Media, PA Bankruptcy Lawyer
Life can be filled with unexpected challenges that demand immediate attention, and sometimes, taking on debt might be the only viable option. However, when the weight of debt becomes too much to bear, filing for bankruptcy can provide some much-needed relief.
There are several reasons why someone might find themselves in a position where filing for bankruptcy becomes necessary. Regardless of the reason, it is often the most sensible decision for securing long-term financial stability. The good news is that there are different types of bankruptcy to choose from, giving you some flexibility in the process.
For a free case analysis with our bankruptcy lawyers, call Young, Marr, Mallis & Associates at (215) 701-6519.
Filing for Chapter 7 Bankruptcy in Media, PA
If you face overwhelming debt and cannot pay your creditors, filing for Chapter 7 bankruptcy might give you a fresh start. Chapter 7 bankruptcy, or “liquidation bankruptcy,” is designed to help individuals and businesses eliminate most of their unsecured debts by liquidating non-exempt assets to pay off creditors. Unlike Chapter 13 bankruptcy, which involves a repayment plan, Chapter 7 bankruptcy typically results in the discharge of debts without needing ongoing payments.
Eligibility for Chapter 7 Bankruptcy
If you are considering filing for Chapter 7 bankruptcy in Media, it is important to fully understand the eligibility criteria and requirements. One of the key factors is the means test, which evaluates your income to determine if it falls below the median income for a household of your size in Pennsylvania.
If your income is below the median, you automatically pass the means test and can file for Chapter 7 bankruptcy. However, if your income is above the median, further calculations will be done to determine if you qualify based on your disposable income and ability to repay.
Another important factor to consider is your bankruptcy history. If you have previously received a discharge in a Chapter 7 case within the past eight years or a Chapter 13 case within the past six years, you might not be eligible to file for Chapter 7 bankruptcy again.
Additionally, before filing for Chapter 7 bankruptcy, you must complete a credit counseling course with a court-approved agency within 180 days prior to filing. This is designed to provide you with the tools and information needed to assess your financial situation and explore alternative options before making the decision to file for bankruptcy.
Liquidation of Assets
After filing for Chapter 7 bankruptcy, non-exempt assets will be sold or liquidated to repay your creditors. However, exemption laws allow individuals to exempt certain assets, such as their primary residence, vehicle, household goods, and retirement accounts, from being sold or liquidated.
If everything proceeds smoothly, you will receive a discharge order from the bankruptcy court. This discharge order eliminates your personal liability for most unsecured debts, such as credit card debt and medical bills. It is important to note that certain types of debts, such as student loans, child support, and alimony, are generally not dischargeable under Chapter 7 bankruptcy.
Benefits of Filing for Chapter 7 Bankruptcy
When you file for Chapter 7 bankruptcy, an automatic stay goes into effect immediately. This stay prevents most collection actions by creditors, giving you a chance to reorganize your finances.
During the automatic stay, creditors are prohibited from contacting you, garnishing your wages, or initiating or continuing any legal proceedings against you without permission from the bankruptcy court. This provides an opportunity for you to take a breather and focus on your financial situation without the constant pressure of creditors’ collection efforts.
Chapter 7 bankruptcy is a quick process that typically takes about four to six months to complete. It is a liquidation bankruptcy, which means that a trustee will sell your non-exempt assets to pay off your debts. However, many people who file for Chapter 7 bankruptcy are able to keep most or all of their assets. Compared to Chapter 13 bankruptcy, which involves a three- to five-year repayment plan, Chapter 7 bankruptcy can be a faster and more efficient way to get a fresh start financially.
Filing for Chapter 13 Bankruptcy in Media, PA
If you want to reorganize your finances while keeping your property, filing for Chapter 13 bankruptcy might be the right option for you. While these options might seem complex, our bankruptcy attorneys can help you determine which choice is best to get you back to financial security. Chapter 13 bankruptcy is designed for individuals with a regular income who want to create a manageable repayment plan to satisfy their debts over time.
Chapter 13 bankruptcy, often referred to as a “wage earner’s” plan, allows individuals to develop a repayment plan to pay back a portion or all of their debts over a three to five-year period. Unlike Chapter 7 bankruptcy, which involves liquidation of assets, Chapter 13 bankruptcy allows individuals to keep their property while making affordable monthly payments to creditors.
Eligibility for Chapter 13 Bankruptcy
Determining your eligibility for Chapter 13 bankruptcy in Media requires careful consideration of several factors. To begin with, you must meet certain debt limits. In particular, your unsecured debts, such as credit card debt and medical bills, must not exceed $419,275, while your secured debts, such as mortgages and car loans, must not exceed $1,257,850. These amounts are subject to change, so it is important to verify them at the time of filing.
In addition to debt limits, you must have a regular source of income to show that you can make consistent payments toward your repayment plan. This income can come from various sources, including wages from employment, self-employment income, or other regular sources of income. To prove your income, you will need to provide documentation, such as pay stubs, bank statements, and tax returns covering the past six months.
Finally, you must have sufficient disposable income to devote to your repayment plan after subtracting necessary living expenses. The amount of disposable income required will depend on various factors, including the size of your household and allowable expenses.
