Allentown, PA Bankruptcy Attorney
Anyone can suffer economic hardships when life’s difficulties arise. Many bankruptcies are filed in Pennsylvania and Allentown for medical issues — either due to high health care costs or time spent out of work due to an illness. Other reasons for filing for bankruptcy include unaffordable mortgages, foreclosure, student loan increases, divorce, or separation. Regardless of the reason why your finances are suffering, Allentown residents have top legal assistance at their disposal.
If you are thinking about filing for bankruptcy in Allentown, you should not begin this challenging and sometimes confusing process without the guidance of a qualified attorney. At the law offices of Young Marr & Associates, our seasoned lawyers have over 20 years of experience handling all types of consumer bankruptcy cases, including Chapter 7 and Chapter 13. Our bankruptcy law firm has represented over 5,000 clients across Pennsylvania, including across Lehigh County.
Why Do I Need a Bankruptcy Attorney?
For most of us, this would not be the time to hire anyone as you cut all expenses. However, having an attorney representing you can make a significant difference in the outcome of your bankruptcy. There are times when you need an experienced and knowledgeable professional working at your side – the same way you would seek out the help of a trained doctor or qualified mechanic.
To begin with, bankruptcy law is exceptionally technical and convoluted in that the U.S. Bankruptcy Code provides formulas intended to strike a balance of fairness between the creditors’ rights and the amounts you can discharge. Debtors must interpret and strictly adhere to not only the U.S. Bankruptcy Code but also the applicable Pennsylvania bankruptcy legal standards, rules, and regulations. Many times, a case could be dismissed practically before it has begun if a debtor fails to file the correct schedules or forgets to provide all required documents.
In many cases, there are variations between Pennsylvania and federal bankruptcy rules, and certain options are more favorable than others. For example, a debtor may be unsure as to whether they should file in accordance with the exemptions allowed by Pennsylvania or the exemptions allowed by the federal government. This is a complicated decision, and your Allentown bankruptcy attorney can help you choose wisely.
Additionally, if a debtor makes an error at any point during the bankruptcy process — which in some cases, can last for as long as five years — their entire case could be hurt, converted to a different chapter unexpectedly, or even dismissed.
Common examples of mistakes made by debtors who file without an attorney (known as filing pro se) include forgetting to list a creditor, incorrectly filling out bankruptcy documentation and missing deadlines. Moreover, there is a lot at stake for you, and creditors can bring in lawyers who can propose to the judge actions that can be detrimental to your interests. If you are filing for bankruptcy to stop a foreclosure or sheriff sale and make an error, you could permanently lose your home. Vacating a sheriff sale in Pennsylvania is exceedingly difficult and often not possible. Our qualified Allentown bankruptcy attorneys understand the legal concepts and can defend your rights aggressively.
Remember, filing for bankruptcy is only the beginning. If you are filing for Chapter 7, you will have to provide certain documents to a court-appointed trustee and attend a 341 Meeting. You must also comply with several requirements to ensure your discharge order is entered. In Chapter 13, you must propose a bankruptcy plan that adheres to the bankruptcy rules and addresses your creditors’ claims. Furthermore, there are many potential post-filing motions and hurdles that you will encounter depending on the unique factors of your case. In most situations, it is more challenging and costly for an attorney to fix mistakes and problems with a bankruptcy case than having one representing you from the beginning.
In addition, there are regulations governing the bankruptcy legal costs that we can explain at greater length when you meet with us. At Young Marr & Associates, we are sensitive to our bankruptcy clients’ financial concerns. We offer affordable representation with flexible options for payment. You do not want to find yourself paying higher bankruptcy litigation costs due to an avoidable mistake.
Which Type of Bankruptcy Should I File For?
Bankruptcy is not one-size-fits-all. Instead, there are different types of bankruptcy that will fit your unique situation, depending on your assets and types of debt. The categories of bankruptcy are called “chapters,” as specified in the U.S. Bankruptcy Code. In consumer bankruptcy, there are two main chapter categories:
- Chapter 7 bankruptcy, also known as liquidation
- Chapter 13 bankruptcy, known for following a payment plan
The type of bankruptcy you choose is not always a matter of personal preference. The type you should file for is largely determined by the “means test.” The means test is essentially a calculator that measures financial variables like median household income to determine whether Chapter 7 or Chapter 13 is a better fit for a given debtor. However, there are some cases in which an individual who qualifies for Chapter 7 may want and be able to file under Chapter 13. An experienced Allentown, PA, bankruptcy lawyer can advise you about the pros and cons of each.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a fast-moving process which is often completed in four to six months. Chapter 7 is also called liquidation, because some debtor assets may be sold off to creditors as a way to help cover their debts. However, many debts can be erased in Chapter 7, including medical bills, credit card bills, and utility bills. Chapter 7 bankruptcy is based on financial need.
