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Chapter 7 and 13 Bankruptcy
BUCKS COUNTY CHAPTER 7 & 13 BANKRUPTCY ATTORNEY
What is a Chapter 7 bankruptcy?+
Chapter 7 bankruptcy is a liquidation proceeding. The debtor turns over all non-exempt property to the bankruptcy trustee, who then converts it to cash for distribution to the creditors. Most Chapter 7 cases are "non-asset" cases in which all property owned by the Debtor is exempt. Under this scenario the Debtor can keep all of his/her property. Within 4 to 5 months after filing a Chapter 7 bankruptcy, the debtor receives a discharge (i.e., a "wiping out") of all dischargeable debts.
Who can file a Chapter 7 bankruptcy?+
The debtor must reside or have a domicile, a place of business, or property in the United States or a municipality. The debtor must not have been granted a Chapter 7 discharge within the last 8 years. In addition, the debtor must not have had a bankruptcy filing dismissed for cause within the last 180 days. For the most part, Chapter 7 bankruptcy is limited to individuals who earn less than the State's median income for their family size.
What are the most common reasons for filing a Chapter 7 bankruptcy?+
The most common reasons for filing Chapter 7 bankruptcy are: unemployment/income loss; large medical expense; seriously over-extended credit; marital problems and other large unexpected expenses.
What is a Chapter 13 bankruptcy?+
Chapter 13 is a reorganization of debt. The debtor pays back creditors through a monthly "plan" payment handled by the bankruptcy trustee. Generally, the duration of the plan ranges from 3 to 5 years.
Who can file a Chapter 13 bankruptcy?+
The same filing requirements apply to Chapter 13 debtors as to Chapter 7 debtors, with some differences. Normally, the Chapter 13 debtor must have a steady income and his/her secured debts cannot exceed approximately $1,000,000 and his/her unsecured debts cannot exceed approximately $300,000.
What are the most common reasons for filing a Chapter 13 bankruptcy?+
Generally, a person files for a Chapter 13 bankruptcy to keep their home which payment is in default (i.e., stop foreclosure proceeding). Under a Chapter 13 plan, the debtor will be able to pay all mortgage arrears over a period of time (three to five years).
Should I choose Chapter 7 or Chapter 13?+
There are a lot of factors to consider when deciding the type of bankruptcy to file. You should consult a competent bankruptcy lawyer to assist you with this process. Your attorney will need to analyze your assets, income, expenses, debt, and financial issues before determining the appropriate Chapter in which to file.
I am married, does my spouse also have to file bankruptcy?+
No. In some cases where only one spouse has debts, or where the other spouse has debts that are not dischargeable, then it might be advisable to have only one spouse file. However, in some cases where real property is involved, or where the spouse is a co-debtor on most of the other spouse's dischargeable debts, then the question of joint bankruptcy is a little trickier, and questions should be referred to an attorney.
I am a co-signer for a debt, how does bankruptcy affect my obligation?+
If the debt is a dischargeable debt, then you will not have to pay it. However, the other co-signer becomes primarily responsible for the debt.
Is there anything that I should not do if I am contemplating filing for bankruptcy?+
There are several areas related to this question. You should consult your attorney. In particular, there are three items worth mentioning. First, under bankruptcy law, certain purchases of luxurious items over $500 within 90 days of filing for bankruptcy are presumed to be nondischargeable. Also, under bankruptcy law, cash advances aggregating $1,000 within 60 days of the bankruptcy filing are presumed to be nondischargeable. Last, debts involving materially false financial statements are nondischargeable under certain circumstances. "Running up" credit card debt just before filing is fraud and will likely be prosecuted as such.
Who can help me with my bankruptcy?+
The best person to help is your attorney. When you discuss your situation with your attorney, you will need to be prepared to discuss all areas of your case. This includes each and every debt and creditor you have. It is very important to list all your creditors in your bankruptcy. One of the best ways to know all your creditors is to get a credit report about your credit history. This report should list the majority of your creditors, even ones you did not know about.
Are there any alternatives to bankruptcy?+
Aside from debtor protection under the bankruptcy laws there are some other alternatives. These include credit counseling, loan extensions, compromises, mortgage modifications, short sales, workout agreements and taking no action. All but the last require negotiation skills and experience. These alternatives may alert your creditors to the existence of nonexempt property that the creditor could reach. In any event you should seek professional advice in dealing with most of these alternatives.