The Repayment Plan
When an individual files for Chapter 13 bankruptcy, they are required to attend a meeting of creditors, also known as a 341 meeting, within 21 to 50 days. This meeting is attended by the debtor, their attorney, the Chapter 13 trustee, and creditors. The primary purpose of this meeting is for the trustee to review the debtor’s financial affairs, verify the accuracy of the information provided, and ensure that the proposed repayment plan is feasible.
Following the meeting of creditors, a confirmation hearing is scheduled. During this hearing, the bankruptcy court reviews the proposed repayment plan and determines if it is fair and feasible. The trustee assigned to the case might provide input on the plan’s viability.
Creditors are also given the opportunity to object to the plan during this hearing. Should creditors object to the repayment plan, the debtor might need to make adjustments or negotiate with creditors to resolve any issues.
Once the repayment plan is approved, debtors must make monthly payments to the Chapter 13 trustee as outlined in the plan. The trustee is then responsible for distributing these funds to creditors according to the plan’s terms.
It is essential for debtors to make all required payments under the repayment plan, which typically lasts between three to five years. Failure to meet any obligation, including timely payments to the trustee and ongoing compliance with the plan’s terms, might result in the case being dismissed, and the debtor might not receive a discharge of their debts.
Benefits of Filing for Chapter 13 Bankruptcy
One of the most significant advantages of this type of bankruptcy is that it enables debtors to keep certain property, including their homes and vehicles. Through a repayment plan that lasts for three to five years, debtors can catch up on missed mortgage or car loan payments and prevent foreclosure or repossession. This means they can maintain ownership of their property and avoid the stress and disruption of finding new housing or transportation.
Another benefit of Chapter 13 bankruptcy is that it offers a comprehensive solution to address credit card debt, medical bills, personal loans, and many other forms of debt. Throughout the repayment plan, debtors have the opportunity to repay a portion or all of their debts, depending on their individual circumstances and financial situation. This allows you to regain financial stability and move forward with your life.
Like Chapter 7 bankruptcy, filing for Chapter 13 bankruptcy initiates an automatic stay, which instantly stops creditors and all debt collection activity. This provides immediate relief from creditor harassment, foreclosure proceedings, and other collection actions.
Debts that You Can Discharge by Filing for Bankruptcy in Media, PA
Discharging a debt means the debtor is no longer legally obligated to repay it. The specific types of debts that can be discharged depend on the type of bankruptcy filed. Generally, unsecured debts like credit card debts, medical bills, personal loans, and utility bills can be discharged, while other debts cannot. The following are the most common debts discharged through bankruptcy in Media.
Individuals who are struggling with medical bills can find relief through bankruptcy. Medical debt, which includes hospital fees, doctor’s charges, and other healthcare-related expenses, is one of the most common reasons why people file for bankruptcy. The financial burden of medical care can become overwhelming, and bankruptcy can provide a way to discharge these debts and start fresh.
Credit Card Debt
Unsecured credit card debts are one of the most common types of debts that can be discharged through bankruptcy. This means that if you file for bankruptcy, you might be able to eliminate your credit card debt without having to repay it.
However, if there is evidence of fraudulent activity or excessive charges related to your credit card prior to filing for bankruptcy, your creditor might challenge the discharge ability of the debt, and you might still be responsible for paying it back.
Unsecured personal loans, such as those from family or friends, can also be discharged. However, the situation will depend on whether there is a written agreement or collateral securing the loan.
Such agreements might be subject to review to determine if discharge is possible. In some cases, the bankruptcy court might require the borrower to provide evidence of the collateral or the terms of the agreement to ascertain if the loan can be discharged.
It might also be possible to discharge past-due utility bills, including electricity, water, or gas bills. However, keep in mind that any future utility bills will still be the responsibility of the debtor and should be paid as they come in to avoid further financial difficulties. It is also important to note that some utility companies might require a deposit or a new account to be set up before service can be restored after filing for bankruptcy.
If you are facing civil judgments, some of them can be discharged through bankruptcy. While personal injury claims might be eligible for discharge, judgments related to fraud, intentional misconduct, or drunk driving might not be dischargeable.
Debts that You Cannot Discharge by Filing for Bankruptcy in Media, PA
While many debts can be discharged through bankruptcy, certain limitations and exemptions exist. These limitations vary depending on the type of bankruptcy filed and other factors unique to each case. Some debts that cannot be discharged by filing for bankruptcy in Media include the following:
Child Support and Alimony
When filing for bankruptcy, domestic support obligations, which include child support and alimony, are not typically dischargeable. This means that even if the debtor’s other debts are discharged, they will still be responsible for paying any outstanding alimony and domestic support obligations.
Tax debts, including federal, state, and local income taxes, are typically not dischargeable in bankruptcy. However, in certain circumstances, older tax debts might be eligible for discharge. It is crucial to consult with a bankruptcy attorney or tax professional to explore available options.
In most cases, student loans cannot be discharged through bankruptcy unless the debtor can demonstrate undue hardship. Proving undue hardship is challenging and requires filing an adversary proceeding and presenting evidence to the court.
Criminal Fines and Restitution
Debts owed as a result of criminal fines or restitution orders imposed by a court are not dischargeable in bankruptcy. These debts remain the debtor’s responsibility and must be paid in full.
Our Media, PA Bankruptcy Lawyers Are Here to Help You Regain Financial Security
Contact Young, Marr, Mallis & Associates today at (215) 701-6519 for a free case review with our bankruptcy attorneys.