Dennis L. Plank, Attorney
In Lancaster County and across the country, Americans are struggling with more and more debt, especially credit card debt and student loan payments. For some people, debt is a necessary but manageable part of their financial picture. However, for others, debt can get out of control. For some households, debt piles up because of poor spending habits and or ill-advised financial decisions. For others, life events such as job loss or chronic illness take a toll on finances.
Bankruptcy is often considered to be a last resort, and a sign of failure. However, filing for Chapter 7 or Chapter 13 may be a wise financial decision that provides the tools needed to reboot one’s personal finances. An experienced bankruptcy attorney can help each person decide on the best debt relief option for their situation.
No matter why debt accumulated, the only way to improve the situation is to take action. Contacting the Law Offices of Going and Plank in downtown Lancaster is the first step to initiating many types of debt relief options.
Chapter 7 and Chapter 13 bankruptcy are not the right choice for everyone. But they may be good financial options for some people. Here are some questions to ask to find out if bankruptcy is right for an individual or couple:
Are Collectors Are Calling or Threatening to Sue?
Constant calls from creditors are demoralizing, but creditors must be dealt with. Once bankruptcy is filed, a bankruptcy lawyer can 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 their client. Contact Going and Plank to find out more about how we stop harassment from creditors.
Is There a Danger of Losing a Home?
When mortgage payments fall behind, some creditors threaten to repossess a home. Chapter 13 bankruptcy may be a good option for people in danger of losing their home to foreclosure because it allows filers to make up late payments through a court-approved repayment plan. Contact us to find how out we help clients assess the suitability of bankruptcy to avoid foreclosure.
Are Loans Being Used to Pay Bills?
Borrowing to pay off debts can trigger a cycle of debt that is difficult to escape. While securing a lower-interest personal loan to pay off higher-interest debts may seem like a good idea, there are associated issues. Fees and higher monthly payments can add to the overall debt. Taking out loans tied to collateral such as a car could result in repossession if signatory falls behind on payments.
Are Retirement Assets Being Liquidated to Pay Debts?
Retirement assets are intended to provide security for the future. However, some retirement accounts are reduced or liquidated to pay off debts. Filing for bankruptcy is one way to protect retirement accounts from creditors.
Is Chapter 7 Bankruptcy a Good Idea?
There are two types of bankruptcy that apply to most consumers in the United States: Chapter 13 and Chapter 7. Chapter 7 allows the forgiveness of debt without repayment, which can provide substantial debt relief. However, applicants must qualify by taking a means test to determine if their income is less than the median income in Pennsylvania or if they have enough disposable income to pay back all or at least part of their debt. If their income is too high, they will not qualify for Chapter 7.
Chapter 7 allows filers to eliminate most types of unsecured debt that are not tied to an asset, such as a home. Unsecured debt may include medical bills, credit card debt, personal loans, and unpaid utility bills.
After filing for Chapter 7 bankruptcy, the applicant may have to liquidate nonexempt assets such as property, investments, artwork, or jewelry to pay off creditors. In Pennsylvania, applicants are allowed to choose whether to use the state or federal exemption system.
Federal exemptions may allow people to keep their primary vehicle and some equity in their home. Because state law and federal law often differ on which assets are considered nonexempt, an experienced bankruptcy attorney may help applicants decide which type is best for their situation.
Is Chapter 13 Bankruptcy a Good Idea?
Chapter 13 bankruptcy is a debt repayment option that can be a good option for people struggling with secured debt, such as a mortgage or car loan. This type of bankruptcy allows filers to renegotiate and reorganize debt, usually creating a three- to five-year repayment plan. While Chapter 13 bankruptcy doesn’t eliminate unsecured debt, it will create a repayment plan based on the applicant’s income. This can sometimes mean that only a percentage of their unsecured debt is repaid.
Most importantly, Chapter 13 bankruptcy is a way for filers save their home and other possessions from foreclosure, repossession, creditor harassment, and lawsuits.
How to Decide if Bankruptcy Will Help Your Situation
Deciding whether to file bankruptcy, and deciding which bankruptcy to file depends on a variety of factors, such as the type of debt incurred, household income, assets, and the importance of certain nonexempt property. Notably, bankruptcy will not eliminate tax obligations, child support, and student loans.
If you know anyone who wants to know about their bankruptcy options, advise them to see the counsel of an experienced bankruptcy attorney. At Going and Plank, we help clients review the advantages and disadvantages of debt relief. Contact Going and Plank today if you know someone who is ready for a free consultation to find out if bankruptcy is right for them.
To read more about bankruptcy, check out these articles by Dennis L. Plank,
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The Law Office of Going and Plank is a debt relief agency. We help people file for bankruptcy under the bankruptcy code.