Bankruptcy Law
Have you lost your job… are you drowning in debt? Is your home now the subject of a foreclosure? Have you been sued or has a judgment been entered against you? Has divorce affected your net worth? If you answered yes to any of these questions, bankruptcy may be your guide towards a brighter financial future.
Bankruptcy is a process by which individuals and businesses can eliminate and/or repay some or all of their debts under the protection of the federal bankruptcy code. Generally, individuals seek protection under Chapter 7 or Chapter 13 of the Bankruptcy Code. In a Chapter 7 bankruptcy, the trustee may take and sell (“liquidate”) some of your property to pay back some of your debt. There are many exemptions under the law however, that allow you to keep certain property that is protected. In a Chapter 13 bankruptcy, you keep all of your property, but must make monthly payments over three to five years to repay all or some of your debt. Chapter 13 is the most common type of bankruptcy filed by individuals.
Bankruptcy Support Services, Inc. has been in operation for more than 20 years. Our lawyers have substantial knowledge and experience in dealing with bankruptcy issues, including but not limited to:
- Bankruptcy Counseling
- Chapter 7
- Chapter 13
- Foreclosure
- Repossession
- Loan Modifications
- Short Sales
- Divorce and Bankruptcy
- IRS Debts
- Alternatives to Bankruptcy
- Defense of Credit Card Lawsuits
Our office offers a FREE, no obligation, legal consultation at which time we will advise you of your rights and available options. We offer affordable payment arrangements and for your convenience, we have offices located in Havertown, Media, Philadelphia and Bucks County.
If you or someone you care about is in need of an experienced bankruptcy attorney, contact us today.
Bankruptcy Counseling
During our initial consultation, we will discuss the advantages and disadvantages of bankruptcy and help you make the decision that is right for you.
Chapter 7
A Chapter 7 bankruptcy is a debt liquidation bankruptcy available to both individuals and businesses. It allows a person or business to discharge certain debts, including credit card debt, medical bills and judgments. 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, (i.e. 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, which essentially wipes out all of his/her dischargeable debts. After the debt is discharged, the debtor is free from the creditor collection practices and he/she can begin to rebuild his/her credit score.
Who can file a Chapter 7 bankruptcy?
A person or business with residence, a domicile, a place of business, or property in the United States or a municipality may file a Chapter 7. 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. A means test applies.
The Benefits of Filing Chapter 7 Bankruptcy
A Chapter 7 bankruptcy may help you to:
- Eliminate or reduce dischargeable debts (including credit card debt and medical bills)
- Stop harassing collection calls
- Stop car, furniture, and other property foreclosure and repossession
- Stay a lawsuit or enforcement of a judgment
- Prevent a sheriff’s sale of your property
Means Test
When the new bankruptcy laws were passed in 2005, a means test was introduced to help determine whether filing Chapter 7 or Chapter 13 bankruptcy is appropriate. In general, the means test measures income in comparison to the average household income in the state. Overall expenses are also considered. If a debtor falls below the median income, he or she may qualify for Chapter 7 bankruptcy.
Our firm understands the nuances of filing bankruptcy and the means test, and we can help you weigh your options and decide which Chapter is more appropriate for you.
Chapter 13
Chapter 13 is a reorganization of debt bankruptcy, available to both individuals and businesses. The debtor pays back creditors through a monthly payment “plan,” which is 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?
In many cases, a person files for a Chapter 13 bankruptcy because of they have fallen behind in their mortgage payments and their home is in foreclosure. Filing bankruptcy stops the 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). Unlike a credit card or loan, there is no interest attached to the debt.
Should I choose Chapter 7 or Chapter 13?
There are a lot of factors to consider when deciding the type of bankruptcy to file. Our office has competent bankruptcy lawyers 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. Our attorneys will work to reduce your debts and develop an affordable debt reorganization plan designed to pay off your debts and restore you to financial wellness.
Trustee
The United States Trustee appoints regional trustees as well as assistants to oversee bankruptcy cases. The trustee is usually a lawyer and/or accountant. The trustee’s job is to enforce bankruptcy laws through the supervision of Chapter 7 and Chapter 13 cases.
The trustee administers the means test. He/she may move to dismiss a case that seems to be an abuse. If your bankruptcy case was filed without credit counseling, the US Trustee will move to dismiss it.
