Philadelphia Bankruptcy Lawyers
At Young, Marr, Mallis & Associates, we can help lift the burden of filing for consumer bankruptcy. Our Philadelphia Bankruptcy Lawyer has over 30 years of experience handling bankruptcy cases. With more than 5,000 cases filed, we’ve seen it all: no matter how hopeless or confusing you think your circumstances may be, our attorneys have been there before. We know the way.
To speak confidentially in a free consultation about how bankruptcy may be able to help you achieve debt relief, contact Young, Marr, Mallis & Associates online, or call our Pennsylvania law offices at (215) 701-6519. Your bankruptcy questions are important to us, which is why calls are answered 24 hours a day, seven days a week.
For Over 30 Years, Our Sole Focus Has Been Our Clients. Here is How We Can Help You:
Bankruptcy is a powerful tool that has helped millions of Americans regain their financial stability and independence in life. When you file for a Pennsylvania consumer bankruptcy in Chapter 7 or Chapter 13, you gain the ability to eliminate the majority of your debts, prevent your creditors from contacting you, and even stall a foreclosure on your home. In the long term, bankruptcy gives debtors the tools they need to start building good credit for the future, and many individuals with a bankruptcy in their past go on to be approved for loans and to make major purchases.
In Pennsylvania, consumer bankruptcy is more commonplace than you may think, particularly in Philadelphia. In fact, Philadelphia has the highest number of bankruptcy filings in the state every fiscal year.
Filing for bankruptcy is a daunting process. Federal and Pennsylvania laws pertaining to bankruptcy are complex, and on top of the legal challenges, the prospect of filing often causes stress and anxiety. You shouldn’t have to struggle through dense and unfamiliar legal technicalities at a time when you’re already facing emotional turmoil.
What are the Benefits of Filing Bankruptcy?
Many people are nervous about bankruptcy due to negative myths and misconceptions. In reality, filing can be the best way to restore your financial health. Debt will not disappear by itself – but filing for bankruptcy can set you on the right path again. If your case is managed with skill and care, bankruptcy can reduce or eliminate your debts, prevent your creditors from bothering you, and give you the financial tools to start the process of repairing bad credit.
While bankruptcy is not appropriate for everyone, there are many Philadelphians who could benefit greatly from filing for bankruptcy. Below, you’ll find just a few reasons for hiring a Philadelphia Bankruptcy Lawyer. If you are struggling with overwhelming debt, consider the following benefits of bankruptcy for Pennsylvania residents:
You Can Reduce or Eliminate Many Different Types of Debt
The major categories of bankruptcy are called “Chapter 7” and “Chapter 13.” Both chapters enable most debts to be reduced or wiped out in a matter of months or years, depending on the case. In bankruptcy terminology, this is known as the “discharge” of debts. Dischargeable debts, or debts that can be erased by bankruptcy, include credit card debt, medical debt, personal debts (such as debts owed to friends or family members), and business debt. Though rare, there are also some cases where it is possible to discharge student loan debt or debt that is related to unpaid federal income taxes.
You Can Save Yourself From Foreclosure
There are tools within bankruptcy that can help you keep your home if it has been placed in foreclosure or foreclosure is looming. The same is true for some other major assets. By filing for bankruptcy, you can stop a foreclosure proceeding or a scheduled sheriff sale. While our Philadelphia bankruptcy attorney would not advise you to wait until the last minute, you could actually stop a sheriff sale on the morning of the auction. Chapter 13 allows you to pay your mortgage default over three to five years. In many cases, you could discharge unsecured debt so that your mortgage and trustee payments are easier to make.
You Can Stop Debt Collection with the Automatic Stay
A person who files bankruptcy is referred to as a “filer,” a “petitioner,” or a “debtor.” When a debtor files for bankruptcy, they immediately come under the protection of a court order called the “automatic stay.” With a few exceptions, the automatic stay strictly limits what creditors may and may not do during the bankruptcy.
Limiting the actions of your creditors is one of the most potent benefits provided by filing for bankruptcy. When you attempt to negotiate with your creditors or work with a debt consolidation company, your creditors retain all their legal rights. This means that they can continue to call you, send you letters, and file lawsuits against you. When a creditor gets a judgment against you in Pennsylvania, they get a judgment lien on your property. A credit could, and usually will, move for a judgment even if they are working with you. A judgment lien means that your unsecured credit card debt is now secured by your home. By filing for bankruptcy, your creditors are prohibited from filing any lawsuits against you. In fact, if there was a pending lawsuit, it will be stayed by your bankruptcy filing.