What about credit card counselors?+
Be careful with credit card counselors. I would not recommend any company that holds your money to negotiate a lump sum payoff of your credit cards. Usually, it takes too long a time to accumulate enough money to payoff a balance. In the mean time, the creditor can sue and obtain a judgment. These companies offer no protection against lawsuits. Also, not all creditors participate with credit card counselor programs. Creditors, however, are forced to participate in the bankruptcy proceedings so long as they are properly notified. Credit counseling with good reputations could be a benefit. Consult your attorney who can recommend a good credit counselor.
Bankruptcy Filing Consequences in Southampton, Havertown, Perkasie & Bucks County, PA
Is it true that filing for bankruptcy can wipe out all of my bills?+
The underlying policy of bankruptcy law is that the honest debtor who is in debt beyond his/her ability to repay the debt should be given a fresh start through the discharge of debts in a bankruptcy proceeding. Not all debts are dischargeable. For example, the following debts are generally not dischargeable: most taxes; spousal and child support; student loans; criminal fines and penalties; debts arising out of willful or malicious misconduct; liability for injury or death from driving while intoxicated; nondischargeable debts from a prior bankruptcy. Those debts, which are secured, may be discharged; however, the creditor may take legal steps to take back the property.
Can I keep my home after bankruptcy?+
Under a Chapter 7 proceeding, you may be able to keep your home through a reaffirmation agreement so long as you are current in your mortgage payments. Before filing a Chapter 7 bankruptcy, it is important to verify that your house can be protected through bankruptcy exemptions if you intend to keep your home. However, even if you do owe back payments, you may still be able to keep your home through a proposed Chapter 13 monthly plan wherein you would pay all back payments over a period of time (normally three to five years).
What types of personal property may I keep?+
You are permitted exemptions for personal property, including personal property such as household furnishings and personal effects, clothes, jewelry, personal injury award and other miscellaneous property. Equity in your automobile may be exempted to a certain extent. In addition, there is no limit as to the amount you may keep in your retirement plans, pension plans, annuities and unmatured life insurance.
Can I keep my credit cards after bankruptcy?+
All debts are required to be included in the bankruptcy. You may not show preference towards certain creditors in the bankruptcy by choosing to list some and paying on others.
What happens to my personal property, real property and other assets?+
Once the bankruptcy is filed, all of the property of the debtor at the time of filing and certain other property to be received in the future, become the property of the bankruptcy estate. This means that the bankruptcy trustee will take control of this property for purposes of satisfying the creditors. HOWEVER, there is certain property which is either excluded or exempt and the debtor will be able to keep it. Property or asset exemption is determined based upon a statutory scheme. As discussed above, you are allowed exemptions for a limited amount of equity in your home, car, personal property and certain pension and retirement plans, annuities and unmatured life insurance.
Will my employer find out about my bankruptcy?+
Unless your employer is a creditor, generally your employer will not be notified of your filing.
Will I lose my job?+
No. Bankruptcy laws prohibit discrimination based upon a debtor filing for bankruptcy protection.
Can I go to jail if I file bankruptcy?+
No. There is no debtor's prison in the United States.
The Bankruptcy Process
Who notifies the creditors and bill collectors of my bankruptcy filing?+
After your bankruptcy is filed, the court mails a notice to all the creditors listed in your mailing matrix. This usually takes a couple of weeks. For emergencies, you should have your attorney inform the creditors immediately.
What if I forget to list a creditor on my bankruptcy papers?+
You are permitted to file an amendment to your schedules up to a certain time before discharge. If the amendment is timely filed, then the omitted creditor is added to the bankruptcy. However, if you fail to list a creditor, you may not be able to use the bankruptcy laws to protect you against that creditor, although there is case law that discharges an unlisted creditor in a Chapter 7 no asset case. However, it is in your best interest to list every creditor, whether or not you dispute his/her claim against you.
What is a Chapter 13 bankruptcy?+
Yes. About 45 days after you file for bankruptcy, you will have to attend a hearing presided over by the bankruptcy trustee. This hearing is called the First Meeting of Creditors. At this hearing the trustee will ask you questions under oath regarding the content and accuracy of your bankruptcy petition. After the trustee is done the creditors will be permitted to question you. If you have an attorney, your attorney will be there to represent you and will help prepare you for the hearing. After this hearing, you will normally not need to return to court.
The Automatic Stay
Does the filing of bankruptcy stop the bill collectors from calling or contacting me?+
Yes. One of the major benefits of filing for protection under Chapters 7 and 13 is that many creditors' actions are stayed. This means that debt collection efforts and foreclosure must be halted until further order of the bankruptcy court.
How long after the bankruptcy is filed will the creditors stop calling?+
Once a creditor or bill collector becomes aware that the debtor has filed for bankruptcy protection, he/she must stop all efforts to collect the debt. If a creditor continues to use collection tactics after notification of the bankruptcy proceeding, he/she may be liable for court sanctions and attorneys' fees.
