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The Pros and Cons of Chapter 7 Bankruptcy

dennis-plank-Lancaster-County-PennsylvaniaBy Dennis Plank, Attorney

Debt is a fact of life for many in Lancaster County, and perhaps for you, too. And sometimes that debt can become overwhelming.

Maybe years of poor spending habits, mounting credit card balances and rising interest rates have finally caught up with you. Or perhaps a major life event that is out of your control, such as job loss, illness or a death in the family, has made it impossible to keep up with the rent, mortgage, medical bills and a host of other financial obligations.

There are a number of ways to find financial relief, from eliminating unnecessary expenses to selling off assets such as a car or even your home. But if those options are not practical, or they are not sufficient to resolve your debt, you may want to consult the attorneys at Going and Plank in downtown Lancaster to find out if filing for Chapter 7 bankruptcy is an option for you.

While you may think of filing for bankruptcy as a failure, it can actually be a wise financial decision. Chapter 7 bankruptcy offers a fresh financial start by eliminating much of your existing debt without the need for repayment.

If you are considering Chapter 7 bankruptcy, you are not alone. In the 12-year period from 2005 to 2017,  8.7 million petitions for Chapter 7 bankruptcy were filed in federal courts, accounting for 68 percent of all non-business bankruptcy filings.

Like any financial decision, Chapter 7 bankruptcy has its pros and cons. Contact a bankruptcy lawyer at Going and Plank to help you evaluate your situation.

Pros of Chapter 7 Bankruptcy

You can Eliminate Most, if not all, of Your Unsecured Debts

Unsecured debt is debt that is not tied to an asset, such as your home. Credit card debt is the most common form of unsecured debt, but Chapter 7 bankruptcy can also wipe out other debts, like medical bills, personal loans, and overdue utility bills.

You can Keep Your Home and Your Primary Vehicle Under Exemptions Provided by the Federal Bankruptcy Law

Filing for Chapter 7 bankruptcy may mean you have to liquidate assets to pay your creditors; however, available Federal exemptions may permit you to retain your home and vehicle.

You Don’t Have to Make Payments to a Bankruptcy Trustee

When you file for bankruptcy, a court-appointed trustee will evaluate your assets and administer your case. The role of the trustee, and consequently their fee, varies depending on the type of bankruptcy case. While trustees in Chapter 13 bankruptcy cases receive a monthly payment, Chapter 7 trustees receive only a portion of the bankruptcy filing fee. If assets are liquidated, the trustee may also receive a commission paid out of the funds brought in by the sale of the assets.

You’ll Worry Less About how to pay Your Bills While Providing for Your Family

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Filing for Chapter 7 bankruptcy not only eliminates much of your debt but also makes your expenses more manageable. It also can protect you and your family from foreclosure, repossession, eviction, and garnishment of wages.

You’ll Stop Harassment From Creditors

Once you choose to file Chapter 7 bankruptcy, a bankruptcy lawyer at Going and Plank will activate an automatic “stay,” which stops collections and prohibits creditors from pursuing any collection activity, including telephone calls, attachments and the filing of lawsuits against you.

The First Consultation at Going and Plank is Free

Contact Going and Plank today for a free, no-obligation consultation with a bankruptcy lawyer to see if Chapter 7 bankruptcy is right for you.

Cons of Chapter 7 Bankruptcy

You Must Meet the Income Requirements of the Means Test

The means test compares your income to the median household income in Pennsylvania and can help determine if you have enough disposable income to pay back all, or at least some, of your debt. It is one of a number of requirements that determine your eligibility for Chapter 7 bankruptcy.

A Chapter 7 Case Will Remain on Your Credit Report for 10 Years

Filing Chapter 7 bankruptcy may give you a fresh financial start, but it won’t do the same for your credit score, at least not in the short term. Depending on what your score was to begin with, it could drop by 100 points or more. But remember, by eliminating debt, Chapter 7 bankruptcy can give you the time and space necessary to improve your financial situation – and your credit.