When a lender repossesses your car, they are exercising their legal right to enforce a debt. An automatic stay will stop a repossession. If your vehicle was taken, by quickly filing for bankruptcy, you could force your lender to return your car.
To provide a few examples, the automatic stay delays service shut-offs where utility bills have not been paid, prevents debt collection actions such as wage garnishment, and delays against foreclosure and eviction actions for renters and homeowners. Our Philadelphia bankruptcy attorney will review how an automatic stay will benefit your situation.
Lower Car Payments
If you filed Chapter 13 and purchased your car at least 910 days before the filing date, you might be able to lower your monthly payment. A car will begin depreciating on the day you purchase it. Depending on your loan, you could owe more than the vehicle is worth. If that is the case, our Pennsylvania bankruptcy attorney could attempt to cramdown your car loan. This means that you would pay the fair market price of the car through your bankruptcy plan and not the remaining balance of your loan.
You Can Get Back on Track Toward Having Good Credit
Many people worry that filing for bankruptcy will permanently destroy their ability to maintain good credit, to make major purchases, and to take out loans at favorable rates. However, these are all bankruptcy myths. Once a bankruptcy has been discharged, regular and timely payments of credit card and utility bills can restore good credit over time. But unless the debtor files bankruptcy or achieves debt relief through other means, the bills and financial obligations will continue to pile up, making it harder and harder to restore a good credit score.
Bankruptcy typically provides the fastest way to begin restoring your credit. Most people who are considering filing for bankruptcy already have a low credit score. Trying to pay off your debt when you lack the funds is a fruitless journey. Bankruptcy lights a lamp at the end of the tunnel, so you know exactly where you will be in either a few months or three to five years.
Another important advantage to note is that when debt is discharged through bankruptcy, there are no tax consequences. If a creditor forgives your debt or accepts a partial payment in satisfaction of a larger liability, the amount forgiven is considered income for tax purposes. You will be required to report the income on your federal returns. Depending on your ordinary income, this additional amount could cost you your yearly refund or you might owe taxes.
You Can Enjoy the Peace of Mind that Your Finances are Stable
There’s no question that the circumstances leading up to bankruptcy are stressful. The accumulating bills and constant phone calls from debt collectors can take a heavy emotional toll. With the financial relief that bankruptcy provides, debtors can once again sleep easy knowing that they’re in control of their lives.
The Types of Bankruptcy Available to Clients in Philadelphia
While there are extremely rare occurrences of consumers filing for Chapter 11, the overwhelming majority of all consumer bankruptcy cases fall into the category of either Chapter 7 or Chapter 13.
As a debtor, one of your most important decisions will be choosing effectively between the different kinds of bankruptcy. For most debtors in Pennsylvania, there are two bankruptcy options: Chapter 7 bankruptcy (which is otherwise known as “liquidation,” “straight” bankruptcy, or “ordinary” bankruptcy), and Chapter 13 bankruptcy (which is otherwise known as “reorganization” bankruptcy or a “wage earner’s plan”). So how are they different, and which one is appropriate for you?
Chapter 7 Bankruptcy
Chapter 7 is more common than Chapter 13, but both are used by thousands of Pennsylvania residents every year. The question is, which is right for your bankruptcy case? The answer is different for every debtor, because the “right” type of bankruptcy depends on factors like how much you earn, the nature of your debts, and your specific goals for the bankruptcy – for example, whether or not you are trying to prevent the repossession of your vehicle or to stop a foreclosure on your home.
Chapter 7 bankruptcy is called “liquidation” because a court-appointed official, who is known as the “bankruptcy trustee,” may sell off certain assets to repay some of the debts that you owe to your creditors. However, with an effective bankruptcy strategy in place, most people who file Chapter 7 are able to keep much or all of their property.
