Lehigh Valley, PA Bankruptcy Lawyer
Filing for bankruptcy is never an easy decision. Many people struggle with the idea that their situation requires filing for bankruptcy. However, it is often a decision that brings a level of serenity and calmness into your life. Part of the process of deciding to file for bankruptcy is understanding your financial situation along with the advantages and disadvantages of filing. Our Philadelphia bankruptcy attorneys can help guide you through the challenging process.
The step in determining if bankruptcy is the right option for you is to understand what it is and how it works. Bankruptcy is typically misunderstood. If you are feeling overwhelmed by debt, being sued by your creditors, or if your home is in foreclosure, you need to speak with an experienced attorney.
At Young, Marr, Mallis & Associates, our attorneys and staff have over thirty years of experience guiding our clients through the bankruptcy process. If you feel helpless, hopeless, or just out of options, give our law offices a call at (215) 701-6519. Bankruptcy could give you a fresh start and peace of mind.
Advantages of Filing for Bankruptcy in Lehigh County
Paying bills every month is a challenge for some people. Old credit card debt that does not seem to decrease or medical expenses from an unexpected illness could easily rip through a household’s savings. Creditors will begin charging late fees, interest will accrue, and you could find yourself inundated by unwanted phone calls, letters, and emails. In the worse situations, you could find yourself being sued by one or more of your creditors.
If you file for bankruptcy, you put an immediate halt to everything listed above and more. The moment your case is filed, an injunction goes into effect that puts up a legal wall between you and your credits. Commonly referred to as an automatic stay, this injunction will stop phone calls, wage garnishments, lawsuits, and sheriff sales. Many people find this respite helps them relax and concentrate on following through with the bankruptcy.
Chapter 7 Bankruptcy in Lehigh County, PA
More people file for Chapter 7 than any other chapter of bankruptcy. Often called a “straight” or “liquidation” bankruptcy, Chapter 7 allows debtors to eliminate most of their debt within a few short months. If you qualify for Chapter 7, you could discharge personal loans, credit cards, medical bills, and other unsecured debt.
The reason Chapter 7 is also known as a “liquidation” bankruptcy is that debtors might be required to sell their assets to pay their creditors. A court-appointed trustee would take possession of your property, sell it, and disburse the proceeds among all your creditors. The idea of losing personal property or prized possessions might frighten people away from filing. However, there are exemptions under the law that allow a debtor to keep most of their property. Typically, a Chapter 7 bankruptcy in Lehigh Valley will be conducted as a “no asset” case. This means that the debtor has no non-exempt property. Our Pennsylvania Chapter 7 bankruptcy attorneys will thoroughly review your assets to determine if the available exemptions protect your property. If you do have non-exempt property, you have the option of filing a Chapter 13 instead.
Chapter 13 Bankruptcy in Lehigh Valley, PA
A Chapter 13 case is sometimes called a “wage earner” bankruptcy. This is because when you file a Chapter 13, you will propose a plan to pay your creditors over the next three to five years. In order to do so, you need to demonstrate to the bankruptcy court that you have the available income to fund your plan and your ordinary monthly expenses.
While this does not sound as advantageous as a Chapter 7 case, Chapter 13 bankruptcies allow debtors to restructure their financial obligations. Furthermore, it provides a means to pay back delinquent secured debt so a filer could keep their property, including their home or car.
For example, if you fell behind on your mortgage payments, your lender might have started foreclosure proceedings. Now you owe missed monthly payments, assessed late fees, and attorney’s costs. The mortgage company will likely want you to pay everything you are behind at once or it will continue with the foreclosure and eventual auction of your home. By filing a Chapter 13 bankruptcy, you force your lender to accept a five-year payment plan to pay back the money you are behind. Depending on your income and other debt, you might be able to discharge a significant amount of unsecured debt while you pay back your mortgage lender.
If you make too much money to qualify for a Chapter 7 bankruptcy, you could still address your unsecured debt through Chapter 13. To illustrate this, imagine you have $75,000 of unsecured debt, including credit cards and personal loans. You have been making the minimum payments each month but have not been able to reduce your debt. You make too much money to qualify for Chapter 7, so you consider Chapter 13. Our Lehigh Valley bankruptcy attorneys will calculate your disposable monthly income (DMI) using bankruptcy Form 22B. Your DMI is what you will be required to pay towards your unsecured creditors. If your DMI is $310, then you must pay that amount each month to a Chapter 13 trustee for five years. Therefore, over sixty months, you will have paid $18,600 to your unsecured creditors. This amount is significantly less than $75,000 and probably less than your creditors would have agreed to outside bankruptcy. Another benefit is that there are no tax obligations regarding debt discharged through bankruptcy.
If your creditors agreed to forgive $56,400, it would be considered income for federal tax purposes.
The above example is a streamlined version of how Chapter 13 works. To fully understand how it would function given your circumstances, contact our Lehigh Valley bankruptcy lawyers.
Call Our Experienced Lehigh Valley Bankruptcy Lawyers to Discuss the Pros and Cons of Filing For Bankruptcy
Most people do not consider filing for bankruptcy because they do not understand the process. While there are some disadvantages to filing, in most cases, the advantages far outweigh any adverse effects. At Young, Marr, Mallis & Associates, our Leigh Valley bankruptcy lawyers are committed to helping our clients recognize how filing for bankruptcy could be beneficial. Call (215) 701-6519 to schedule a free appointment.