Pottstown, PA Bankruptcy Lawyers
If you are feeling crushed by debt, unable to pay your monthly expenses, or fear losing your home to foreclosure, filing for bankruptcy could offer you the relief you and your family desperately need. There is no shame in filing for bankruptcy. Bankruptcy was designed to give hardworking people a means to pull themselves out of an economic hole. Bankruptcy provides the tools and legal protections to obtain a fresh financial start.
How filing for bankruptcy benefits you depends on your unique circumstances. At Young, Marr, Mallis & Associates, our Pottstown, PA bankruptcy lawyers offer compassionate and professional legal help to those overwhelmed by debt. Our goal is to take the fear and stigma out of bankruptcy, so the hardworking residents of Pottstown feel comfortable taking advantage of the benefits it offers.
Our attorneys and staff also understand that it is not easy to seek assistance for your financial troubles. We also know that a successful bankruptcy case depends on how invested the debtor is in the proceedings. Therefore, it is important to us that you understand the bankruptcy process. Our Pottstown bankruptcy lawyers are here to answer your questions and address your concerns. Call (215) 701-6519 to schedule a confidential appointment.
Who Should File For Bankruptcy in Pottstown, PA
Filing for bankruptcy is a major decision. For many people, bankruptcy is a way to start over. For others, bankruptcy is a means to protect their most cherished possessions. However, in some situations, filing for bankruptcy is analogous to using a sledgehammer on a finishing nail. How do you know if you need to or should file for bankruptcy?
There is no “one” or “correct” answer. However, if certain circumstances exist, you should consider speaking with one of our experienced Pottstown bankruptcy lawyers.
- The majority of your debts are unsecured, such as medical bills, credit card debt, or unsecured personal loans
- It would take you over five years to pay your creditors, not including your mortgage or car loan
- You are receiving harassing collection calls, letters, or emails
- You have fallen more than a month behind on multiple debts
- You have expensive medical bills and limited or no medical insurance
- You have little savings and few assets
- A creditor is suing you, your bank account has been frozen, or your wages have been garnished
- Your car was repossessed or threatened with repossession
- Your mortgage lender filed a mortgage foreclosure action against your home
Every person’s situation is unique, so it is important to review your case with an experienced bankruptcy lawyer.
The Advantages of Filing for Bankruptcy
The benefits filing for bankruptcy provides depends on what chapter you file and the type of debt you have.
The Automatic Stay
When you file for bankruptcy, a legal wall is erected between you and your creditors. This injunction, known as an automatic stay, goes into effect whether your file a Chapter 7 or Chapter 13 case. Creditors are prohibited from attempting to collect a debt after you file. This means they are not allowed to call you, send you letters, or file a lawsuit against you. For example, if your house was scheduled for a sheriff’s sale, filing for bankruptcy will stop the sale. Additionally, wage garnishments will cease, bank accounts will be unfrozen, and in some cases, repossessed vehicles will be returned.
Eliminate Unsecured Debt
Most people file for bankruptcy to discharge unsecured debt. If you qualify, you could eliminate your unsecured debt, including medical bills, personal loans, and credit card debt in five or six months through a Chapter 7 bankruptcy. While you might be required to pay a portion of your debt back if you file Chapter 13, debtors typically still discharge a significant portion of their unsecured debt. Our Pottstown bankruptcy lawyers will evaluate and examine your debt to determine what is dischargeable.
Pay Back Secured Debt
Sometimes people want to file for bankruptcy to pay back secured debts. A common example is a homeowner who fell behind on their mortgage. Filing a Chapter 13 case allows a homeowner to pay their mortgage lender over five years. In most cases, this is a much more manageable payment schedule than the mortgage company would offer. Depending on the homeowner’s income and assets, they could also discharge unsecured debt. Paying secured debt is not limited to homes. Many people file for bankruptcy to keep their car or truck.
