Springfield, PA Bankruptcy Attorney
Those who suffer financial distress or find themselves deep in debt may consider filing for bankruptcy. However, distress shouldn’t be the sole reason to pursue bankruptcy protection. If you’re behind on enough of your monthly payments, late fees and penalties can build up an insurmountable hurdle.
If you’re unable to pay the bills, then you should consider talking to an attorney. An attorney can help you learn the benefits and risks of bankruptcy. You can file for bankruptcy, possibly liquidate all or part of your debt, and maybe keep your home. Even in the face of money problems, you may want to stay in your home. Thus, the prospect of losing your home and other assets can be very upsetting. Many people file for bankruptcy under Chapters 7 or 13, and each one carries different pros and cons. Before filing, we must make sure you meet certain eligibility requirements and have the evidence and documentation required to begin your case.
Call our Springfield, PA bankruptcy attorneys at (215) 701-6519 to schedule a free review of your case at Young, Marr, Mallis & Associates.
Things to Consider Before a Bankruptcy Petition in Springfield, PA
People considering bankruptcy usually start too late after adversity has exhausted their finances — a severe illness or an unexpected accident, marital separation or divorce, or a job loss are events that tend to trigger a bankruptcy petition. Bankruptcy is a legal process intended to clear or restructure debt and provide a clean slate.
The first step needed if you’re considering filing for bankruptcy is to determine if your monthly debt payments are higher than your take-home pay. Our bankruptcy lawyers can review your income, finances, and debts to determine your eligibility for bankruptcy.
Applying for more loans may not be the best option if you can’t make ends meet, and your credit may already be damaged. Swift action early on can be crucial if you have a large mortgage payment and keeping your home is very important to you. Credit card debts typically grow at an average interest rate of 13% or more. Accumulation of interest rates can have devastating financial consequences down the road.
Bankruptcy Petitions to Discharge Certain Debts in Springfield, PA
A request for a court to “discharge” or purge the debt allowable under the bankruptcy laws is called a “Bankruptcy Petition.” The Eastern District of Pennsylvania is where residents of Springfield file bankruptcy petitions. Bankruptcy laws provide two debt classifications: dischargeable and non-dischargeable.
Secured debt is generally non-dischargeable because it is backed by assets or there are specific discharge prohibitions. Assets are known as collateral—these can be a car or a home. Unsecured debt is not attached or connected to an asset, like credit cards. While most unsecured debt can be discharged partially or in full, not all unsecured debts qualify to be cleared right after bankruptcy is filed. For example, credit card debt (in whole or portions) can be liquidated if you file for bankruptcy.
Moreover, unsecured debts must go through judicial review before discharge is granted. For instance, student loans will only be discharged if the legal requirements of “undue hardship” are met. The undue hardship exception applies to situations when the debtor has a medical condition that renders them unable ever to repay the debt.
Breakdown of Bankruptcy Petitions and Exemptions in Springfield, PA
If you’re contemplating bankruptcy, the most common options are Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. The person designated to supervise the filing is the “trustee.” Trustees are lawyers appointed to work with all parties and determine the elimination of debt, sales of assets, and restructuring plans. People tend to mistrust bankruptcy because there are no guarantees as to the outcome since trustees and bankruptcy judges have considerable discretion throughout the process.
However, the US Bankruptcy Code provides specific guidelines to give debtors a chance to keep their homes. This exemption – as it is known in the legal field – is based on comparisons between the amount owed and the value of the asset. A lawyer can review the details of exemptions and give you a sense of what can happen based on your circumstances.
Which Bankruptcy Chapter is Right for You in Springfield, PA?
Bankruptcy is a matter of federal law, and there are numerous federal bankruptcy chapters under which a person might file. Each Chapter carries different advantages and disadvantages. Come chapters are meant solely for businesses or organizations, so you would likely not file under those as an individual. Instead, most people file for bankruptcy under Chapters 7 or 13.
Chapter 7 is popular for people with few significant assets or those willing to let go of their assets. Chapter 7 bankruptcy focuses on liquidating your assets and using the proceeds to pay off debts. For example, your home, vehicles, and other properties might be liquidated by a bankruptcy trustee in charge of your estate.
In some cases, this liquidation process allows people to pay off nearly all their debts and get a fresh start. In other cases, people are left with remaining debts even after liquidating their assets. At that point, we can focus on getting the court to discharge the remaining debts. Once a debt is discharged, you would no longer be liable for repayment, and creditors cannot seek payment for the debts.
Your car, home, and owned household goods might be protected under Chapter 7. If there are other assets at stake, there are state and federal exemptions that can be applied to some assets. Alternatively, you might have very high debt but even greater assets. In such a case, we might be able to avoid liquidating your home by liquidating other property or assets that are less important to you first.