The trustee is not the court but he/she can appear before the court and express his/her views on your particular matter.
Credit Counseling
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 launched a new era. With limited exceptions, people who plan to file for bankruptcy protection must get credit counseling from a government-approved organization within 180 days before they file. They also must complete a debtor education course to have their debts discharged. Credit counseling must take place before you file for bankruptcy and debtor education must take place after you file.
Foreclosure
Foreclosure is a process in which the home becomes the absolute property of the lending institution/bank. The foreclosure process begins when the homeowner fails to make mortgage payments due at the appointed time due to unemployment, divorce, medical challenges, terms of the loan, property management disputes, and even death.
A letter demanding payment is usually sent by the bank/lender. This letter is generally referred to as a Notice of Default (NOD). The notice is serious as it relays the bank’s intention to sell your property, terminate all of your rights in that property and evict you from the premises.
Our attorneys have tremendous experience in litigating mortgage foreclosure complaints and/or using the bankruptcy laws to stop foreclosure proceedings.
Repossession
Repossession is generally used to refer to a financial institution taking back an object (house or car) that was either used as collateral or rented or leased in a transaction. If you are behind on your mortgage or car payments and are threatened with repossession or foreclosure, we can help.
You do not have to lose your home or personal property. Our attorneys are experienced in dealing with foreclosure, repossession and garnishments. If your vehicle has been repossessed but not yet sold by the finance company, we can get it back for you!
Loan Modifications
Many mortgage lenders have come to realize that they have little chance of obtaining full payment on the mortgages they have issued. They are increasingly willing to renegotiate many of their mortgages at terms much more favorable to borrowers.
A loan modification can do one or more of the following:
- lower your interest rate
- lower the total outstanding mortgage
- incorporate mortgage arrears into the mortgage
- extend the term of the loan
The extra cash flow you get from better loan terms can improve your life in many ways.
Our firm has experience in all aspects of loan modifications. From the negotiation stage to completion of the final documentation, we will work diligently to obtain the best loan terms for you.
Short Sales
In a short sale, you arrange to sell your house to a third party and the mortgage lender agrees to settle for less than what is owed. Our firm has relationships with a number of real estate brokers and mortgage lenders. We can coordinate all aspects of your transaction, from negotiating the agreement with your lender to working with a real estate broker to finalize the sale. Our attorneys have the knowledge and experience essential to protecting your interests and minimizing you tax liability.
Divorce and Bankruptcy
Financial pressure is a major cause and/or contributor to most divorces. Unfortunately, the financial pressures may not go away after a divorce decree is issued. Many times, they get worse as each spouse tries to support a household on a single income.
Whether bankruptcy is right for you is a highly complex issue depending on the specifics of your situation.
Discharging Debts Before Divorce
It is often better to file for bankruptcy before divorcing, particularly when the couple has a significant amount of jointly held dischargeable debt, such as credit card debt and medical bills. A Chapter 7 bankruptcy does just that, it completely eliminates certain debts. In addition, a Chapter 7 bankruptcy can be achieved in as little as six months before the divorce is finalized.
Discharging Debts After Divorce
Some debts cannot be discharged after divorce, such as child support and court-ordered spousal support (alimony). By eliminating other debts however, a Chapter 7 bankruptcy after divorce can provide you with the cash flow you may need to pay your non-dischargeable obligations. You may also have the option of a Chapter 13 bankruptcy, which can roll your remaining debts into a repayment plan.
IRS Debts
Tax debts continue to grow through interest and penalties. Eventually, the IRS will take action by placing a tax lien on your property and in time sell it to satisfy the tax debt.
In some instances, it may be possible to obtain a discharge of your tax debts. If a discharge is not possible, there are many other alternatives available. (See Tax Law)
Defense of Credit Card Lawsuits
Credit card lawsuits are very common. Before you decide whether to file a bankruptcy petition, you need to determine if you have a valid defense under the law. Our attorneys are experienced in litigating credit card lawsuits. We are aware of the defenses available in Pennsylvania and we know how to help you defend credit card claims.
Here are some examples:
In Pennsylvania, a credit card company cannot pursue a lawsuit against you if: 1)your debt is more than four years old, and 2)you have not paid on your credit card during those four years.
Credit card companies often assign debt collection to a third party. Unless this company has a valid assignment from the original creditor, it cannot legally sue you for the credit card debt.