Will bankruptcy stop a wage garnishment?+
Yes. However, the debtor cannot recover that amount already garnished by the creditor before the debtor filed for bankruptcy.
Will bankruptcy stop a foreclosure?+
Generally, yes. However, in a Chapter 7, since a home is an asset usually secured by a deed of trust, the lender will be entitled to apply to the court for relief from the automatic stay (the order preventing creditor action by virtue of the bankruptcy). Depending upon several factors, you may be able to prolong a foreclosure until you have received your discharge from bankruptcy. A Chapter 13 is usually a better choice if you are in a foreclosure situation. In a Chapter 13, your attorney will create a plan to repay the mortgage arrears over a period of time so that you may become current on the mortgage.
Will bankruptcy stop an eviction?+
Perhaps. If you file bankruptcy prior to a judgment for possession being obtained by the landlord, the eviction action is stayed. This may allow you enough time to pay the rental arrears, or under a Chapter 13 you may create a plan to repay these arrears over a period of time. You will also be required to post monthly escrow payments to the bankruptcy court. If the landlord is not willing to wait for repayment, he will most likely be able to get relief from the stay to proceed with eviction. The landlord is entitled to possession of his property and at best you will be able to remain in the property until you have received your discharge from bankruptcy or the landlord obtains an order from the bankruptcy court to go forward with the eviction.
If you file bankruptcy after a judgment for possession has been obtained by the landlord, there is no automatic stay and the landlord can proceed with eviction.
Will bankruptcy stop a judgment?+
Yes. Most civil judgments are stopped by bankruptcy.
Will bankruptcy remove a lien?+
Under some circumstances once the bankruptcy proceedings have started, a special motion can be filed to remove certain liens. It will take a bankruptcy court order to remove them. This is a complicated area of the bankruptcy law and an attorney should be consulted. However, generally, you may not remove an already existing tax lien.
What happens to my credit rating after bankruptcy?+
The bankruptcy will be listed on a credit report for a period of ten years. However, it is critical that you re-establish your credit after the bankruptcy discharge. This can be done by ensuring that all monthly bills are paid on time. You may want to ask your bank about a credit card that is secured against your checking account. By making timely payments, your credit score will improve.
After bankruptcy, how do I re-establish my credit?+
There are at least two ways to get credit after bankruptcy. First, one of your existing creditors may continue to grant you credit based upon a reaffirmation agreement made during the bankruptcy proceeding. Second, today there are several banks offering a secured credit card. This means that the credit limit is based upon the amount of security given. Note also that many creditors are more likely to extend you credit after you file for bankruptcy than before your filed. With all of your dischargeable debts wiped away, creditors view the debtor of now having more disposable income to pay the new debts. In addition, creditors know that the debtor cannot file for bankruptcy for another eight years, thereby shielding creditors from the bankruptcy laws during this time period. You may also reestablish debt by having someone co-sign a loan with you.
If I need to file bankruptcy again, how long do I have to wait?+
You must wait 8 years to file Chapter 7 after receiving a discharge in bankruptcy. In certain situations, the Court may have granted a bar against you preventing a re-filing without Court approval. An attorney can tell you if a bar was ordered in a previous bankruptcy.
The Bankruptcy Discharge
How long before I get my Chapter 7 discharge?+
Under normal circumstances, the bankruptcy court will automatically issue the discharge 90 days after the First Meeting of Creditors. What this means is all of the debtor's dischargeable debts are now "wiped out" and the creditors of those debts may not take any actions against the debtor to satisfy those debts.
Do I receive a discharge in Chapter 13?+
Yes, provided you make all payments in accordance with your approved Chapter 13 plan you will receive a discharge upon completion of your plan payments. If your approved plan contemplates repaying unsecured creditors pennies on the dollars, upon receiving your discharge you will no longer be obligated to repay the balance of the unsecured debt.
Find a Bankruptcy Attorney in Southampton, Havertown, Perkasie & Bucks County, PA
With offices in Southampton, Havertown and Perkasie, Pennsylvania, we are pleased to offer our service to people and businesses throughout Philadelphia and the surrounding areas, including but not limited to Delaware County, Bucks County, Philadelphia County, Drexel Hill, Philadelphia, Norwood, Chester, Media, Havertown, Broomall, Quakertown, Holland, Fairless Hills, Morrisville, Churchville, Langhorne, Glenolden, Sharon Hill, Darby, Yeadon, Springfield, Lansdowne, Clifton Heights, Upper Darby, Southampton, Richboro, Willow Grove, Levittown, Bristol, Southampton, Trevose, Bensalem, Warrington, Warminster and Newtown.