Chapter 13 bankruptcy does not involve liquidating your assets but instead allows you to reorganize your finances and set up a payment plan to help you repay your debts. Your payment plan is devised by you and your attorney and must be approved by the court. Your creditors will also have a chance to review the plan and voice any concerns.
Individuals who file Chapter 13 petitions can keep all their property as long as they can keep up with the payment plan based on their earnings or income. In most cases, petitioners are on payment plans for several years.
Chapter 13 petitioners might receive a partial discharge of unsecured debts. The progress of the payment proposal will be overseen, sometimes lasting between 36 and 60 months or longer. The trustee will supervise the execution of the payment schedule. Also, the judge and judicial clerks will monitor the plan since bankruptcy rights must be protected at every stage of the petition.
Eligibility for Bankruptcy in Springfield, PA
Not everyone with high debts can file for bankruptcy. Certain eligibility criteria must be met before proceeding with your bankruptcy case.
Eligibility for Chapter 7
While Chapter 7 bankruptcy may be applied to individuals, businesses, or corporations, individuals must pass a means test.
The means test is required in cases where the petitioner’s income is above the state median. The test is designed to prevent people with higher incomes from abusing the bankruptcy system to avoid paying debts they can afford. The means test analyzes your income from the past 5 years. To pass, your net monthly income from the last 5 years must be less than 25% of your nonpriority unsecured debt or $15,150, whichever is less.
In addition, to file under Chapter 7, you must not have had a bankruptcy petition dismissed in the previous 180 days for a willful failure to show up in court or follow court orders or because you voluntarily dismissed the petition. You must also receive credit counseling before you file for bankruptcy.
Eligibility for Chapter 13
Chapter 13 bankruptcy is intended for individual petitioners, including those who are self-employed or operating an unincorporated business. Unlike Chapter 7, you do not have to pass a means test to qualify for Chapter 13 bankruptcy. However, when you file, your total secured and unsecured debts must be less than $2,750,000. If your debts are greater, speak to an attorney about other bankruptcy options.
Similar to qualifying for Chapter 7b bankruptcy, people filing under Chapter 13 must not have had a prior bankruptcy petition dismissed within the last 180 days for the same reasons mentioned above. If this is not your first time filing for bankruptcy, you should discuss your situation with an attorney.
Additional Bankruptcy Protections in Springfield, PA
- You cannot be fired from your job for filing for bankruptcy
- Your retirement is protected, including your 401K, pension, Keogh plans, and IRAs
- Social Security will not be affected
In addition, it’s a violation of bankruptcy laws to:
- Cut off utility services when a person files for bankruptcy
- Call or communicate with you in violation of the “automatic stay,” the legal concept requiring that all communications from a creditor to the debtor must go through the bankruptcy court system
Weighing the Pros and Cons of Bankruptcy in Springfield, PA
There are numerous pros and cons of filing for bankruptcy. While bankruptcy is often perceived as something negative, it is actually a legal solution to your financial woes. However, many petitioners do not emerge from the bankruptcy process unscathed, and there may be some unpleasant consequences to deal with.
First, there are many potential benefits to bankruptcy. Under Chapter 7, you may have your assets liquidated and various debts paid within only a few short months. After that, the court might discharge eligible debts, and you might have a fresh start rather quickly.
If you do not want to lose important assets like your home, Chapter 13 might help you hang on to these important assets while you reorganize your debts. In the end, your debts should be under control, and some might even be discharged while you remain in your home.
The downsides to bankruptcy should not be disregarded, and you should discuss them with your attorney to determine if bankruptcy works for your situation. First and foremost, your credit will likely take a significant hit. It is very likely that your credit score will fall significantly, making future financial opportunities harder. If you want to purchase a home or start a business sometime in the near future, your history of bankruptcy might get in the way.
What You Need to Get Your Bankruptcy Petition Started in Springfield, PA
Your bankruptcy petition will not be approved simply because you meet the necessary eligibility criteria. You need evidence to back up your claims and support your petition. Since the case revolves around your finances, financial records are arguably the most significant evidence you need.
The precise records and documents you need vary based on your finances, income, and debts. We should have records regarding all your bank accounts. If you have multiple accounts at different banking institutions, we need records from each bank, which might take time to assemble.
We should also have records about your income, preferably from the last few years, if not longer. Pay stubs, tax forms like W2s, and records from your employer about your salary might be necessary for your case. These forms are especially important if you need to pass a means test. We should also get information about all your assets, including properties you own, vehicles, and other financial assets or interests.
Finally, we need records about your debts and creditors. If you owe money on anything, we need the information about it. Credit cards, medical bills, mortgages, loans, and any other debts must be properly accounted for so we know how much your total debt is worth.
Call Your Springfield, PA Bankruptcy Attorney Today and Protect Your Home and Most Precious Assets
Call our Springfield, PA bankruptcy lawyers at (215) 701-6519 to arrange a free evaluation of your case at Young, Marr, Mallis & Associates.