5 Things to Do Before Filing for Bankruptcy

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

For Lancaster County residents who are struggling with debt, filing for bankruptcy may be a wise choice that can put them back on solid financial footing. Here are five things to do before making that decision:

1. Identify Debts and Determine if Bankruptcy Will Help

Bankruptcy can be a wise option for debt relief, but it’s not for everyone. For those who are struggling with unsecured debt, such as credit card debt, medical bills, personal loans, and unpaid utility bills, filing for bankruptcy can offer total debt forgiveness. Bankruptcy can also help those who have fallen behind on secured debt, like mortgage payments and car loans. However, there are certain debts that bankruptcy typically will not eliminate, except in rare cases, including child support and alimony obligations, student loans, and tax debt. If the bulk of debt falls under one of those categories, then filing for bankruptcy probably doesn’t make sense.

2. Make Sure Pennsylvania’s Residency Requirements are Met

Although bankruptcy is governed by federal law, each state has its own set of rules and exemptions regarding what property is legally protected and how bankruptcy laws are interpreted. Although a debtor might find it more beneficial to file bankruptcy in one state rather than another, they must meet certain residency requirements.

If a Pennsylvania resident has lived in the state for fewer than two years, then they must file bankruptcy in the state where they have lived at least 91 out of the 180 days preceding the filing date. Lancaster County residents are in the jurisdiction of the United States Bankruptcy Court for the Eastern District of Pennsylvania.

3. Understand Credit Counseling Requirements

Before filing for bankruptcy in Pennsylvania, debtors must prove that they have completed credit counseling within the previous 180 days.

Credit counseling is a federal requirement designed to review the type of debt and other debt management options for relief to determine if filing for bankruptcy is the right choice. Additional debtor education is required later in the bankruptcy process. Failure to meet counseling requirements can result in the dismissal of a bankruptcy case.

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4. Learn Bankruptcy Filing Requirements and Benefits

In addition to the certificate verifying credit counseling, filing for bankruptcy requires numerous other documents outlining financial information, debts, and assets. Gathering that information will also help determine whether Chapter 7 or Chapter 13 bankruptcy is the best option and, in the case of couples, whether they should file a joint bankruptcy or individual bankruptcies.

Chapter 7 makes more sense for Pennsylvania residents with lower incomes and substantial unsecured debt, such as credit card debt. For those with higher incomes who have fallen behind on secured debt, such as a mortgage, Chapter 13 can prioritize debt and design a repayment plan based on income.

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Married couples can double their exemptions when filing jointly in Pennsylvania. Joint filing can also result in significant savings in court filing fees and attorney fees. However, in cases where one spouse holds the majority of the debt or separately owns a large number of unprotected assets, it may make more sense to file individually.

5. Hire an Experienced Bankruptcy Attorney

An experienced bankruptcy lawyer can help clients determine if bankruptcy is the right choice or if alternative forms of debt relief make more sense. If bankruptcy is the best option, an attorney can activate an automatic stay that will stop collections and prohibit creditors from pursuing any collection activity, including telephone calls, attachments, and the filing of lawsuits.

A bankruptcy lawyer can also handle the complicated filing process, protect important assets, create structured payment plans to pay off any remaining debt, and map out an improved financial future. For more information about filing for bankruptcy, contact Going and Plank in downtown Lancaster.

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

Want to find out more about Bankruptcy in Lancaster County? Read these articles and blogs:

When is Bankruptcy a Good Option?

The Pros and Cons of Chapter 7 Bankruptcy

7 Ways to Deal With Debt

5 Questions to Ask When You’re Considering Bankruptcy

Chapter 7 Bankruptcy in Pennsylvania

Or click here to discover an even wider range of legal topics in our legal blog.

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.

The Law Offices of Going and Plank are located in downtown Lancaster, PA. We are proud to participate in the Hyatt Legal Plan.

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