Bankruptcy Lawyer in Pennsylvania
Filing for bankruptcy can be a stressful, challenging time. Most people who file for bankruptcy have never done so before and are often unsure of what to expect, what to do, and what will happen to their debts, assets, and credit. But while bankruptcy may have a frightening reputation, filing for bankruptcy is actually a very proactive and responsible step toward financial recovery and the independence and freedom it brings.
Bankruptcy law can be complicated, but at Young Marr & Associates, you can rest assured you’re in good hands. With over 5,000 cases filed, our seasoned bankruptcy attorneys have over 20 years of experience to apply to your case. No matter how complicated, hopeless, or overwhelming your financial situation may seem, our Pennsylvania bankruptcy attorneys have been there before. We have decades of hands-on working knowledge of both Chapter 7 and Chapter 13 individual bankruptcies, and we are committed to walking our clients through every step of the process with compassion and respect, from initial filing all the way to final discharge. For a free legal consultation, call our attorneys today at (215) 701-6519.
Why File for Bankruptcy in Pennsylvania?
The world of bankruptcy is rife with negative myths and misconceptions. Sometimes, false ideas about bankruptcy even deter potential petitioners from filing. This is unfortunate because, for many people, bankruptcy is actually a powerful tool that offers many benefits and protections in addition to the relief from overwhelming debt. In many instances, bankruptcy can be more cost-effective than debt consolidation or debt settlement.
For consumers, there are primarily two basic categories of bankruptcy: Chapter 7 (liquidation) and Chapter 13 (reorganization). Both allow petitioners to discharge or eliminate a wide variety of debts. Depending upon which type of bankruptcy is more appropriate for a petitioner, they may be able to completely eliminate many debts, such as the following:
- Utility bills
- Medical bills
- Personal loans
- Business loans
- Credit card debt
No Taxes for Forgiven Debt
In addition to debt elimination, bankruptcy affords petitioners an additional tax benefit. Canceled or forgiven debt would usually be added to gross income when filing your federal income taxes. That means, for example, that $10,000 of debt forgiveness would require you to report an additional $10,000 of income, increasing the amount of federal taxes you owe. When you file for bankruptcy and get your debt eliminated, the discharged debt does not count as income and does not increase how much you have to pay in taxes.
Protection from Collectors
From the moment a petitioner files for bankruptcy, they are afforded the protection of an “automatic stay.” An automatic stay is a legal wall between the petitioner and their creditors that limits or stops the actions a creditor can take to collect a debt. When an automatic stay is in place, a creditor cannot call a petitioner or send them bills, and all legal proceedings, such as a lawsuit or sheriff sale, are stopped. In fact, next to debt elimination, invoking the power of an automatic stay is one of the chief reasons many individuals opt to file for bankruptcy. Advantages of an automatic stay include the following:
- An immediate stop to collection calls and letters
- Delays against service shut-offs for unpaid utility bills
- Delays against eviction and foreclosure
One of the most persistent and pernicious myths about bankruptcy is that it destroys a petitioner’s credit permanently, and it will never again be possible to purchase a house or car or take out a loan. While it is true that a bankruptcy remains visible on a petitioner’s financial record for a set period of time before disappearing, eliminating outstanding bills and debts through bankruptcy gives petitioners the opportunity to begin again on a level playing field. Once a bankruptcy has been successfully discharged, making timely bill and credit card payments can restore good, healthy credit.
Peace of Mind
Peace of mind may not be quantifiable like debt discharge or credit repair, but for many petitioners, it’s one of the most valuable aspects of filing for bankruptcy. The constant harassment from creditors and worries about the future can often lead debtors to suffer from stress, depression, and anxiety. With the support of a consumer bankruptcy attorney on your side, you can banish creditors and regain the confidence that you are empowered to take control of your finances, your future, and your life.
