Pennsylvania Bankruptcy Laws – A 101 Guide

If you’re facing mounting bills that you’re unable to pay and feel that you have nowhere to turn, filing for bankruptcy may be the best answer available to you. Though many people fight long and hard against having to do so because it carries a negative stigma and can impact your credit in the future, bankruptcy has the advantage of providing the opportunity to make a fresh start. It allows you to put an end to harassing phone calls from creditors and helps end the nightmare of spiraling debt. Many of the fears that people have surrounding bankruptcy come from their lack of understanding of exactly what it is and how it works.  The Philadelphia bankruptcy attorneys at Erik B. Jensen, P.C. understand how intimidating the idea can be, and are here to help you understand the process and whether it is right for you.

Filing Chapter 7 Bankruptcy

Chapter 7 bankruptcy is available to almost anybody unless they don’t qualify because they have to much disposable income available or have filed under Chapter 7 in recent years. When filing for Chapter 7, you are able to eliminate your debt on your credit cards, your medical bills and other unsecured loans by submitting to the liquidation of non-exempt assets, which means that many of your assets can be sold in order to satisfy as many of your debts as possible. The belongings that are exempt are those that creditors are generally unable to resell, and include items like household furnishings, clothing and personal items.  Other items such as automobiles and mortgages may be repossessed, or you may be permitted to continue making payments under the existing contract or to pay a lump sum in order to retain them. Our experienced bankruptcy attorneys can help you with this process. We will also explain the long-term ramifications of Chapter 7, including the need to continue making payment for student loans, child support and spousal support and tax debts, as well as the difficulty you will likely encounter when applying for credit in the future.

Filing Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a process that allows those with less than $1,149,525 in unsecured debt of more than $383,175 in secured debt to restructure their payment schedules so that repayment takes place, but over an extended period of time.  Every repayment plan is structured differently and is based upon the total amount owed and the amount that the debtor earns. Creditors are often amenable to Chapter 13 filings because even though it takes longer for them to collect the monies owed to them and they often have to negotiate to accept less than was originally borrowed, they generally are able to recoup more than they would have had the debtor filed for Chapter 7 bankruptcy.

If you are a homeowner or have secured debt that you are currently unable to pay according to the agreed upon schedule, a Chapter 13 bankruptcy offers the benefit of not having to liquidate assets under a foreclosure or repossession. You will be given the opportunity to make good on your debt. This option is only available to those who are able to show that their income will enable them to make payments under the new schedule.

Other Types of Bankruptcy Filings

In addition to Chapter 7 and Chapter 13 filings, there are other methods of filing that are largely utilized by businesses. These include Chapter 11, which involve reorganizing a business, and Chapter 12, which is specifically utilized for those whose debts are tied to the ownership of a family farm.

Call the Philadelphia Bankruptcy Attorneys at Erik B. Jensen, P.C.

Filing for bankruptcy is the absolute right answer for many situations, and it may or may not be the answer for you. There are a lot of factors that need to be considered beyond simply looking to escape your debt, and even if the process sounds appealing there is a possibility that you may not be eligible, or that a better answer may exist.

One way or another, if you do not pay your creditors you put yourself at risk of ruining your credit further and losing your assets. The Philadelphia bankruptcy attorneys at Erik B. Jensen are here to help. Schedule an appointment with us and we will review your situation and let you know what your options are.

Learn more about Pennsylvania Bankruptcy Laws here –