Bristol Township, PA Bankruptcy Lawyers

When economic times get tough, the amount of debt the average family holds increases. Unfortunately, it seems that more and more often, the debt burden is too much for families and individuals.

In many cases, the excessive debt stems from an illness or another medical emergency. A Nerdwallet Health study reported by CNBC identifies medical debt as the most prevalent reason for bankruptcy in the U.S. The study estimates that in 2014, nearly 2 million people will file for medical bankruptcy. However, there is a silver lining to this national crisis. That is, bankruptcy can offer a way out of an unsustainable debt burden, including unsecured medical debts. An attorney can advise you on the pros and cons of bankruptcy. While it might solve many of your debt problems, there are some drawbacks you must be made aware of. Chapters 7 and 13 are common choices, but other chapters might be better suited to your needs.

Before making any decisions regarding bankruptcy, contact our experienced bankruptcy attorneys at Young, Marr, Mallis & Associates, LLC. Call (215) 701-6519 for a free case review.

Pros and Cons of Filing for Bankruptcy in Bristol Township, PA

People often view bankruptcy as a bad thing. It is sometimes thought of as a punishment that applies to people who make serious financial mistakes. While the bankruptcy process can be embarrassing, it is not a punishment. In fact, bankruptcy is a legal solution designed to help people escape crippling debt and start over with a clean slate.

Benefits to Bankruptcy

Filing for bankruptcy comes with numerous benefits and advantages. First, when a person files for bankruptcy, the court will initiate something called an automatic stay. The automatic stay legally prohibits creditors, lenders, and servicers from contacting you about paying your debts. This can be a huge relief for people being bombarded and harassed by bill collectors.

Additionally, the automatic stay halts legal proceedings that might be filed or are currently pending as they relate to your financial situation. For example, if the bank wants to foreclose on your home, they cannot do so while the automatic stay is in place.

Another benefit is that many debts may be discharged. When the court discharges debts, you are no longer legally liable for paying them. They are essentially erased. Not all debts may be discharged. For example, money owed to the government such as back taxes or court-ordered payments for things like alimony or child support, usually cannot be discharged. However, credit card debt, medical bills, and similar debts may be discharged.

Downsides to Bankruptcy

While bankruptcy is indeed a solution rather than a punishment, it is not without drawbacks. First, when someone files for bankruptcy, they might lose various assets or properties. Depending on how you file for bankruptcy, as detailed below, your assets may be liquidated, and the proceeds used to pay some of your debts. People often lose their cars, homes, and other assets or accounts to bankruptcy.

Perhaps the most well-known disadvantage of bankruptcy is that it takes a serious negative toll on your credit. After bankruptcy, your credit score will likely take a pretty big hit. People often spend more than a few years rebuilding their credit. This can make it hard to get approved for loans for important things like buying a house or paying school tuition.

Future financial opportunities might be hindered by having bankruptcy on your record. For example, if you want to start a business, the bank where you apply for a business loan will review your credit history. When they see you have previously filed for bankruptcy, they might deny you the loan.

What are the Benefits of Bankruptcy in Bristol Township, PA?

In general, the greatest benefit of bankruptcy is that it can eliminate or allow you to pay down your debt. Bankruptcy can handle many types of debts, including unsecured, credit card, and medical debts. Agreeing to experienced representation as part of a bankruptcy filing can also stop credit calls through two means. To begin with, as a represented party, your creditors may only contact you through your agent – the attorney.

Furthermore, the automatic stay goes into effect when you file for bankruptcy. The automatic stay prohibits a creditor from beginning collection attempts against you. While stopping creditor calls should not be your sole reason for declaring bankruptcy, it is a very welcome additional benefit.

Understanding Chapter 7 Bankruptcy in Bristol Township, PA

Chapter 7 bankruptcy is sometimes referred to as liquidation. However, despite the name, it doesn’t mean that you will necessarily lose everything. The liquidation process will not be applied to certain exempt properties as per the state or federal bankruptcy exemptions.

Property that is liquidated is sold by the bankruptcy trustee and those proceeds are distributed to your creditors. At the end of the liquidation process, provided that creditors do not object, you will likely be granted a bankruptcy discharge. This means that the remainder of your dischargeable debt is wiped away and is no longer collectible by creditors. In fact, if a creditor continues to try to collect a discharged debt, you may have a claim against them under the FDCPA.

However, to qualify for Chapter 7, you must be able to satisfy the means test. An experienced attorney can analyze your financial situation and advise you as to whether Chapter 7 bankruptcy is a good fit.

How is Chapter 13 Different in Bristol Township, PA?

When compared to Chapter 7, Chapter 13 may not offer immediate debt relief. However, for many individuals, the unique features of Chapter 13 can potentially lead to a more favorable outcome. A Chapter 13 plan is not a liquidation – rather, it is somewhat similar to a debt consolidation but comes with much greater consumer protections than a simple consolidation.

A Chapter 13 plan generally requires the debtor to make payments to their creditors for 3 to 5 years, with the actual duration of the plan being dependent upon your particular financial circumstances. People agree to this more lengthy process because they receive greater asset protections than under Chapter 7 bankruptcy.

Bankruptcy and Discharging Debts in Bristol Township, PA

One of the biggest advantages of filing for bankruptcy is that the court might discharge some of your debts. As discussed above, when debts are discharged, you are no longer liable for paying them. For example, if the court decides to discharge $5,000 in credit card debt, you are no longer legally required to pay that money back to the credit card company.

While discharging debt can be beneficial to those financially struggling, not all debts may be discharged.

Debts that can be discharged may include credit cards, medical debt, utilities, certain business debts, and past-due rent. Debts that cannot be discharged may include secured debts like a mortgage or car loan, student loans, and debts incurred from criminal activity or fraud. It is also important to note that the debts that are discharged may vary depending on which bankruptcy chapter you file under.

When to Consider Filing for Bankruptcy in Bristol Township, PA

Bankruptcy is not a decision people make lightly, but when exactly is the right time to make this decision? People sometimes resist filing for bankruptcy when they should be speaking to an attorney about how to begin the process.

The right time to begin the bankruptcy process depends on your unique circumstances. If your debts are extremely high and you do not have the income to pay them, now might be the time to talk to a lawyer. Even if you have a high income, your debts might still be more than you can manage. Talk to a lawyer if you find yourself only able to make minimum payments or cannot make payments at all.

We should also consider whether any legal action is pending against you related to unpaid debts. For example, the bank might be ready to initiate foreclosure proceedings if you have missed too many mortgage payments. Filing for bankruptcy might help you stall the foreclosure process until your finances are back in order. Many people are actually able to keep their homes because of bankruptcy.

Our Bristol Township, PA Bankruptcy Lawyers Can Help

Young, Marr, Mallis & Associates can provide trusted and strategic bankruptcy representation for those in Bristol, Bucks County, and beyond. For a free case review, call (609) 755-3115 in New Jersey or (215) 701-6519 in Pennsylvania or contact us online.