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You Can’t Eliminate all Debt

While Chapter 7 bankruptcy can eliminate many of your unsecured debts, you will still be obligated to pay alimony and child support, most taxes, most student loans and any court restitution in full.

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Filing for Chapter 7 bankruptcy is a serious financial step, but it could end up putting you on the right financial footing in the long run. If you’re struggling with debt, contact the team at Going and Plank in Lancaster today for a free consultation to help you determine if you are a candidate for Chapter 7 bankruptcy and if it’s the right step for you.

7 Ways to Deal with Debt

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By Dennis Plank

Attorney

Debt can sneak up on you in a variety of ways. Some people don’t watch their spending carefully and wake up one day to find they’re buried in debt. Others take a lower paying job only to find they can no longer keep up with credit payments.

Still, others fall behind because of high medical costs. Some people find it difficult to manage finances after a divorce or the loss of a loved one. Others fall behind after an extended period of unemployment.

There are many reasons for the accumulation of staggering debt. While each person and each situation are different, there are some strategies you can use to get a better handle on your total debt and understand the best way to manage it and get a fresh financial start.

1. Inventory Your Debt and Expenses

The first step to getting debt under control to tally your total debt and expenses. If you don’t know your total debt, it’s smart to inventory your bills and nail it down. Sometimes, when you know your debt is large, you avoid tallying the actual number. Inventorying debit is not a fun task, and for some people, it can be terrifying.

No matter If your debt is big or small, if you’re having trouble paying your bills, the first step is to make a list of what you owe. Add in recurring bills and expenses, including mortgages, cable and phone expenses, transportation costs, medical and prescription costs, food, clothing, utilities, eating out, trips, vacations, and entertainment costs.

2. Tally Your Take-Home Income

Many people don’t add up their household’s total income. They may know how much they make in salary, or how much gross income their spouse makes in a year. But you must also know the monthly and annual total of your take-home pay after things like taxes, insurance, and benefits are deducted. If you have outside income sources, such as child support, alimony, or other regular payments, factor those in as well.

3. Assess the Debt Gap

Now that you know how much you spend each month, and how much you take home each month, you can do some simple math to see if you are making enough money to pay your bills and pay down your debt. If your income is larger than your expenses, you’re in good shape and should be able to work on reducing your debt with regular and timely payments.

If your income just barely covers your expenses, you may want to reduce costs or increase your income with a new job, or even a second job. This will give you a bit of cushion that allows you to pay down debt more quickly.

If your expenses are larger than your income, you’ll need to do some real work to make the kind of changes necessary to get your finances back on track.

4. Pay Your Bills on Time Each Month

As you work on creating a workable budget, it’s also important to calendar payment due dates. Late payments make it harder to pay off your debt because you’re often charged a late fee. If you miss two payments in a row, your interest rates and finance charges may increase. While it may be hard to juggle your debt, try to create a calendar of due dates, and stick to it. Many people find it helpful to generate an alert for the bill several days before it’s due.

5. Get Rid of Extras

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To pay down your debt, you’ll need to divert money away from expenses and funnel that into paying off credit cards, medical bills, or other ongoing expenses. While it may seem difficult to give up some extras, it will help you get into better financial shape. How can you trim costs?