There are some common misconceptions regarding Chapter 7. First, many people believe they will not qualify because of their income. While there is an income requirement, many people fall within the prescribed range. Your income might appear too high in many cases once you include your family members and your qualified expenses, such as a mortgage payment or a car loan. For bankruptcy purposes, however, your disposable income will be below the average median.
People also fear losing their property, especially their car or home. Our Allentown bankruptcy attorneys will work with you so this does not happen or offer alternative solutions if it is a problem. A debtor has both federal and state protections available that allow them to keep most, if not all, of their property. We will use the available exemptions to prevent your property from being sold by the trustee. In cases where a debtor has non-exempt property, Chapter 13 is an available option.
People often refrain from filing for bankruptcy because they worry about how it will impact their credit score and their ability to make a significant purchase in the future. The truth is, if you are in a position where you are considering bankruptcy, your credit score or ability to make a major purchase is probably already compromised. Filing for bankruptcy will hurt your credit score; however, it also provides one of the fastest ways to establish better credit and raise your score. By eliminating your debt, without any tax consequences, filing for bankruptcy will set you on the path to a more secure financial future.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a much more gradual process, typically taking three to five years for completion. Chapter 13 is also called reorganization because it features a reorganization or repayment plan with creditors. Making these repayments helps debtors hold on to their assets and possessions. Like Chapter 7, Chapter 13 bankruptcy discharges many major categories of debt.
To fully understand Chapter 13, you need to know how the bankruptcy plan works and how debt is categorized in bankruptcy.
First, there are three types of debt in bankruptcy: secured, unsecured, and priority. Depending on a number of factors, your bankruptcy plan will have to address each type of debt. If you are filing to save your home from foreclosure or keep a car out of repossession, the outstanding payments you are behind on are considered secured debt. To keep possession of your property, you must pay the secured debt through your plan. One of the advantages of paying through bankruptcy is that the amount due is frozen as of the time of your filing. This means that your payments will be interest-free. Additionally, many fees and attorneys’ costs are not included in a bankruptcy claim. If a creditor claims that you owe an amount that is inaccurate or fails to provide proof that you owe the debt, our office can file an objection to the claim.
Priority debt is typically unpaid taxes. In rare cases, you can discharge an income tax obligation but, in most bankruptcies, this debt must be paid through your plan. However, some interest and penalties could be dischargeable, lowering your total tax liability.
Unsecured debt includes just about everything else, such as credit card debt, personal loans, and medical bills. What you must pay to unsecured creditors depends on three main factors.
First, the means test calculation could require a specific monthly payment based on your income over the previous six months. The next factor is your non-exempt property. For example, if you have non-exempt property valued at $8,000, you will have to pay that amount to your unsecured creditors. Often, this amount is significantly less than what a debtor owes. It is also important to note that your property’s value is based on its fair market value at the time of filing – not what you paid for it or what it would cost to replace. Our Allentown bankruptcy attorney will ensure that your plan adheres to all rules and regulations.
What Happens to Retirement Savings During a Bankruptcy Filing?
Another concern people have, whether they file for Chapter 7 or Chapter 13, is what will happen with their savings. The answer depends on what type of savings the debtor has, such as retirement accounts or considerable savings and checking accounts with their bank.
All of your qualified retirement accounts are protected. For example, 401k and other retirement accounts that are qualified under the Employee Retirement Income Security Act (ERISA) and will not be part of your bankruptcy estate. Qualified plans generally have withdrawal restrictions based on age. Also, funds in non-ERISA plans are protected for up to $1,362,800 per person under federal law.
Personal savings in a bank account are a different story and could present a challenge. Any cash savings you have are included in the bankruptcy estate and must be protected by an available exemption to keep them. Unfortunately, there is no specific exemption that addresses cash savings in a checking or savings account. That does not mean you cannot protect it. Under the federal exemptions, there is a wildcard exemption. Currently, the wildcard exemption is $1,325 plus up to $12,575 of any unused portion of your homestead exemption. This exemption can be applied to any of your property, including your savings account.
Call an Experienced Allentown Bankruptcy Lawyer
The thought of filing for bankruptcy can be scary. This is especially true if your information is inaccurate or if you have been told some of the prevailing myths concerning bankruptcy. However, in many situations, bankruptcy is the most efficient and cost-effective way to get a fresh financial start. Do not let high-interest rates and fees further increase your debt or let collection actions jeopardize your rights. If you would like to speak with an Allentown bankruptcy attorney about what bankruptcy can do for you, call the law offices of Young Marr & Associates today at (215) 701-6519 to schedule a free legal consultation.