Bankruptcy Expertise in Ridley Park, Pennsylvania

To many people, the word “bankruptcy” brings on visions and fear of losing everything, as well as tarnishing your reputation so much that life will never be the same. Both impressions couldn’t be further from the truth. Depending on the type of bankruptcy you file, you can either rearrange your debts to keep all your possessions, or you can exempt many of your valued belongings if you seek a quick discharge from obligations. And indeed, bankruptcy does represent a fresh start in life and relief from overwhelming stress.

For one, creditors and bill collectors can never contact you again. The phone will stop ringing, emails will stop coming, and annoying text messages will vanish. With a Chapter 13 filing, you can rearrange your debt load to pay a consolidated monthly bill for three to five years, and then you’re free. With a Chapter 7 filing, you can discharge all your unsecured obligations in a matter of months while in many cases retaining your home, your car, and your essential belongings. 

Overwhelmed by debts and just making minimum payments or skipping some payments in favor of others? You probably should consider bankruptcy as an option. If you’re in the Ridley Park area of Pennsylvania, or anywhere in Delaware County or Chester County, contact Adams Kearney Law for attorney expertise in bankruptcy. Countless individuals have benefited from our expertise in navigating the bankruptcy system to obtain a fresh start in life, and we stand ready to help you, too. We provide personalized and compassionate attention to every client’s unique circumstances. 

Understanding Bankruptcy 

The federal bankruptcy code contains provisions for different categories of individuals, families, and businesses to seek relief from unmanageable debt obligations. These provisions go by the title of “chapter.” Chapter 13 is a reorganization option and Chapter 7 is a liquidation option. Chapter 11 is like a Chapter 13, but it is mainly for higher-income individuals and businesses. 

The code also allows for exemptions if Chapter 7 is invoked. These exemptions allow filers to retain possession of their home, their car, their belongings, and the other essentials of life, provided they meet certain equity standards, which will be described in more detail below. 

As soon as you file under any chapter, the bankruptcy court will issue what is called an “automatic stay,” meaning your creditors and bill collectors have to cease contacting you and instead work through the bankruptcy court on any obligations owed to them. When the bankruptcy process is over, you will be discharged from most debts, with a few exceptions to be listed below. 

Chapter 13 Bankruptcy 

A Chapter 13 filing is known as the “wage-earner’s plan.” In this filing, you compute your disposable income – what is left over after you’ve paid all your essentials for living, such as rent, mortgage, car payment, food, and so on – and that figure becomes the basis for a debt reorganization.  

Depending on how big your debt load is, the process can take three to five years. In short, your obligations will be reduced and eliminated within a few years. You can even use the reorganization plan to pay back past-due mortgage or car payments, but you need to file before the lenders take back your home or car. 

Chapter 7 Bankruptcy 

Chapter 7 is the liquidation option. This means you probably don’t have enough disposable income for a Chapter 13, and indeed, there is an income “means test” to qualify for Chapter 7. Liquidation means selling off your property and possessions to satisfy creditors, but the federal code allows for exemptions, and states are allowed to establish their exemption levels as well. 

For instance, in Pennsylvania, you can retain $27,900 of equity in your home, double that if you’re married. This means that if your home value minus your mortgage obligations is less than $27,900 (or $55,800 if married), your home cannot be sold off. The same goes for a car if the equity is $4,450 or less. There are also exemptions for household goods, jewelry, tools of the trade, and so on.  

Exemptions can get tricky, as you can apply unused exemptions to other categories. Consult with an attorney for skilled guidance. 

Chapter 11 Bankruptcy 

Chapter 11 is much like a Chapter 13 but it is mainly used by corporations, partnerships, other businesses, and higher-income individuals. It allows for the reorganization of all debts, but instead of working through a trustee, you present a plan to your creditors directly as the “debtor in possession.” This can be problematic because your creditors may reject your plan and eventually force you into a Chapter 7 filing. Again, a bankruptcy attorney can help you navigate the process. 

Which Debts Cannot Be Discharged 

Keep in mind that some debts can never, or rarely, be discharged. These include past taxes, student loans, and spousal or child support. It is sometimes possible to discharge state and federal taxes past due, but they must precede your filing by at least three years. Student loans can also sometimes be discharged, but the filer must prove that continuing to pay the loan will present an “undue hardship.” 

Deciding Which Option Is Best for You 

A Chapter 7 is the quickest way to a financial fresh start, but you do face the potential of having property sold off. Plus, if you’re behind in your auto or home payments, the creditors can repossess or foreclose on you if you can’t refinance or make up past-due obligations.  

Chapter 13 allows you to retain all possessions that you wish to retain, but your lifestyle may be negatively impacted for three to five years.