  • Eliminate gym memberships
  • Cancel club memberships
  • Downgrade or eliminate cable TV
  • If you have a mobile phone, consider removing your landline
  • Consider downgrading your mobile plan
  • Sell an expensive car and trade it in for a reliable, used model
  • Eat out less, or stop eating out
  • Give yourself a weekly food budget and stick to it. Cooking at home can save you lots of money.
  • Spend time clipping coupons and comparing prices. The savings will add up quickly.
  • Stay away from expensive coffee shops. Make coffee at home.
  • If your job is more than a few miles from your home, try to find a carpooling buddy or two. You’ll save big on gas and reduce miles on your car.
  • Stop buying cans of soda; purchase 2-liter bottles instead. Better yet, switch to tap water.
  • Bring your lunch to work.
  • Cut back on, or eliminate, cigarettes, vapes, cigars, and alcohol. They’re all expensive habits.
  • If you have fine jewelry, consider selling it.
  • If you have a garage or basement full of used junk, hold a garage sale, or sell unneeded items online. Look around your house and sell the things you don’t need or want.
  • Embrace used clothing. Resale boutiques, Goodwill, and garage sales are all great places to find the clothes you need for pennies on the dollar. And you’re the only one who will know they are used.
  • Cut down on salon costs. Stretch out periods between haircuts. Use home hair coloring kits. Give yourself manicure or pedicures.
  • Stay away from bookstores; visit the public library instead.
  • Eliminate nights at the movies. The public library also lends videos, DVDs, and BlueRay movies.

6. Consider Getting a Second Job

While the thought of working nights the local fast food joint may not be your style, more and more people are making more money with the kinds of second jobs that offer flexibility and income. People bring in extra money doing things like dog sitting, gardening, or rideshare driving for someone like Uber or Lyft. If you have a computer and an internet connection, you may make money doing transcriptions, telemarketing, or by becoming a remote customer service agent.

You can also freelance the skills you use for your day job. For example, if you are a teacher, you can also work as a tutor. If you’re an accountant, you may want to hire out your services to small businesses or for tax returns.

Whatever path you choose, adding a second job, even if it’s only for a few months a year, can help you significantly reduce your debt.

For more ideas on second jobs, check out these articles from U.S. News, Career Builder, or Women’s Day.

7. Recognize the Signs That You Need Help

Sometimes even the most diligent budgeters find that their debt has grown beyond their control. Once you see that your debt is more extensive than you can handle, it’s time to move to the next step.
Considering bankruptcy is a scary process for many people. However, if you are facing foreclosure, repossession, eviction, garnishment of wages, or a lawsuit from creditors, it’s time to consider the benefits that bankruptcy offers. Going and Plank can help you identify your best options. Contact us today to set up a free consultation.

There are two types of bankruptcy. Chapter 7 helps you eliminate debt, but also requires you to sell many of your assets. Chapter 13 is a way to restructure debt and usually allows you to keep many or all of your assets. While bankruptcy is a step that should be considered carefully, it’s also a way to give you a fresh start. Schedule your free consultation today.

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Going and Plank offers free consultations to potential bankruptcy clients. We’ll help you assess your debt and figure out if bankruptcy is right for you. We also help you make decisions that help you save money long term, work through complicated paperwork, and avoid action or activities that would be considered fraudulent.  Contact us today.

5 Questions to ask if You’re Considering Bankruptcy

Dennis-Plank-Lancaster-County-Attorney-PA By Dennis Plank, Attorney

If you’ve been struggling with a mountain of debt, you may be considering bankruptcy as one way to remedy your financial challenges. Bankruptcy is a good solution for many people in Lancaster County, but it is not right for everyone. Each person’s issues and needs vary, so you may want to consult a bankruptcy attorney before making your final decision.

As you consider your financial options, there are some questions many clients ask. If you wonder if bankruptcy is right for you, take some time to consider these questions, and see if they apply to your situation.

Will I Have to Liquidate my Assets if I Declare Bankruptcy?

Every situation is different, but bankruptcies usually don’t require you to sell everything to pay off debts. Much depends on whether you will file Chapter 7 or Chapter 13 bankruptcies. Your income and personal situation will dictate whether you qualify for Chapter 7 or Chapter 13, but in both types of bankruptcy, certain classes of property are exempt. Contact the team at Going and Plank and we’ll explain how property is treated in bankruptcy, and give you all the facts before you make a decision.

Is it Too Late to File Bankruptcy?

