What happens in a Chapter 7 bankruptcy case?

What happens in a Chapter 7 bankruptcy case?

Chapter 7 bankruptcy cases are usually straightforward.  On rare occasions, complications arise if creditors take aggressive action, if the trustee thinks you are hiding assets, or if you want to challenge creditors’ claims.

Who can file?

Any individual who lives in the United States or has property or a business in the United States can file a chapter 7 bankruptcy. If you received a chapter 7 bankruptcy discharge within the past eight years, you are disqualified from receiving a discharge in chapter 7. A similar disqualification may also apply if you received a discharge within the past six years in a chapter 13 case in which your unsecured creditors were paid less than 70% of what they were owed.

 

What is the means test?

In 2005, Congress added the “means test” to the bankruptcy law to make it more difficult for wealthy consumers to file chapter 7 bankruptcy. Most consumers who file for bankruptcy are not affected by this change. If your income is below the median in Pennsylvania, you are protected by a “safe harbor” and not subject to the means test. The current median family income figures for Pennsylvania are available on the website for the Untied States Trustee Program at: http://www.usdoj.gov/ust.

What are the first steps?

The first step in a chapter 7 bankruptcy is completion of certain basic forms. These include a three-page initial “petition.” You will also need to file a certificate from an approved credit counseling agency.  A number of other forms must also be filed either at the same time of the petition or shortly afterwards. These include your statement of financial affairs, statement of intentions with respect to certain secured debts, statement of monthly income and means test calculations, copies of any pay stubs you received from an employer during the sixty days before filing your bankruptcy case; and a set of schedules listing all your debts, assets, income, and expenses. It is important that all of these forms be filled out completely and accurately.

What are common mistakes?  

A chapter 7 bankruptcy is often called a “liquidation” bankruptcy because the debtors assets are examined by the court appointed  trustee and any “unexempt” assets are typically sold for the benefit of creditors.  Frequently overlooked assets include tax refunds, child support arrearages, security deposits, pledged goods at pawnbrokers, personal injury claims, other legal claims, and the cash value of life insurance policies.

What is Chapter 7 Bankruptcy?

Chapter 7 Bankruptcy wipes out (“discharges”) your debts. Chapter 7 is the bankruptcy provision most frequently used by individuals. It involves the complete liquidation of a debtor’s property to pay creditors and wipes out the remaining debts, giving the debtor what’s known as a “fresh start”.  The whole Chapter 7 bankruptcy process takes about three to four months, costs $299 in filing and administrative fees, and commonly requires only one trip to the courthouse.

Are You Eligible for Chapter 7?

Visit the following website to determine if you are eligible to file Chapter 7 Bankruptcy. http://www.legalconsumer.com/bankruptcy/nolo/

The bankruptcy law determines your income by looking at your household income during the six full calendar months before your bankruptcy filing. The following is brief summary of who is eligible to file Chapter & Bankruptcy in Pennsylvania:

1 # of people in Household: $3,700 per month or $44,396 annually

2 # of people in Household: $4,464 per month or $53,572 annually

3 # of people in Household: $5,626 per month or $67,516 annually

4 # of people in Household: $6,466 per month or $77,590 annually

5 # of people in Household: $7,041 per month or $84,490 annually

You may have noticed already that changing the number of persons in the household dramatically affects the median income figure.  For your information, all children, dependents and anyone that lives with you that you take care of can be included in the household number.

Chapter 7 Bankruptcy wipes out (“discharges”) your debts. Chapter 7 is the bankruptcy provision most frequently used by individuals. It involves the complete liquidation of a debtor’s property to pay creditors and wipes out the remaining debts, giving the debtor what’s known as a “fresh start”.  The whole Chapter 7 bankruptcy process takes about three to four months, costs $299 in filing and administrative fees, and commonly requires only one trip to the courthouse.

Dunne Law Offices, P.C.

