Bethlehem Bankruptcy Lawyer
Bankruptcy is a word that people do not like to use. Despite facing severe financial hardships, many individuals will allow bills to go unpaid, sink further into debt, or lose their home in foreclosure rather than consider filing for bankruptcy. At Young, Marr, Mallis & Associates, we understand the fear that is inspired by that one word. Our sympathetic Bethlehem bankruptcy attorneys also understand the hopelessness associated with overwhelming debt. For many people, bankruptcy is a fresh start, and we will guide you through the process with respect and compassion.
When facing financial hardships, it is often difficult to know where to turn. “Get out of debt” schemes are rampant and could end up costing you more money in the long run. While bankruptcy is not always the best option, it is the only path that legally protects filers from their creditors.
Bankruptcy law can be frightening and complicated, but at Young, Marr, Mallis & Associates, you can trust that we will work with you every step of the way. Whether you need Chapter 7 or Chapter 13, our Bethlehem bankruptcy lawyers are committed to helping alleviate your financial stress. Young, Marr, Mallis & Associates has assisted hundreds of residences of Lehigh and Northampton counties in finding relief from debt on their way to financial freedom. Call (215) 701-6519 to speak with an attorney. Your initial consultation is completely confidential and free.
Types of Bankruptcy in Bethlehem
Deciding whether you want to put an end to your financial stress through bankruptcy is a difficult decision. First though, you will need to choose what kind of bankruptcy you wish to file. Bankruptcies are separated into “chapters” named after provisions in the Bankruptcy Code. In almost all situations, the details of your financial situation will dictate the chapter you can or should file under. In Bethlehem, individuals will generally file under Chapter7 or Chapter 13.
No matter what chapter of bankruptcy you file under, there are general similarities they all share. Before filing bankruptcy, you will be required to take a credit counseling course. This must be provided by an authorized agency and be completed before the case is filed. Additionally, a financial management course is required before a discharge is granted. The timing of the second course depends on the type of bankruptcy filed.
As soon as a bankruptcy case commences, an automatic stay goes into effect. An automatic stay is a legal wall of protection that stops all collection actions against you. Creditors can no longer call you or send you letters, but more importantly, the stay stops all current legal proceedings. For example, an automatic stay will stop a judgment lawsuit or sheriff’s sale. Our bankruptcy attorneys will thoroughly explain all the protections provided by an automatic stay as well as the legal remedies available should any of your creditors violate it.
Chapter 7 in Bethlehem
Chapter 7 bankruptcies are known as “liquidation” or “no-asset” bankruptcies. In many instances, if Chapter 7 would require the sale of property, a debtor may opt to use Chapter 13 instead.
To qualify for Chapter 7, you will have to pass an economic calculation called the “means test.” The means test evaluates your household income along with several expenses and financial obligations to determine if your income is low enough to file for Chapter 7.
Once filed, a court-appointed trustee will administer the bankruptcy. The trustee will review all of the bankruptcy forms you submitted and some of your financial documents, including bank statements, pay stubs, and federal tax returns. The trustee will then determine, based on the information provided, if your property needs to be sold. Before you file, our experienced Bethlehem bankruptcy attorneys will determine how much of your personal property and real estate is protected through either state or federal exemptions. In most Chapter 7 cases, a debtor can keep all of their property.
Chapter 13 in Bethlehem
Chapter 13 bankruptcy will require many of the same documents as Chapter 7, with the addition of a bankruptcy plan. Your bankruptcy plan will propose a monthly payment plan to satisfy your creditors over three to five years. The type of debt you have, along with your financial ability, will determine the monthly payment.
One of the benefits of Chapter 13 is that it will stop a foreclosure or scheduled sheriff sale. If you have fallen behind on your mortgage payments and your home is either in foreclosure or scheduled for sheriff’s sale, a successful Chapter 13 filing allows you to maintain possession of your property. Once your home is in foreclosure, you usually need to pay the full amount you owe, plus attorney fees, to stop a sheriff’s sale. If you can show you can afford the monthly payment, Chapter 13 allows you five years to pay the delinquency.
Chapter 12 bankruptcy is similar to Chapter 13 but it is specially designed for family farms or fisheries. While classified as a business filing, Chapter 12 is much less expensive and complicated than filing Chapter 11, or business bankruptcy. To qualify for Chapter 12, 50% of your gross income must be from farming and 50% of your debt must be related to your business operations. Chapter 12 can be a powerful tool for Lehigh Valley families to protect their farms.
Benefits of Filing for Bankruptcy in Bethlehem, PA
Deciding to file for bankruptcy is never easy. However, because it is governed by federal law, bankruptcy offers many advantages that are not available in other debt relief options.