When you file for bankruptcy, you are required to provide a detailed list of your personal property. Everything you own is known as the “bankruptcy estate.” As stated above, a court-appointed trustee is tasked with reviewing your assets, selling them, and disbursing the proceeds to your creditors. Fortunately, there are numerous ways to protect your property under federal and state law. Known as exemptions, our Pennsylvania bankruptcy attorney will have to pick either the federal exemptions or state exemptions when preparing your filing. Which set of exemptions we use will be based on the type of assets you own. In nearly every case, a debtor will not lose any of their property. In situations where your assets present a problem, we will either advise filing Chapter 13 or offer another solution.
Two major benefits of the Chapter 7 process are that it is faster and simpler than the Chapter 13 process. If you file Chapter 7, your dischargeable debts may be discharged in as little as four to six months.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a more elaborate process than Chapter 7, and therefore takes a longer time to complete: three to five years, depending on the specifics of the case. That is because each Chapter 13 case revolves around a plan of reorganization, which establishes terms by which the debtor agrees to repay certain creditors through manageable installments.
Understanding the bankruptcy plan requires understanding how debt is categorized in bankruptcy. Typically, there are three types of debt: secured, unsecured, and priority.
Secured debt is debt that is attached or secured by your property. For example, your mortgage is secured by your home and your car loan is secured by your vehicle. When you file for bankruptcy to stop a foreclosure or repossession, you will be required to pay the money you are behind on either your mortgage or car loan through your bankruptcy plan. Often, if you are behind on your utilities, there will be a municipal lien on your home. This means that an overdue water bill could be secured and must be paid through your plan.
Unsecured debt includes almost every other financial liability you might have, such as credit card debt, medical bills, and personal loans. Whether you must pay anything to your unsecured creditors will depend on three factors. First, if you are above the family income median in the Means Test calculation, you will have to pay a specific amount each month towards your unsecured creditors.
Next, if you have any non-exempt equity in your property, or property that would have been sold if you filed Chapter 7, you must pay that amount towards your unsecured creditors. For example, if you have $7,500 in a savings account that you could not exempt, you must pay that to your creditors. While this might not seem like a benefit, imagine you have a total debt of $15,000. In this example, you would have five years to pay $7,500 towards the $15,000. Thereafter, $7,500 would be discharged. Additionally, you would not be required to pay the $7,500 immediately and there would be no tax consequences for the discharged debt.
The final category is priority debt. Usually, priority debt is an outstanding tax obligation. Priority debt must be paid through your bankruptcy plan. However, if you have a tax liability, often a portion of the debt is unsecured. In many cases, even though you must pay your tax liability, you will save some money because a part could be discharged.
Once the debtor has completed his or her repayment plan, the remaining debts will be discharged by the bankruptcy court, provided the debtor follows court rules and obeys bankruptcy laws. By making steady repayments, a Chapter 13 debtor can protect valuable property from being seized or sold off. For example, Chapter 13 can save a debtor’s car, truck, or SUV from being repossessed, or even prevent home foreclosure.
Which Type of Bankruptcy is Right for You?
Unfortunately, debtors are not allowed to choose which type of bankruptcy they would like to enter. Instead, the category of bankruptcy most appropriate for you is selected via Means Testing.
The Means Test calculates several variables to determine whether you are a more suitable candidate for Chapter 7 or Chapter 13. The Means Test primarily measures your median household income against Pennsylvania averages, but other factors which are analyzed include your living expenses, and the amount of “disposable” income you have. The reason Means Testing exists is to make sure that people who have the ability to accommodate a Chapter 13 bankruptcy do not abuse the system by filing for Chapter 7, which is need-based.
There are some exceptions to the regulations of Means Testing, which our qualified Philadelphia bankruptcy attorneys can help you navigate.
How to File for Bankruptcy Using a Philadelphia Bankruptcy Attorney
There are many rules, regulations, and procedures that you need to be aware of if you decide to file bankruptcy in Philadelphia. For example, federal bankruptcy laws require you to complete pre-bankruptcy credit counseling before you may file. Credit counseling can only be received through a government-approved service provider.
Once you have completed pre-bankruptcy requirements and ensured that you meet the appropriate residency requirements, you can begin the process of filing a bankruptcy petition. However, it may make better financial sense to temporarily delay the filing, depending on your circumstances. Our Philadelphia bankruptcy attorneys can help you decide when is the best time to file bankruptcy based on your situation.
