Wilkes-Barre Bankruptcy Lawyer

Bankruptcy is not exactly an ideal option for most people. It is often regarded as the financial option of last resort. However, bankruptcy is not the punishment it is often made out to be. Our legal team can help you determine if bankruptcy can help you.

Talk to a lawyer to determine if bankruptcy can help you in your financial situation. You might be eligible for various bankruptcy chapters depending on the size of your debts, income, and assets. Choosing the right chapter is not a decision to make lightly. There are numerous chapters designed for different financial needs. A lawyer can help you match your specific needs to the appropriate bankruptcy chapter.

You should also discuss the advantages and disadvantages of filing for bankruptcy. For example, many people who file are provided with more time to catch up on mortgage payments via an automatic stay imposed by the court. However, bankruptcy may also have a significant negative impact on your credit.

For a free initial case review regarding your potential bankruptcy case, call our bankruptcy attorneys at Young, Marr, Mallis & Associates at (215) 701-6519.

Deciding Whether Filing for Bankruptcy in Wilkes-Barre is a Good Idea

How does one know if bankruptcy is the right choice? This is a hard question to answer, especially since most people want to avoid filing for bankruptcy at all costs. If struggle with debts and barely get by making minimum payments, you can speak to our bankruptcy lawyers about whether bankruptcy is a good solution to your troubles.

Reviewing Debts and Incomes

First, we should review your debts and income. Most people carry at least some debt, and it is not unusual to have fairly significant debt. For example, anyone who has purchased a home or vehicle is likely carrying a lot of debt and must keep up with monthly payments.

If your income is insufficient to stay ahead of monthly payments on all your debts, it might only be a matter of time until you default.

Assessing Defaults

If you have been struggling with debt for some time, you might already be in default or close to it. At that point, it can be very hard to catch up with payments and turn your situation around. It might be better to file for bankruptcy, have debts discharged, and start over with a clean slate.

Assets You Might Lose

You should also talk to our team about the possibility of filing for bankruptcy if you are at risk of losing important assets. For example, if you fall too far behind on mortgage payments, you risk losing your home to foreclosure. In some cases, filing for bankruptcy actually helps people keep their homes and other property.

When filing, you will need to choose whether you use the state or federal exemptions to protect certain assets. Our attorneys can go over your assets and help you determine which set best protects your house, your car, certain “tools of the trade,” or other assets you need to save.

Selecting the Bankruptcy Chapter That Works Best for You in Wilkes-Barre

There are many different ways to handle bankruptcy. We often think of bankruptcy as a singular legal action, but it is actually many different actions. Choosing the best way to file for bankruptcy is key to getting a fresh financial start.

Chapter 7

A popular bankruptcy option is Chapter 7 bankruptcy. Chapter 7 is sometimes called “liquidation bankruptcy” because the main goal is to liquidate assets and use the proceeds to pay back debts. As such, people who file for Chapter 7 bankruptcy often have property like homes, vehicles, and even some personal belongings sold off by a bankruptcy trustee assigned to their case.

One of the upsides to Chapter 7 is that it tends to be completed relatively quickly. Many cases take only a few short months. By the end, certain remaining debts may be discharged. When the court discharges a debt, you are no longer legally liable for payment.

Keep in mind that not all debts are eligible for discharge, and you should speak to your attorney about which debts you have that are eligible for discharge.

Chapter 13

Another common choice among bankruptcy petitioners is Chapter 13. This is quite different from Chapter 7 as it does not focus on liquidating your assets. In fact, many people who file for Chapter 13 bankruptcy do not lose their assets and property.

The purpose of Chapter 13 bankruptcy is to reorganize debts into a feasible yet aggressive payment plan that usually lasts for several years. You and your lawyer must devise the payment plan, which must then be approved by the court, pending any objections from creditors.

Unfortunately, Chapter 13 bankruptcy tends to take a lot more time to complete. As mentioned, most petitioners who file for Chapter 13 spend at least a few years on their payment plans. If you fall off the plan and miss payments, you might have to redesign the plan or possibly lose important assets.

Like Chapter 7, when your payment plan under Chapter 13 ends, the court may discharge certain debts.

Am I Eligible for Bankruptcy

It can be hard to know when you are at a point where bankruptcy is the best decision for you, but you can assess whether you should qualify for bankruptcy or not. Everyone is generally eligible unless they hit certain disqualifications.

If you are already bankrupt and dealing with another bankruptcy petition, you cannot file a second one. You also cannot file for bankruptcy too close to a previous bankruptcy petition and must wait 6-8 years before filing another Chapter 7 petition or 2-4 years for another Chapter 13 petition.

You also cannot file fraudulently, e.g., when hiding assets or trying to game the system. If you recently spent a lot of money on unnecessary purchases just before filing, it might be considered fraud and disqualify you.

While you can still qualify for Chapter 13, you can be disqualified for Chapter 7 if you do not meet the means test.

What is the Means Test for Bankruptcy?