The Automatic Stay
Under state and federal law, creditors have many tools available to pursue the collection of a delinquent debt. For example, a creditor could obtain a court ordered judgment to access the funds in your bank account. In New Jersey, your wages could be garnished, while in Pennsylvania, your home could be subject to a judgment lien.
As mentioned earlier, when you file for bankruptcy, an injunction goes into immediate effect that limits the rights your creditors have to collect on a debt. Commonly called an automatic stay, this injunction will stop all legal action against you. This means any pending lawsuit will stop in its tracks. For instance, if you file for bankruptcy on the morning of the day your home is scheduled for a sheriff’s sale, the sale will be stopped. Nonetheless, it is not recommended to wait until the last minute to file a case if you are facing foreclosure.
Returning Repossessed Vehicles
Banks and other lenders have the right to repossess a vehicle the moment someone misses a payment. They are not required to go to court or notify the vehicle owner. If your car is repossessed, you might be able to get it back by filing for bankruptcy. Timing is of the essence in these types of cases. Once your car is sold at auction, bankruptcy will not help you retrieve the vehicle.
Lowering Car Payments
In some Chapter 13 cases, it might be possible to lower the amount of money owed on your car loan. Because cars begin depreciating the moment they are driven off the lot, many people end up owing more than their vehicle is worth. If you purchased your car 910 before you filed for bankruptcy, you might be able to cram down your car payment to its fair market value. Imagine your car is worth $5,000 and you still owe $9,000 under the original contract. Under this rule, you could cram your payment down to $5,000, discharging the remaining $4,000 balance. While not every debtor can take advantage of this provision in the Bankruptcy Code, our Bethlehem bankruptcy lawyers will carefully review the facts in your case to see if your payment could be reduced.
Stripping Second Mortgages
Many homeowners have second mortgages on their homes. When property values drastically decrease, a homeowner could find themselves with a house that is worth less than what they owe. If your property is worth about the same or less than your first mortgage, it could be possible to strip the second mortgage and discharge the remaining balance in a Chapter 13 bankruptcy.
No Tax Consequences
Some people decide to work with their creditors to settle their debts without filing for bankruptcy. In some cases, a creditor will accept less than the total amount due. However, when this occurs, any forgiven debt is considered income for tax purposes. If you settle a $30,000 debt for $15,000, you will owe federal tax on $15,000 of additional income. This amount could cost you your refund or result in significant tax debt. When $30,000 is eliminated through bankruptcy, it is not considered income. Therefore, there are no further tax obligations.
These are just a few of the additional benefits in addition to the ability to eliminate or restructure your debt. Once you sit down with one of our Bethlehem bankruptcy attorneys to thoroughly review your case, we will be able to further explain the other benefits and advantages of filing for bankruptcy.
Why and When to File for Bankruptcy in Bethlehem
Filing for bankruptcy is a personal decision. However, that does not mean you have to make the decision alone. At Young, Marr, Mallis & Associates, our compassionate and pragmatic attorneys are available to help you in making the best decision given your circumstances. We will work with you to review your financial situation and your goals to help you determine if filing for bankruptcy is beneficial.
Bankruptcy is not always the best option. If you owe $2,000 in credit card bills, filing for bankruptcy is probably unnecessary. If you have no income and your house is in foreclosure, filing for bankruptcy will most likely not help you keep your home. However, in many other cases, bankruptcy is the best option available. For people overwhelmed with debt and limited income, filing Chapter 7 could be the fastest way to start improving their credit score and financial situation. If you can afford your mortgage payment but cannot pay the full amount you are behind, filing for bankruptcy could give you the time you need to catch up while staying current with your other obligations.
Timing is also important. Part of the bankruptcy process is the means test. The means test is used to calculate a debtor’s current monthly income (CMI) and disposable monthly income (DMI). CMI will determine if a person is eligible for filing Chapter 7 and DMI is one factor that will dictate the amount someone must pay through Chapter 13. Because the means test looks at the previous six months of income, it might be advantageous to wait a few months if there is an expected change in income. For instance, if you expect a decrease in pay, it would be better to wait until you are receiving the lower-income to file – you could qualify for Chapter 7 at that time. Our Bethlehem bankruptcy lawyers will examine your situation closer to help advise you on the timing of your case.
Call Our Experienced Bethlehem Bankruptcy Lawyers Today
If you or a loved one is considering filing for bankruptcy in Bethlehem, contact Young, Marr, Mallis & Associates. Call (215) 701-6519 to speak with one of our attorneys; your initial consultation is completely confidential and free. For over 20 years, we have provided aggressive, affordable bankruptcy representation to clients in Bethlehem and throughout the Lehigh Valley. It is time to take a positive step towards financial freedom with Young, Marr, Mallis & Associates.