1500 John F Kennedy Boulevard, Suite #200

Philadelphia, PA 19102

(215) 854-6342 (Office)

http://www.dunnelawoffice.com

http://www.dunnelawoffices.com

http://www.thephiladelphiabankruptcyattorney.com

http://www.bestphiladelphiabankruptcyattorney.com

What is Bankruptcy?

Bankruptcy is intended to give people a fresh start – free of debt.  The bankruptcy laws provide an opportunity for a fresh start to those individuals whose financial difficulties have left them unable to pay their bills and have put them at risk of losing their house, cars, or other property.

Why do people file bankruptcy in Pennsylvania?  In my experience as a bankruptcy lawyer, these are some common scenarios:

  • You are trying to keep debts current but are borrowing money from one card to pay another (robbing Peter to pay Paul).
  • You are trying to keep debts current by using your savings but can see the day when your savings will run out (don’t wait until it does).
  • You have defaulted on credit card debt and are dealing with debt collectors who are not willing to help you and are rude and harassing.
  • You have defaulted on credit card debt and are being sued or already have civil judgments against you.
  • You have looked into credit counseling and found that they demanded a payment you could not afford.
  • You have lost a job or had a sudden reduction in income.
  • You have incurred substantial medical debt because of illness or an accident.
  • You have fallen behind on house or car payments and are facing foreclosure or repossession.
  • You had a business that failed or is failing.

People often feel embarrassed and feel like there is no hope when they find themselves in situations like these.  They may know that bankruptcy exists but are scared by it.  Bankruptcy is not something to take lightly, but it is not as scary as you might think.

You owe it to yourself to at least know your options.

Dunne Law Offices, P.C.
1500 John F Kennedy Boulevard, Suite 200
Philadelphia, PA 19102
(215) 854-6342 (Office)

http://www.dunnelawoffice.com http://www.dunnelawoffices.com http://www.thephiladelphiabankruptcyattorney.com http://www.bestphiladelphiabankruptcyattorney.com

The Difference Between Chapter 7 and Chapter 13 Bankruptcies

Chapter 7 and Chapter 13 are two different kinds of bankruptcies available to individuals, some businesses, and married couples with financial problems.

A straight liquidation bankruptcy, known as a Chapter 7 bankruptcy, involves the filing of a bankruptcy petition and statement of all property, debts, and budget information. The filing of the petition stops all creditor action against the Chapter 7 debtors and their property, including mortgage foreclosure, sheriffs sale, utility shut-offs, and other creditor harassment. Chapter 7 debtors can generally keep all their personal property, but debtors can keep their home and cars only if arrangements are made separately by the debtors themselves for payment of all current and back payments of auto loans, mortgage payments and finance company liens against their home.

Chapter 7 debtors usually have one short meeting with a trustee. After Chapter 7 discharge, debtors no longer have personal liability for most of their utility and consumer debts petition Chapter 7 does not discharge debts such as mortgage payments ( if the debtors wants to keep the property), city water/sewer liens, ongoing utility bills, auto loan payments (if the debtor wants to keep the automobile), alimony, child support, fines, traffic tickets, most student loans, most taxes, amounts owed because of malicious injury, drunk driving, criminal restitution, and certain debts owed creditors not listed in the Chapter 7 list of creditors filed with the court. The discharge order is usually entered approximately six months after filing the Chapter 7 petition. Debtors may receive a Chapter 7 discharge only once every eight (8) years. After discharge, a mortgage company can continue with foreclosure and sheriff’s sale and an automobile lender can repossess an automobile if the car loan payments are delinquent. Chapter 7 is appropriate for debtors who either do not have mortgages, are current in their mortgage payments, are able to bring current their mortgage arrearage in the few months prior to Chapter 7 discharge, or for debtors who are unable to afford to keep their home.

