Dauphin County, PA Bankruptcy Lawyers
For 20 years Young, Marr, Mallis & Associates has worked with hard-working Pennsylvanians who have suffered a setback, and as a result, have unfortunately suffered a financial disaster. Regardless of the reasons for your financial trauma, bankruptcy can offer financial relief and a pathway to good financial health. We have handled over 5,000 bankruptcies and provide clear, experienced representation.
The purpose of bankruptcy is to provide the honest hard-working individual a second chance should they fall on hard times. Bankruptcy can discharge, wipe clean, many types of debt. For instance, Chapter 7 bankruptcy can usually provide relief for credit card debt. If you are feeling overwhelmed with debt or facing foreclosure, contact our Dauphin County, PA bankruptcy attorney today. Call Young, Marr, Mallis & Associates at (215) 701-6519 to schedule a free consultation.
The Automatic Stay
While the automatic stay should never be your lone reason for selecting bankruptcy, many clients do report that it is an added bonus. The automatic stay is a feature of bankruptcy that is triggered when an individual files for bankruptcy. It automatically stops many types of debt collection activity.
What this means to you is that creditors cannot begin new collection activities against you. The importance of this court injunction, which an automatic stay legally is, cannot be understated. Collection activities that are prohibited while you are under the protection of bankruptcy include phone calls, letters, bills, automatic deductions, wage garnishments, bank account freezes, repossessions and any legal action taken through the courts. By filing for bankruptcy, you can stop legal collection proceedings, such as a foreclosure on your home.
Further, because you are represented by an attorney, current collectors become prohibited from calling you when they learn that you are represented by an attorney. If they continue to call you after they are made aware, have used profane language, or implied that you have committed a crime they may have violated provisions of the Federal Debt Collection Practices Act (FDCPA) and you may have a cause of action against your creditor.
Types of Bankruptcies Available in Dauphin County
Every person’s financial situation is unique and every bankruptcy will present its own benefits and challenges. Most people who file for bankruptcy in Dauphin County, PA will file for either Chapter 7 or Chapter 13. While many people will be able to pick which type they wish to file for, in many cases, the petitioner’s circumstances will dictate which chapter is necessary.
Two primary factors determine what type of bankruptcy a person is eligible to file. The first is their monthly household income. It is important to stress that the bankruptcy calculation, known as the means test, includes all household income, even if only one person is filing for bankruptcy. This means that if a couple is married, both incomes are included, even if only one spouse is filing. However, the means test does consider the size of the household. If your household income is below the median average for your area, then you are eligible to file for Chapter 7. If not, you might have to file for Chapter 13. Our experienced Dauphin County, PA bankruptcy attorney will explain how someone whose income is above the income median might still qualify for Chapter 7.
The other concern is why you are filing for bankruptcy. If someone is struggling with credit card debt, then filing a Chapter 7 might make the most sense. However, if you are facing foreclosure, a repossession, or a large tax debt, filing for Chapter 13 will probably be in your best interests. Below, we discuss the pros and cons of each chapter of bankruptcy.
Chapter 7 Bankruptcy in Dauphin County
Despite often being referred to as liquidation, Chapter 7 does not mean that you lose everything. That does not mean that it is not possible. When you file for Chapter 7, all your assets become part of the “bankruptcy estate.” Everything in the bankruptcy estate could be taken and sold by a court-appointed trustee. The proceeds from the sale would be distributed among your creditors. However, bankruptcy could hardly be considered a fair and fresh start if it left people penniless and without assets.
Instead, the Bankruptcy Code makes allowances, or exemptions, for certain classes of goods that you are all allowed to keep. Because Pennsylvania permits you to select either the state or federal exemptions, the type a debtor will pick will depend on the kind of property the debtor owns. In some instances, the federal bankruptcy exemptions may be able to protect your home. This is especially true when a married couple files jointly because the federal guidelines then permit doubling of the exemption. This means that the $23,675 in equity an individual would be permitted to protect normally doubles to $47,350 – a number that is slightly more reasonable. Likewise, the amount would double for exemptions, including a motor vehicle, jewelry, household goods and appliances, and tools of the trade.