When filing under Chapter 7, you have to qualify financially. Since Chapter 7 forgives a lot of debt – debt that might otherwise be paid off over time if you used Chapter 13 – they want to make sure that you truly cannot afford reorganization before letting you liquidate.

Under this test, you need to show your income is low enough to get access to Chapter 7. First, if your income has been under the state median for 6 months, you can use Chapter 7.

If it is not, then you can still qualify if your disposable income is low enough. This requires you to subtract out necessary expenses like food, clothes, utilities, housing, and medical costs. If this leaves you with enough to make your minimum payments on debts, then you probably cannot use Chapter 7.

Even if you do not pass the means test for Chapter 7, you can still typically file under Chapter 13 instead. In any case, our bankruptcy lawyers can help you figure out the best option.

What Assets Are Protected from Bankruptcy in Wilkes-Barre?

When filing for bankruptcy, you choose whether to use the state or federal exemptions. Every case is unique, but most cases will end up using the federal exemptions.

Pennsylvania has no homestead exemption unless you own it as tenants by the entirety with your spouse. Plus, the federal limits for other categories of property are simply higher in virtually every category.

Ultimately, there are federal protections up to certain limits for your house, jewelry, other important personal items, items used in your work (e.g., cameras for photographers, guitars for musicians, or power tools for contractors), and certain retirement accounts. There are even some special rollovers, where if you do not use all of your housing exemption, you can use some of it as your “wildcard” exemption to protect cash and bank accounts.

Otherwise, only the unprotected funds and accounts are used to pay off your debts in bankruptcy.

Will Bankruptcy Save My House?

Filing for bankruptcy might save your house depending on what type of bankruptcy you use, how far along into homeownership you are, what your outstanding mortgage looks like, and other factors.

Generally, Chapter 7 wants to liquidate assets you have. If you have paid off a lot of your debt on your house, selling it might help get you out of the hole with other debts. However, if keeping your home is more important, then it might be protected under exemptions that allow you to keep it.

Under Chapter 13, you usually do not have to sell off assets, meaning your house is often safe. If you are behind on your mortgage, that debt might be reorganized along with other debts as part of the bankruptcy process, potentially allowing you to stay there for years to come.

What is an Automatic Stay in Bankruptcy Proceedings?

One of the most important aspects of filing for bankruptcy is that you get an automatic stay against collections efforts. This means nearly all creditors must stop contacting you, stop mailing you collection notices, and let you figure out your case in court.

The bankruptcy process either sells off assets to pay your creditors or reorganizes your debts into affordable pieces, meaning your creditors will get their payments – or however much of them bankruptcy affords them. The automatic stay protects you in the meantime, forcing them to be patient and giving you legal recourse against them.

How Long Does Bankruptcy Take?

Chapter 7 is much faster than Chapter 13. Typically, Chapter 7 bankruptcies can be completed within 6 months in many cases. This is because Chapter 7 sells off a lot of your assets, getting your debts settled more quickly and giving you a fresh start.

Chapter 13 inherently takes longer because you still have to pay off your debts over time. While debts can be reorganized and new monthly payments can be set, you still have to make the payments over time. This can take years.

Advantages and Disadvantages of Bankruptcy in Wilkes-Barre

While people often think of bankruptcy as a punishment for financial mistakes or the mismanagement of assets, this is not true. It is meant to be a solution for those who cannot escape their debts. Even so, there may be both advantages and disadvantages to bankruptcy that you should thoroughly discuss with your lawyer.

Advantages

One of the biggest advantages to filing for bankruptcy is the automatic stay. This order from the court immediately halts any legal proceedings related to your debts and prevents new legal actions from being initiated.

On top of that, the automatic stay should stop creditors from contacting you about payments for debts. This can be extremely helpful for people facing mortgage foreclosure, as the foreclosure proceedings must immediately stop.

Additionally, there may be ways in which you can protect some of your assets during the bankruptcy process. Numerous exemptions allow bankruptcy petitions to exempt or exclude certain property, assets, or accounts from being seized during the bankruptcy process.

For example, the federal homestead exemption under 11 U.S.C. § 522(d)(1) allows you to exempt a certain amount of equity in your home.

Disadvantages

Unfortunately, bankruptcy can be an uncomfortable process for a number of reasons. First, when someone files for bankruptcy, their overall credit will likely take a significant hit.

As such, you might have difficulty securing certain financial opportunities after the bankruptcy process is complete. When creditors see you have a bankruptcy in your credit history, you might have trouble securing a loan or opening other lines of credit.

Depending on the outcome of your case, you might lose important assets. For example, many people end up losing their homes to bankruptcy. While there are ways your attorney can help you try to avoid this, it is sometimes not possible.

Contact Our Bankruptcy Attorneys in Wilkes-Barre for Help Today

For a free initial case review regarding your potential bankruptcy case, call our bankruptcy attorneys at Young, Marr, Mallis & Associates at (215) 701-6519.