Montgomery County, PA Bankruptcy Lawyer
Bankruptcy is a powerful tool that has helped countless Pennsylvanians regain financial stability and independence. By filing for bankruptcy, you can eliminate debts, prevent debt collectors from pursuing you, and stall or even prevent foreclosure proceedings. In the long term, bankruptcy can also give you the financial freedom you need to start fresh and rebuild better credit. Whether you file for Chapter 7 or Chapter 13, the Montgomery County bankruptcy lawyers at Young Marr & Associates can guide you through every stage of the process with precision, professionalism, and care.
Bankruptcy is more common than you think, with thousands of Pennsylvanians filing every year. However, the bankruptcy process can be difficult to navigate without an attorney to help you. At Young Marr & Associates, we have more than 30 years of experience handling bankruptcy filings throughout Montgomery County. We are here to manage your legal forms, prepare you for hearings, and uphold your rights while we walk you through bankruptcy laws and procedures. For a free consultation about bankruptcy in Montgomery County, call Young Marr & Associates today at (215) 701-6519.
Why File for Bankruptcy in Montgomery County, Pennsylvania?
There are many reasons to file for bankruptcy if you are dealing with persistent financial difficulty. The advantages and benefits of filing bankruptcy are numerous:
Reduce or wipe out debts
Bankruptcy may allow you to shrink or eliminate various debts, including but not limited to credit card debts, medical debts, and business debts. In many instances, bankruptcy is more cost-effective than debt consolidation or negotiating with your creditors directly. Bankruptcy also protects against judgment lawsuits, and under certain circumstances it allows you to remove judgment liens against your property.
Delay or prevent foreclosure
If your home is in foreclosure or there is pending sheriff sale, bankruptcy can stop the legal proceedings, affording you time to pay back the money you are behind. Filing Chapter 13 will put three significant events into effect. First, a bankruptcy will halt any legal proceeding against you or your home, stopping any scheduled sheriff sales. Next, after filing, your mortgage company will begin accepting your monthly mortgage payments again. And finally, you will be able to pay back the money you were behind over five years through a monthly payment to a court-appointed Chapter 13 trustee.
Stop your car from being repossessed
Losing your car can make it hard or impossible to commute, get to school, and move around freely. In some cases, bankruptcy may give you a chance to prevent repossession of your vehicle by repaying loan payments you have missed in the past. A timely filed bankruptcy can sometimes have a repossessed vehicle returned. In certain circumstances, it may also be possible to lower your car payments in bankruptcy.
Strip a second or third mortgage from your home
You may have tapped into the equity in your home to obtain a second mortgage only to watch your property values drop. Many homeowners have watched their property values plummet, finding that they owe more than their house is worth. In certain circumstances, it is possible to use bankruptcy to strip and discharge a second mortgage.
Payback, lower, or discharge your city, state, or federal tax obligations
Back taxes can accrue substantial interest and penalties over years of neglect. Bankruptcy may allow you to pay back the principle and discharge the interest and penalties. In some instances, it may be possible to discharge tax debt entirely.
Prevent debt collectors from garnishing wages, shutting off utilities, or taking other collection actions
A bankruptcy feature called an “automatic stay” pauses all debt collection activity. An automatic stay is a legal wall between you and your creditors. This protection stops your creditors from actively attempting to collect a debt through letters or phone calls, and it stops any legal proceedings such as a lawsuit or foreclosure proceeding. If a creditor wants to lift the stay and collect a debt, they must go through the process of obtaining the court’s approval first.
Get financial space to work on rebuilding your credit
Bankruptcy is designed to wipe out debts and give you a fresh start. Once your debts are under control, you can focus more energy on rebuilding better credit instead of struggling to keep up with bills and expenses.
Types of Bankruptcy in Montgomery County
There are a few different categories of bankruptcy in Pennsylvania. Some are better suited to businesses (called “corporate bankruptcy”), while others are more effective for individuals (called “personal bankruptcy”).
When it comes to personal bankruptcy, most people file either “Chapter 7” bankruptcy or “Chapter 13” bankruptcy, named after different chapters of the U.S. Bankruptcy Code. But how are they different, and which one is right for you?
Differences Between Chapter 13 and Chapter 7 Bankruptcy in Montgomery County
Chapter 7 bankruptcies move more quickly than Chapter 13 bankruptcies, typically taking about four to six months. Chapter 7 bankruptcies are shorter proceedings because, unlike Chapter 13, they do not involve financial reorganization plans.
Before filing Chapter 7 or 13 bankruptcy, you will be required to take a certified credit counseling course. A certificate of completion must be submitted along with the bankruptcy petition at the time of filing. A second debtor’s financial education course must be completed before the discharge is issued. In Chapter 7 the financial education course must be completed within 60 days of the first scheduled 341 meeting. In contrast, Chapter 13 requires that this course be completed before the final trustee payment.
A 341 meeting, or meeting of the creditors, will be scheduled in both Chapter 7 and 13 bankruptcies. You will be required to meet with a court-appointed trustee to review your petition, schedules, and related documents. The role of the trustee is different depending on the type of bankruptcy, but the structure of the meeting is similar in both.