Be advised that there is generally a filing fee to submit your bankruptcy paperwork. As of 2018, the bankruptcy filing fees are as follows:
- Chapter 7 Filing Fee – $338 (as of December 1, 2020)
- Chapter 13 Filing Fee – $313 (as of December 1, 2020)
These fees are typically due at the time of filing. However, in some cases, the fee to file Chapter 7 bankruptcy can be either waived or paid in installments. You will need to complete and submit an application to have the Chapter 7 fee waived.
If you live in Philadelphia or the surrounding suburbs, your bankruptcy court will be the United States Bankruptcy Court for the Eastern District of Pennsylvania. This court has jurisdiction (authority) over not only Philadelphia but also several of the surrounding counties. The court is located in downtown Philadelphia in Center City.
You will need to submit a range of forms when you file bankruptcy in Pennsylvania. The core of each case is the bankruptcy petition. On your petition for bankruptcy, which an attorney can help you complete and file, you will provide your contact information and answer questions about why you are filing for bankruptcy, your history of bankruptcy (if any), your debts and assets, and other essential information. Along with the petition for bankruptcy, you will also need to file some supplementary paperwork, including forms that describe the following in detail:
- Information about your income and assets
- The creditors you owe debts to
- The property/properties you own
- Whether anyone is filing with you (called a “co-debtor”)
- Your current living expenses
Before the bankruptcy court will agree to discharge your debts, you must complete another federal requirement known as “debtor education.” Similar to credit counseling, debtor education must be provided by a government-approved agency. The purpose of debtor education is to help you develop effective budgeting, financial planning, and money management skills so that you will not need to declare bankruptcy again in the future.
Why Having an Experienced Bankruptcy Lawyer is Important
Budgeting is usually a major concern for people who are thinking about filing for bankruptcy. For this reason, some people may decide to avoid hiring an attorney and take a do-it-yourself approach. This is known as “pro se” representation.
If you are considering declaring bankruptcy, you should be advised that filing without an attorney is extremely risky. The laws and regulations, the court procedures, and the financial paperwork associated with bankruptcy are highly technical and are full of language that is unfamiliar to most people, making it easy for debtors to make mistakes or overlook critical details.
Making even a small error in the course of bankruptcy could have disastrous effects on your case. For example, you might lose property that could have been saved, or even risk having your case dismissed. Even the official website of the United States Courts cautions against filing without legal assistance, explaining that “seeking the advice of a qualified Philadelphia bankruptcy attorney is strongly recommended because bankruptcy has long-term financial and legal outcomes.”
Other than protecting you from avoidable bankruptcy errors, like missing legal deadlines or forgetting to list certain assets, an experienced attorney can also help with your case in other ways. Some benefits of hiring a Philadelphia Bankruptcy Lawyer are that your attorney will:
- Advise you about important legal decisions like which type of bankruptcy to file, which set of exemptions to claim, and when is the most strategic time to file.
- Explain important terms that will help you to understand bankruptcy laws more clearly.
- Help to ensure that you meet federal bankruptcy requirements like credit counseling and debtor education criteria.
- Prepare you for each hearing, meeting, and interview you must attend.
- Protect you if creditors or debt collectors try to violate your legal rights.
- Take care of reviewing and filing your legal and financial documents.
Filing for bankruptcy is one of the biggest financial decisions you will ever have to make. Make sure that you are well-prepared with an experienced bankruptcy lawyer who can counsel you, prepare you, and protect your best interests throughout the legal process.
While bankruptcy law is challenging to interpret, in order to secure a discharge, it is critical that absolutely no mistakes be made during the process of filing. If a petitioner makes an error by omitting a creditor, forgetting a document, incorrectly filling out a document, or missing a deadline, their entire case could be ruined.
Call Our Local Philadelphia Bankruptcy Attorneys to Discuss the Benefits of Filing
With the Pennsylvania bankruptcy attorneys at Young, Marr, Mallis & Associates managing your case, you can feel confident that you’re in experienced and capable hands. We have filed over 5,000 bankruptcy claims — now, let us file yours. To speak with an attorney about your financial options for bankruptcy and debt management, contact our bankruptcy law firm online, or call Young, Marr, Mallis & Associates at (215) 701-6519 today. Consultations are confidential, and your initial consultation is completely free of charge.