No-Asset Chapter 7 Bankruptcy in Pennsylvania
At the commencement of the bankruptcy process, a “bankruptcy estate” is created. A bankruptcy estate comprises all of a petitioner’s property, personal items, real estate, and any interests the petitioner may have. Property is defined very broadly and includes things such as interests in lawsuits or potential inheritances as well as things around the house and real property. A bankruptcy trustee can sell property in the bankruptcy estate to pay a petitioner’s debts.
However, there are several exemptions or protections a petitioner can use to keep their property from being liquidated. In many Chapter 7 cases, the entirety of the petitioner’s property will be exempt from liquidation, meaning they will not lose anything they own. These types of bankruptcies are commonly known as “no-asset” bankruptcies. If there are no assets in Chapter 7, then creditors are not paid anything.
Chapter 13 Bankruptcy Plans in Pennsylvania
The most important document filed in Chapter 13 is the bankruptcy plan. A petitioner proposes a plan that includes a monthly payment amount along with a distribution list of creditors. Creditors are categorized into separate classes, and the plan must address each class of creditor.
Creditors with secured claims must be paid, or else the petitioner must surrender the secured collateral. These payments can be paid through the bankruptcy plan if the petitioner is behind on their payments or, if the debtor is up to date on payments, directly to the creditor. For example, if the petitioner is current on a car note, the bankruptcy plan will specify that payments will be made directly to the loan holder.
Priority claims are nondischargeable, unsecured claims, such as tax obligations, alimony, and child support. A bankruptcy plan must provide to pay all priority claims in full.
Unsecured claims are either paid in full, partially paid, or entirely discharged depending on the details of the case. Speak with our experienced Pennsylvania bankruptcy attorneys to evaluate your situation.
Foreclosure and Chapter 13 to Protect Your House in Pennsylvania
It is not uncommon for someone to fall behind on their mortgage payments. A medical condition, the loss of a job or income, or an unforeseen economic hardship can strain limited financial resources. A mortgage company may demand the full amount due if a person falls behind a couple of months. Once the foreclosure process begins, the delinquency increases due to additional attorney fees and other charges. Eventually, a homeowner could lose their property in a sheriff sale.
Chapter 13 can help a petitioner facing a foreclosure. Once a foreclosure proceeding begins, the mortgage company will require payment of the full amount the homeowner is behind. If payment is not possible, the house will be auctioned at sheriff sale. Through Chapter 13, a petition can halt the foreclosure proceedings and stop any scheduled sheriff sale. The petitioner will be afforded the opportunity to begin monthly mortgage payments directly to the mortgage company while paying the delinquency through the Chapter 13 bankruptcy plan.
Tax Issues During Bankruptcy in Pennsylvania
Paying local, state, and federal taxes is a necessity. Outstanding tax obligations can incur increasingly higher interest payments and penalties, creating a substantial financial burden. Bankruptcy can help provide some relief.
Overdue tax obligations can be paid through Chapter 13. A proof of claim filed by a taxing authority will split the debt owed into different categories. The priority portion of the claim, usually the principal amount the petitioner owes, must be paid in the bankruptcy. A part of the amount due may be classified as entirely unsecured and dischargeable.
In some instances, taxes may be completely dischargeable under bankruptcy. However, the petitioner must meet specific criteria: the debt must be income tax debt, the petitioner must have filed a legitimate tax return two years before filing bankruptcy, and the IRS must have assessed the tax return at least 240 days before the filing date of the bankruptcy.
Call Our Bankruptcy Lawyers in Pennsylvania for a Free Legal Consultation
If you or a loved one is considering filing for bankruptcy in Pennsylvania, contact Young Marr & Associates by calling (215) 701-6519 to speak with an attorney. Our consultations are completely confidential, and your initial consultation comes at no charge. For decades, we have provided aggressive, affordable bankruptcy representation to clients throughout Pennsylvania, and we can do the same for you. Get back on the path to financial success today with Young Marr & Associates.