Chapter 7 Bankruptcy Timeline, Part 1: Chapter 7
Chapter 7 bankruptcy is a legal process designed to provide individuals and businesses with a fresh start by eliminating their debts. It is one of the most common forms of bankruptcy that people can file for. It can offer a relatively swift resolution to overwhelming economic burdens.
Still, the process for filing for Chapter 7 bankruptcy can be complex. There are many steps that you must complete before your debts may be discharged. Accordingly, it can be crucial to have legal representation on your side when navigating the process.
Get help from our experienced Pennsylvania bankruptcy lawyers at Young, Marr, Mallis & Associates today by calling (609) 755-3115.
How is Chapter 7 Bankruptcy Different from Chapter 13 Bankruptcy in Pennsylvania?
Chapter 7 bankruptcy and Chapter 13 bankruptcy are two distinct forms of bankruptcy that individuals and businesses may file for in Pennsylvania. Each type serves different purposes. Support from our Bensalem bankruptcy lawyers can be highly valuable when determining which form of bankruptcy is best for you.
Chapter 7 Overview
Chapter 7 bankruptcy is sometimes referred to as liquidation bankruptcy. It is designed for individuals or businesses with limited income and assets. If you file for Chapter 7 bankruptcy, then a trustee will be appointed to sell your non-exempt assets and use the profits to pay your creditors. You will be allowed to keep certain exempt property, like your primary residence, necessary clothing, and basic household goods. This form of bankruptcy can provide a fresh start by discharging many unsecured debts, such as credit card debt and medical bills. Still, other debts like student loans, child support, and tax obligations cannot be discharged through Chapter 7 bankruptcy.
Chapter 13 Overview
On the other hand, Chapter 13 bankruptcy is often described as reorganization bankruptcy. This is an option for individuals who earn regular income and wish to repay their debts over time. If you file for Chapter 13 bankruptcy, then you will be asked to propose a repayment plan spanning three to five years. The rate of repayment established by your plan will be based on your income and living expenses. The plan consolidates your debts and allows you to make affordable monthly payments to a trustee, who then distributes the funds to your creditors. Chapter 13 bankruptcy is especially helpful if you are facing foreclosure or struggling with tax debts, as it can help prevent the loss of property and allow you catch up on the payments you owe.
Key Differences to Remember
While both Chapter 7 bankruptcy and Chapter 13 bankruptcy offer some form of debt relief, there are key differences to remember. In Chapter 7 bankruptcy, your non-exempt assets may be sold to repay your creditors. Meanwhile, Chapter 13 bankruptcy allows you to keep your property and repay debts over time.
Also, the process for filing Chapter 7 bankruptcy is generally quicker, sometimes lasting only a matter of months. On the contrary, Chapter 13 bankruptcy often involves a longer commitment to your repayment plan.
Consult with a Pennsylvania Chapter 7 Bankruptcy Lawyer
Filing for bankruptcy can be a difficult task without legal representation. Our team can assist with each of the following steps of the process:
Attend Credit Counseling
Credit counseling is a mandatory requirement must be completed when filing for Chapter 7 bankruptcy in Pennsylvania. It is a process that helps evaluate your financial situation and explore potential alternatives to bankruptcy.
You must undergo credit counseling within 180 days before you file for Chapter 7 bankruptcy. Your counseling has to be conducted by an approved agency. The agency will review your income, expenses, and debts to determine your financial situation. They may also offer information about budgeting, debt consolidation or debt management plans.
Once your credit counseling is finished, the agency will issue you a certificate of completion. You must present this certificate when filing your petition in bankruptcy court. Without the certificate, you cannot proceed with a Chapter 7 bankruptcy filing.
File with Bankruptcy Court
If you have completed credit counseling, then you can then attempt to file with bankruptcy court. This process will involve completing the necessary forms. Bankruptcy forms require detailed information about your finances, assets, debts, income, expenses, and recent financial transactions.
You may submit your completed bankruptcy forms to the bankruptcy court in your jurisdiction. Please note that you will likely be asked to pay a filing fee. If you cannot afford the fee, then you may request a waiver.
Trustee is Assigned
After filing with bankruptcy court, a trustee is assigned to your case. When a trustee is assigned, their role is to oversee the administration of your estate and ensure that the bankruptcy process is performed in accordance with applicable laws.
Can I Keep Property After Filing for Chapter 7 Bankruptcy in Pennsylvania?
In Chapter 7 bankruptcy, your property may be repossessed and sold to pay your creditors. However, there is certain property that is exempt from repossession. Common examples include exemptions for your primary residence, for vehicles, for basic household goods, for clothing, and for retirement accounts.
Federal Property Exemption Limits
The government has established certain property exemption limits. For instance, as of 2023, you are only permitted to exempt up to $14,875 in household goods. Furthermore, you may only protect $4,450 worth of equity in your motor vehicle. Our legal team can review your case to determine which federal property exemption limits may apply to you.
Statement of Intention
In a Chapter 7 bankruptcy case, a statement of intention is a document that outlines your plans for dealing with secured debts, specifically assets that serve as collateral for loans like car payments or a mortgage. The statement of intention lets the bankruptcy court, the trustee, and the creditors know about how you aim to handle your debts during the bankruptcy process.
How Long Does Chapter 7 Bankruptcy Take in Pennsylvania?
The length of time it takes to resolve your Chapter 7 bankruptcy case in Pennsylvania can vary depending on multiple factors. These factors can include the complexity of your case, the workload of the applicable bankruptcy court, and any unforeseen circumstances that can arise. Still, the timeline for a Chapter 7 bankruptcy case in Pennsylvania usually lasts from five to seven months.
After filing with the bankruptcy court, you will be asked to attend a meeting of creditors. This meeting permits the bankruptcy trustee and creditors to question you about your financial affairs. Having legal representation by your side during your creditors meeting can be crucial to having your interests protected. These meetings will usually take place approximately six weeks after filing. After the meeting, 30 days will be allotted for potential objections.
The liquidation process refers to the sale and distribution of your non-exempt assets. The funds from these sales will be used to repay your creditors. Typically, this process will be initiated approximately five to six months after filing with the bankruptcy court.
Our Pennsylvania Chapter 7 Lawyers Can Streamline the Bankruptcy Process
Get support from our experienced Philadelphia bankruptcy lawyers by calling Young, Marr, Mallis & Associates at (609) 755-3115.