A debtors reorganization plan, known as a Chapter 13 bankruptcy, is an alternative under the federal bankruptcy law to Chapter 7 bankruptcy. As with Chapter 7, the Chapter 13 petition stops mortgage foreclosure, sheriffs sale, utility shut-offs, and other creditor harassment. Chapter 13 also provides for monthly payments by debtors to a Chapter 13 trustee for three to five years. Out of these payments, the Chapter 13 trustee pays the following: mortgage arrearage, interest, late charges, court costs, and fees for the mortgage company’s lawyer. Out of the plan payments, the Chapter 13 trustee also pays amounts owed prior to the filing the Chapter 13 for taxes, water/sewer liens, arrearage on second mortgages, and usually a small percentage of unsecured debt. Unsecured debt includes back medical and utility bills, credit card, store charge and loan balances for which there is not mortgage lien on the debtor’s home. The trustee also pays the balance of any fees due the debtor’s lawyer and applies a percentage (usually between 10%) of each plan payment, toward the cost of running his office.

During the Chapter 13 plan, debtors must make current mortgage and utility payments as well as payments on any second mortgage, home improvement or auto loan. A mortgage company can obtain relief from Chapter 13 and continue foreclosure if current mortgage payments are not made. A Chapter 13 bankrutpcy can be dismissed if payments to the trustee are missed. At the end of a Chapter 13 plan in which all trustee and mortgage payments have been made, the mortgage is reinstated and pre-bankruptcy unsecured debts are discharged. Chapter 7 or 13 bankruptcies will be dismissed if court hearings are missed.

To speak directly, one on one, with an experienced and knowledgeable Philadelphia Bankruptcy Lawyer, please contact the Dunne Law Offices at (215) 854-6342. We offer a free initial consultation for all consumer bankruptcy matters. The Dunne Law Offices, P.C. is a debt relief agency.
The Dunne Law Offices, P.C. helps people file for bankruptcy relief under the bankruptcy code.

BANKRUPTCY LAW

The bankruptcy laws provide an opportunity for a fresh start to those individuals whose financial difficulties have left them unable to pay their bills and have put them at risk of losing their house, cars, or other property. Bankruptcy is a complex area of the law, and requires the services of an attorney experienced and specialized in bankruptcy law to provide you with an in-depth analysis of your situation and to give you legal advice and representation you can trust to protect your assets and discharge your debts.

In the United States, the two most common forms of bankruptcy available to individuals and families are Chapter 7 bankruptcy and Chapter 13 bankruptcy.

Under a Chapter 7 bankruptcy, an individual completely eliminates all of their legal liability to pay unsecured debt, such as outstanding credit card bills, medical bills, unsecured personal loans, payday loans, judgments, etc. In return for eliminating the majority of your debt, some of your non-exempt property or possessions may be sold in order to help off-set some of your debt. Certain debt cannot be eliminated in Chapter 7 bankruptcy, such as child support, alimony/spousal support, student loans, damages for personal injury accidents or tax debt.

Under a Chapter 13 bankruptcy, an individual consolidates their debt and restructures it into an affordable monthly payment plan. Unlike Chapter 7 bankruptcy, Chapter 13 does not completely eliminate a debtor’s unsecured debt. Under Chapter 13 bankruptcy, you will still be required to repay a portion of or all of your debt. However, you pay off your debt in affordable monthly payments over a period of three to five years. The amount you pay every month will be determined by the court and in relation to your monthly income, current monthly expenses, and non-exempt assets, this way you are not required to pay back more than you can afford each month. Furthermore, you will most likely get to keep all of your assets and property throughout the bankruptcy process.

To speak directly, one on one, with an experienced and knowledgeable Philadelphia Bankruptcy Lawyer, please contact the Dunne Law Offices at (215) 854-6342. We offer a free initial consultation for all consumer bankruptcy matters.

The Dunne Law Offices, P.C. is a debt relief agency. The Dunne Law Offices, P.C. helps people file for bankruptcy relief under the bankruptcy code.