hook" for priority claims, even though they are not part of a Reaffirmation Agreement and even though they are not secured by real property.

What is a foreclosure in Bucks County?

In a foreclosure in Bucks County, the bank or mortgage company to whom you owe money places a lien on the Bucks County real estate if you do not make your agreed upon loan payments. The bank or mortgage company can then initiate the process whereby they can take back your house due to your non payment. This process includes a foreclosure action, which is filed at the Court of Common Pleas in Bucks County. Eventually, if a foreclosure action is granted, a sheriff sale will occur where an individual is evicted from their home.

However, when filing a chapter 13 bankruptcy in Bucks County, if a homeowner can demonstrate ability to make a mortgage payment, then it is often possible to save your home. At the minimum, it will stop foreclosure proceedings temporarily. This is often a sound strategy to afford an owner time to catch up on missed payments or attempt a short-sale.

A foreclosure should be the first sign that you need to call a lawyer in Bucks County about filing a Chapter 13 bankruptcy. If you decide that you do not want to keep the home, you can potentially have the deficiency on the home discharged in a Bucks County Chapter 7 bankruptcy. The Chapter 7 will discharge the deficiency and additional unsecured debt.

Your Bucks County bankruptcy attorney will advise you if this is possible after reviewing your finances.

What is an "Automatic Stay"?

Once a debtor has filed for a Bucks County bankruptcy, an automatic stay is issued. This legal status prevents most, but not all, creditors from taking actions to collect a debt. The automatic stay is a very powerful component of a bankruptcy. The biggest benefit to the automatic stay for Bucks County bankruptcy clients is that it prevents creditor harassment. If a creditor attempts to collect a debt after a bankruptcy is filed (which triggers the automatic stay), they are in violation of the Fair Debt Collection Practices Act.

Secured creditors, upon showing cause, may request that they be exempted in a Chapter 7. This normally occurs after an individual is behind on their mortgage and the mortgage company is pursing a foreclosure. If the Bucks County resident wants to try and keep their home, it may be worthwhile to file a Chapter 13 bankruptcy.

An automatic stay will temporarily halt the foreclosure on a home (if in a Chapter 7), but once the debtor’s bankruptcy is discharged, the creditor can proceed with foreclosure. An automatic stay generally lasts until the debtor’s bankruptcy is discharged. It ends if the bankruptcy is dismissed.

What is a Bankruptcy Discharge?

A "discharge" in a Bucks County bankruptcy means that the debtor is released from liability for certain non-secured debts. Unless a creditor contests the removal of a debt, the discharge generally occurs 60 days after the appearance before the U.S. trustee in Bucks County. The Chapter 7 bankruptcy hearings in Bucks County are held in Trevose. Remember -- there are some debts that are not able to be discharged in a bankruptcy.

The discharge prevents the creditor from taking further action to collect a debt after the automatic stay. This includes eliminating personal contact, phone calls, and mailings by the creditor. Essentially, this is the final step for you to start fresh with your new life. You are assured that no further harassment can occur.

A copy of the discharge is mailed by the bankruptcy clerk to the debtor, the debtor’s bankruptcy attorney in Bucks County, and the debtor’s creditors.

What is a Loan Modification?

A lot of my Bucks County Chapter 13 clients have attempted a loan modification to save their home. So, what is a loan modification?

Essentially, a loan modification changes the terms of the original mortgage. Usually the length of the term (total years) of the mortgage and/or the interest rate are modified so the borrower can fulfill his/her mortgage obligations. Sometimes, but not often, the principal amount owed can be lowered.

It is often difficult to obtain a loan modification. The paperwork can be burdensome and the standards for modification are seemingly high. What occurs frequently is that a client hopes to put their mortgage arrears into a new principle payment through the modification.

If that fails, seeing a Bucks County bankruptcy attorney may provide the Bucks County resident with the opportunity to put their arrears into a payment plan with the trustee to save their home. This may be a great option to save their home from foreclosure and continue to attempt to work on a modification (which I always encourage clients to do).

How Often Can a Bucks County Individual File for Bankruptcy?

There are no legal limits to the number of times a bankruptcy client in Bucks County can file for bankruptcy, but there is a definite and specific time line between the filings. For instance, if you filed for a Chapter 7 you must wait 8 years before you are eligible to file another Chapter 7. You may, however, file a Chapter 13 within the 8 years. Be forewarned that if you file for a Chapter 13 before four years of filing for a Chapter 7, your unsecured debts will not be discharged.

If you filed a Chapter 13 bankruptcy and wish to file another Chapter 13 within a year, you will have to file a motion with the bankruptcy court to extend the automatic stay, which only lasts for 30 days on a second filing (see 11 USC 362 (c) (3)). To be granted the extension, you will have to show a change of circumstances (i.e. reduced expenses, an increase in pay, new family contribution, etc). Your Bucks County bankruptcy attorney can advise you of the best course of action.