At this meeting, you will be asked to provide identification, usually a driver’s license and Social Security card, and you will need to testify to the truth of the statements and information contained in your bankruptcy filing. Despite the name, creditors rarely attend this meeting.
A court-appointed trustee will administer your bankruptcy case. The role of the trustee will be different depending on the chapter filed.
In Chapter 7, a bankruptcy trustee may liquidate property. However, you can use bankruptcy exemptions to protect certain assets and belongings. These exemptions may allow you to keep your car, your home, and other pieces of property. Our Montgomery County bankruptcy attorneys will review the details of your case to determine if Chapter 7 is the best option.
After a Chapter 7 case ends, it will remain on your credit report for 10 years, at which point it should be deleted from your record. However, you can start rebuilding your credit almost immediately after you file.
In Pennsylvania, the Chapter 7 filing fee is $335. It is possible to qualify for a waiver if you meet certain income criteria.
In Chapter 13 bankruptcies, the trustee administers many aspects of the proceeding. The trustee will review your bankruptcy filing and collect and disburse all payments made according to the terms of your bankruptcy plan. If you fail to comply with any of the bankruptcy requirements, the trustee will file a motion to have your case dismissed and you will be left without the benefits and protections of bankruptcy proceedings.
Chapter 13 bankruptcies take more time to complete than Chapter 7, usually lasting three to five years depending on the details of your case. Chapter 13 takes longer than Chapter 7 because of its reorganization plan, which establishes terms by which you agree to repay certain creditors. Under your bankruptcy plan, you will provide payments to the bankruptcy trustee, who will then distribute your payments to your creditors.
In Chapter 13, your creditors are required to file a proof of claim. The claim will detail the obligation owed along with documentary evidence to support the amount. Each claim filed is considered valid but can be challenged by your bankruptcy attorney. Some reasons for filing objections include failure to provide documentation or time limits under the statute of limitations.
Debts are treated differently in Chapter 13 depending on how they are categorized. Secured debts, such as a mortgage or car loan, will generally be paid directly to the creditor. If there is a delinquency, it will be paid through the bankruptcy plan. Priority debts are non-dischargeable, unsecured debts that must be paid in full. These include tax obligations, alimony, and child support. Unsecured debts encompass just about everything else and will be fully paid, partially paid, or entirely discharged, depending on the details of your case.
Like Chapter 7, Chapter 13 allows you to discharge most debts at the end of your reorganization plan. Dischargeable debts in Chapter 13 bankruptcy include medical bills, credit card debt, personal loans, business debt, and some tax obligations. After Chapter 13 debt is discharged, the bankruptcy will remain on your record for seven years.
Note that the filing fee for Chapter 13 bankruptcy in Pennsylvania is $310.
What Bankruptcy Chapter Should I File Under in Montgomery County, PA?
Which bankruptcy chapter you should file under depends on factors like why you are filing for bankruptcy and when you intend to file. For example, Chapter 13 is appropriate if you are ten months behind on your mortgage and your home is in foreclosure and scheduled for a sheriff sale. However, if you are single, unemployed, renting an apartment, and overwhelmed by years of credit card debt, Chapter 7 might be the fastest way to turn your financial situation around.
Because of the differences between Chapter 7 and Chapter 13, which one to choose also depends on financial factors. Two of the most important factors are how much disposable income you have and how your income compares to the median income in Pennsylvania
Chapter 13 requires you to make regular, timely payments as part of your three- to five-year reorganization plan. This plan will be financed with your “disposable income,” which is any income that is left over after necessary expenses like housing, food, medical care, and taxes. Therefore, if you want to file for Chapter 13 in Montgomery County, you’ll need to show that you have enough disposable income to complete a Chapter 13 plan successfully.
Chapter 13 uses Form B 122C-2 to calculate monthly disposable income. This form uses your monthly income to determine the length of your Chapter 13 bankruptcy and the amount you will be required to pay to unsecured creditors. The calculation evaluates six months of household income along with several standard expenses and specific monthly expenditures, such as a mortgage payment, to determine if there is any disposable income available for unsecured creditors.
Since Chapter 7 does not require debtors to enter a payment plan, it is meant for debtors who have a greater level of financial hardship. Therefore, if you want to file Chapter 7, you will need to show that your income is below the median income in Pennsylvania.
A process called the “means test” will be used to evaluate your finances. To determine whether you qualify for Chapter 7 bankruptcy, the government uses Form 122A-2 (Chapter 7 Means Test Calculation). This bankruptcy form asks questions about your current monthly income, out-of-pocket healthcare allowance, transportation expenses, and other financial matters. If your monthly income falls below a median standard in your area, you may qualify to file for Chapter 7.
Our Montgomery County Bankruptcy Lawyers Can Help
Though bankruptcy may be common, that doesn’t mean obtaining a bankruptcy discharge is a simple or easy task. Bankruptcy law is notoriously complex, which is complicated further by the fact that there are different types of bankruptcy – plus specific differences between state and federal laws. For all of these reasons, it is imperative to work with an experienced Montgomery County bankruptcy lawyer who can guide you through the filing process with precision and skill. At Young Marr & Associates, our bankruptcy attorneys have decades of experience assisting thousands of individuals with Chapter 7 and Chapter 13 in Pennsylvania. For a free consultation, contact our law offices at (215) 701-6519 to get started.