Chapter 7 is intended for people facing overwhelming unsecured debt who have few assets and limited income. The primary benefit of Chapter 7 is the elimination of most of your debt within five or six months. However, if you are facing a home foreclosure, filing for Chapter 7 might not provide the relief you are seeking. While the legal process could be slowed down some, there is no mechanism in Chapter 7 to save your home from a sheriff’s sale.
Furthermore, all debt is not dischargeable. For example, many types of taxes will survive a Chapter 7 bankruptcy. For instance, alimony and child support will not be eliminated. Student loans are also not usually dischargeable through bankruptcy. Our experienced Dauphin County attorney can help you determine if Chapter 7 is a good solution for your financial problems.
Chapter 13 Bankruptcy in Dauphin County
In other financial situations, Chapter 13 may appear to be a better option. Chapter 13 plans are sometimes referred to as a reorganization or a wage earners plan. Chapter 13 allows people to keep more property at the expense of the instant relief offered by Chapter 7. In fact, many people are able to keep a significant portion of their assets. Under a Chapter 13 plan, your attorney prepares and proposes to the court a three to five-year repayment plan. If approved by the bankruptcy court the individual agrees to faithfully pay the repayment agreement for it due course. In many cases, Chapter 13 can establish strong saving and spending practices and assist people in returning to financial health with new skills and a favorable balance sheet.
Many people who would prefer filing for Chapter 7 are required to file for Chapter 13 because of their income. While at first the idea of having to complete a reorganization plan might not sound beneficial, it is often the fastest and most efficient way to pay off your debt.
The amount of unsecured debt a petitioner must pay through a Chapter 13 bankruptcy is prescribed by a complicated formula. This means that you do not have to negotiate with your creditors and you probably will not have to pay back everything you owe. For example, a debtor with $80,000 in credit card debt files for Chapter 13 and, according to the formula or Means Test, must pay $320 a month towards their debt. Through this bankruptcy, only $21,000 out of the $80,000 debt will be paid. The remaining balance will be discharged.
In many cases, filing for bankruptcy is a better option than attempting to settle with a creditor. An additional benefit is that any discharged debt carries no further tax obligations. If a creditor forgives debt outside of bankruptcy, the debt you do not pay is considered income and you will owe federal income tax on the amount.
The other primary reason people file for Chapter 13 is to stop a foreclosure or a sheriff’s sale of their home. While Chapter 7 will slow the process down, Chapter 13 allows a homeowner to keep their home by paying their mortgage arrears through the bankruptcy plan. If they also qualify for Chapter 7, then they could save their home while discharging their other debt. Often, this ability to lower and eliminate other monthly payments makes saving their home manageable.
Chapter 13 also allows you to keep other secured assets if you have fallen behind on payments. For instance, you could stop a car repossession and pay what you are behind through your bankruptcy plan. In some cases, you might be able to reduce the total amount you owe on your vehicle to the fair market value. Our knowledgeable Pennsylvania bankruptcy attorney will review any car payments you might have,
The main difficulty with a Chapter 13 bankruptcy is that it must be funded. People filing for bankruptcy are usually suffering from some financial misfortunes. Many people who have fallen behind on their mortgage have done so because they simply do not have the funds to keep current with their monthly payments. A Chapter 13 bankruptcy is not easy – making your mortgage payment along with an additional trustee payment might sound impossible. However, as stated above, bankruptcy could provide relief from other monthly obligations. Our compassionate attorneys understand the difficulties debtors face and will work closely with you so you understand the process and your job.
Our Dauphin County, PA Bankruptcy Lawyers Can Help
Bankruptcy is a powerful financial tool, but it is also one that should be used wisely. An experienced bankruptcy attorney like those at Young, Marr, Mallis & Associates can assist you in making that decision. And if bankruptcy is right for you, we handle every step of the process. Call us today at 1(609) 755-3115 in New Jersey or (215) 701-6519 in Pennsylvania or contact us online for your free initial consultation.