Are you living in Lancaster County and struggling with debt? Maybe you dug yourself into a financial hole with bad spending habits. Or maybe life threw you a curve, like job loss or unexpected medical bills. It’s possible you can improve your situation by giving up extras like gym memberships, cutting your spending, and maybe even getting a second job.
But sometimes budgeting isn’t enough. If you still can’t pay your bills, it might be time to consult a lawyer and consider filing for Chapter 7 bankruptcy.
What is Chapter 7 Bankruptcy?
Chapter 7 is the most common form of bankruptcy. If you have a lot of unsecured debt it may be right for you. Unsecured debt is debt that is not tied to an asset, such as your home or car. Some examples of unsecured debt are credit card bills, medical bills, and personal loans. The major benefit of Chapter 7 bankruptcy is that it wipes out your unsecured debt and gives you a fresh start with more manageable expenses. However, you will still have to pay alimony and child support, taxes, and student loans. Filing for Chapter 7 bankruptcy may mean you have to sell off certain assets, such as property, investments, expensive collections, jewelry, clothing, or newer vehicles to help pay your creditors. Pennsylvania bankruptcy law has exemptions that may allow you to keep your home and a vehicle for transportation.
Who Qualifies for Chapter 7 Bankruptcy?
Not everyone qualifies for Chapter 7 bankruptcy. You may earn too much. You will have to take a means test to compare your monthly income to the average in Pennsylvania. The test will also determine if you have enough disposable income to pay back some of your debt. If you pass the means test, there are other requirements you must meet.
To file for Chapter 7 bankruptcy in Pennsylvania, you must be a resident of the state for at least 91 out of the last 180 days before your filing date. You also must prove that you have completed credit counseling within the last 180 days. Credit counseling is required by federal law. It is important because it helps you look at the type of debt you have as well as other options for debt relief. It can help you decide if Chapter 7 bankruptcy is really the right choice for you. If you decide to file for bankruptcy, there will be more counseling requirements later in the process.
How is Chapter 7 Different From Chapter 13?
Chapter 7 bankruptcy wipes out your debt without requiring repayment. Chapter 13 bankruptcy reorganizes your debt and creates a payment plan to repay a percentage of your debt. Chapter 13 also lets you keep your home and possessions while stopping foreclosures, lawsuits, and harassment from creditors.
Depending on your situation, there are advantages and disadvantages to both bankruptcy options. An experienced bankruptcy lawyer can help you determine which is right for you.
Consider Chapter 7 if you have lower income and your main problem is unsecured debt, like credit card or medical bills. Consider Chapter 13 if your earnings are higher, you have assets you want to keep, or if you’re mainly behind in paying debts that Chapter 7 won’t forgive, like mortgage, student loans, and child support.
One more thing to consider: Both types of bankruptcy will affect your credit score, but future lenders may view Chapter 13 more favorably since you are making a good faith effort to repay some of your debt.
What is Emergency Bankruptcy?
Filing for bankruptcy takes time and requires a lot of paperwork, sometimes 50 pages or more. In certain situations, an attorney can streamline the process and file an emergency bankruptcy. The petition will trigger an automatic stay that will immediately stop legal actions against you, like foreclosure, repossession, eviction, lawsuits, or garnishment of wages (when a court orders your employer to withhold some of your earnings to pay creditors). An emergency bankruptcy requires far less paperwork, but it is only temporary. You will have 14 days to file all required documents and forms, or the courts will dismiss your case.
If you are living in Lancaster County and struggling with debt, contact the Law Offices of Going and Plank in Lancaster city for a free consultation. We can review your financial situation and discuss all of your options for debt relief. If you decide that bankruptcy is right for you, we can activate an automatic stay to stop collections, handle the complicated filing process, protect your assets, and help you plan a better financial future.
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