People often wait to file bankruptcy, hoping they may be able to convince creditors to hold off until they can repay their debt. That’s why some people are surprised by notices of foreclosure, repossession or lawsuits. Even if you’ve been served notice, it’s not too late to declare bankruptcy. In emergency situations, Going and Plank can often file an emergency bankruptcy, that allows us to stop actions like foreclosure, repossession, eviction, garnishment of wages, or lawsuits. An emergency bankruptcy stops legal actions against you and allows you time to get all the required filings and paperwork in order.

Emergency bankruptcies can help you if you are facing;

  • Foreclosure

  • Car repossessions

  • Eviction

  • Garnishment of wages

  • Lawsuits

Contact Going and Plank to discuss your options, and find out if an emergency bankruptcy makes sense for your situation.

Can Bankruptcy Help Eliminate Medical Bills?

Over 700,000 households declared bankruptcies last year, and many of those were due to the financial consequences of overwhelming medical expense and long-term illness. Having health insurance doesn’t mean you won’t be hit with huge medical bills. If a wage-earner is out of work or ill for long periods of time, financial hardships can be multiplied.

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That’s why, after a major or long-term illness, some people find they are facing insurmountable amounts of medical debt. While medical debt can be reduced or even eliminated in a Chapter 7 bankruptcy, in Chapter 13, it may be restructured into more manageable payments.

If you feel overwhelmed by medical debt, Chapter 7 or Chapter 13 may be a smart way to manage or eliminate debt.

Do I Have to Take a Credit Counseling Course?

The short answer is yes. No matter what type of bankruptcy is filed, Pennsylvania state law requires you to complete a credit counseling course with an approved agency. These mandatory courses are designed to help you evaluate and reformat your finances in ways that help you understand ways to pay down debt and avoid bankruptcies in the future. Going and Plank can connect you with a course that meets the state requirements.

What Happens After Bankruptcy?

Many clients wonder if they will be able to refinance mortgages or get a mortgage after declaring bankruptcy. Other are concerned about bankruptcy’s effect on their credit rating. The answers to those inquiries depend on the type of bankruptcy filed and if debts were eliminated or if a repayment plan was formed.

Bankruptcies do affect your ability to refinance a  mortgage or get approved for a new mortgage. As of this writing, you should be able to refinance or obtain a new mortgage two years after declaring bankruptcy, but underwriting requirements and legislation change frequently so this timeframe may change.

Your bankruptcy will be reported to a credit agency and can stay on your credit report for up to ten years. You will find that it will take time to regain a good credit score. But for many people bankruptcy provide a fresh start for their personal finances. By relieving some types of debt, eliminating some debt, and restructuring other types of debt, bankruptcy can give you the time and space you need to change your financial outlook.

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While it may seem like a bankruptcy lawyer is just another expense, an experienced bankruptcy lawyer is dedicated to helping you find the financial solutions that make the most sense for your situation. In addition to helping you through a complicated, paper-intense process, a bankruptcy attorney can steer you away from activities that may be seen as deceitful or fraudulent.

The team at Going and Plank can also help you determine which type of bankruptcy is right for you, help you protect your most important assets, and help you map out an improved financial future. Contact us today for a free consultation, and find out if bankruptcy makes sense for you

Chapter 7 Bankruptcy in Pennsylvania

Is This Debt Relief Option Right for You?

When your finances get out of control, you might resist filing for bankruptcy. After all, many people and businesses can find the financial relief they need by selling off assets, downsizing cars and homes, eliminating memberships, rethinking budgets, and reducing expenses dramatically enough to find the funds they need to work their way out of crippling debt.

However, others struggle to stay afloat when life events severely impact their finances. Perhaps you or someone in your family or business has experienced a serious drop in income, a job loss, got divorced, became ill, or passed away. Sometimes the economy, new regulations, changes in interest rates, or industry shifts also challenge your ability to make ends meet. When life events surprise you, it can become hard to pay leases, rents, mortgages, car payments, installment payments, major medical expenses, or other ongoing financial responsibilities.