No Tax Obligations on Discharged Debt
Bankruptcy offers a huge advantage that many people fail to consider when weighing their debt relief options. It is possible to settle with a credit card company or another creditor. Some creditors will offer a settlement, requiring the debtor to pay a portion of the debt while forgiving the remaining balance. Typically, this amount will have to be paid in one lump sum. One drawback to settling with a creditor is that forgiven debt is considered taxable income. This means you must list any forgiven debt as income when you file your federal tax returns. The additional income means you could lose an anticipated refund or you could owe additional taxes. When you file for bankruptcy, any discharged debt is not considered income for tax purposes.
Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy
Chapter 7 bankruptcy and Chapter 13 bankruptcy each offer different advantages to a debtor depending on their unique situation. For example, individuals who are weary of being hounded by bill collectors and want a relatively quick solution will likely elect to file for Chapter 7. Others who believe they could afford their debt under different circumstances are more inclined to choose Chapter 13.
However, before selecting a certain type of bankruptcy, you should understand how each type operates.
How Chapter 7 Bankruptcy Works
Chapter 7 bankruptcy is a form of bankruptcy that liquidates the assets of a debtor to pay off creditors. Specifically, a bankruptcy trustee will be appointed to collect all nonexempt assets of the debtor and use them to satisfy debts to creditors. A nonexempt asset is the property of a debtor that cannot be liquidated to pay off a debt. While the types of nonexempt assets may be different depending on the state you reside in, the following is a list of common nonexempt assets:
- Valued artwork
- Designer clothing
- Coin collection
This is not an exhaustive list. The bankruptcy court may consider other nonexempt assets.
To initiate a Chapter 7 bankruptcy, a debtor must file a petition with the bankruptcy court where the debtor resides or where they have chosen to incorporate their business. When filing the petition, the debtor must also include information regarding their assets and liabilities, income and expenses, a financial statement, and similar documents.
If a debtor successfully files for Chapter 7 bankruptcy, they will be released from personal liability for various types of debts. Many people prefer this form of bankruptcy because of the possibility that the entire process will be complete within three months. The types of debt that can be discharged in bankruptcy include:
- Medical bills
- Credit card debt
- Personal loans
- Past-due utility bills
- Civil court judgments
- Business debts
- Social Security overpayments
There are other debts that can be discharged in a Chapter 7 bankruptcy. In some cases, it is also possible to have your student loans discharged if you can prove that you are unable to pay them.
How Chapter 13 Bankruptcy Works
Chapter 13 bankruptcy allows a debtor to reorganize their debts into a more affordable form to make it easier to manage the payments. Chapter 13 is typically preferred by individuals who have a steady source of income but that have issues staying current on their bills.
When creating a reorganization plan, the debtor must provide the following information:
- A list of creditors and the debt and type of claim the creditor has
- The income of the debtor, their sources of income, and often the debtor is paid
- A list of all property owned by the debtor
- The monthly living expenses of the debtor including food, medication, transportation, and various other expenses
Using this information, the debtor is expected to create a debt reorganization plan meant to span about five years. The advantage of this plan would be that the debtor can consolidate their debt and make a single monthly payment at a lower rate that is distributed among their creditors. In some cases, the debtor may be approved for a three-year payment plan if they can present evidence showing that a five-year plan would not be feasible.
Once the debtor completes their payment plan, their remaining debt would be discharged. It is also important to note that a filing for bankruptcy may be challenged by a creditor as a reorganization plan would mean they receive less money than they were owed.
Additionally, once bankruptcy proceedings have been initiated, whether you filed for Chapter 7 or Chapter 13, you will receive an automatic stay. An automatic stay prevents creditors from pursuing payments or sending your account to collections until the bankruptcy proceeding has concluded. This will give a debtor time to work with an experienced attorney to improve their odds of successfully filing for bankruptcy.
Our Pottstown, PA Bankruptcy Lawyers Can Help
For many people, knowing whether filing for bankruptcy is the best option or not is difficult – if not impossible. Our experienced Pottstown, PA bankruptcy lawyers are available to help you guide you through this process. At Young, Marr, Mallis & Associates, we know that filing for bankruptcy has great advantages and benefits. We also understand it is not the best option in every situation. By taking the time to review your circumstances, we can offer our professional and compassionate advice. Call (215) 701-6519 to see if filing for bankruptcy is the right option for you.