Bankruptcy Offers a Chance to Reboot Your Finances.

While declaring bankruptcy feels like a failure to some people, legal and financial professionals know that can actually be a good way to rebuild your life. Numerous successful people have declared bankruptcy during their lives, including Abraham Lincoln, Walt Disney, Henry Ford, Milton Hershey, and H.J. Heinz.

What is Chapter 7 Bankruptcy?

Chapter 7 is the most common form of bankruptcy. Once a Chapter 7 bankruptcy is completed, the debtor is usually free of major debt, and is provided a fresh start with smaller, more manageable expenses. However, in exchange for the forgiveness of debts, a trustee will evaluate your assets and may require you to sell possessions to subsidize your debt. Depending on your situation, you may be able to keep your home and essential vehicles. If you have no possessions, your debt will be dissolved without selling off assets. Contact us to discuss your situation.

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How do I Know if I can Declare Chapter 7 Bankruptcy in Pennsylvania?

Before you file Chapter 7 bankruptcy in Pennsylvania, the Commonwealth mandates that you must meet these requirements.

1. You’re a Pennsylvania Resident

You must be a resident in Pennsylvania for at least 91 of the past 180 days preceding your bankruptcy filing date. Bankruptcy courts in Pennsylvania have jurisdictions. If you live in Lancaster, Berks, or Bucks counties, you’re in the jurisdiction of the United States Bankruptcy Court for the Eastern District of Pennsylvania. Residents of York, Dauphin, and Cumberland Counties fall under the jurisdiction of the Pennsylvania Middle District Bankruptcy Court.

2. You Meet Chapter 7 Income Requirements

To qualify for a bankruptcy discharge in Pennsylvania, you’ll have to submit a variety of forms and records, which will be compared to federal IRS and Social Security documents. Honestly is required, and dishonesty or hiding assets may result in criminal prosecution.

The income means test compares your adjusted monthly income to the median state income for a household of your size. If your income falls below the mean, or average, of a Pennsylvania household like yours, you may be a good candidate for Chapter 7. However, if your income ranks about the mean, or is higher than an average Pennsylvania household like yours, you may be asked to switch to a Chapter 13 bankruptcy filing. Chapter 13 bankruptcies focus on reorganization and repayment, not elimination, of debt. It’s important to remember that each case is different. A qualified legal expert on bankruptcy can help you walk you through this process, and identify exceptions in your favor when they exist.

3. You Have Fulfilled Credit Counseling Requirements

Anyone who wishes to file any type of bankruptcy in Pennsylvania must complete a designated pre-bankruptcy credit counseling course. In fact, this is a federal law. The course requirements and fees may vary slightly among bankruptcy court jurisdictions. A Going and Plank bankruptcy expert can talk you through this process.

Is Chapter 7 Right for You or Should You Pursue Other Options?

Once you decide to explore bankruptcy seriously, you should schedule a free consultation with a bankruptcy expert from Going and Plank. We’ll help you evaluate your current situation in many ways, including assessing your eligibility and identifying which debts can be discharged. Our team will help you check your credit report, identify all your debts, and gather the paperwork needed to file.

Before you commit to a Chapter 7 bankruptcy, we’ll help you explore all your options. Even if you qualify for Chapter 7 bankruptcy, other types of bankruptcies might be more helpful to you or your business. We’ll be understanding but honest, and our experienced legal team will help you explore all your choices.

Bankruptcies Will Change Your Life. Make Sure You Have Experienced Support.

Bankruptcies are complex and time-consuming. Mistakes in the process can significantly affect your ability to file bankruptcy and discharge debt. That’s why it’s so important to get the right legal help from Going and Plank. Like Abraham Lincoln and Milton Hershey, you can make bankruptcy the first step to launching the next phase of your life. Contact us today to schedule your free bankruptcy consultation.

The Law Offices of Going and Plank are a debt relief agency. We help people file for bankruptcy under the bankruptcy code.

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