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Harrisburg, PA Bankruptcy Lawyer

When you find yourself drowning in debt, bankruptcy can be a viable option to start anew financially. While deciding to file for bankruptcy can be overwhelming, it can be a crucial step toward regaining your financial stability.

The bankruptcy process in Harrisburg can be complex and confusing, which is why we recommended seeking professional guidance from our team. We can evaluate your situation and help you decide if bankruptcy is the right course for your financial future. Several bankruptcy options are available, but choosing the right one will depend on your circumstances. The advantages and disadvantages of each should be understood since filing for bankruptcy might be one of the most important choices you make.

For a free case review, contact our bankruptcy lawyers at Young, Marr, Mallis & Deane by calling (609) 755-3115.

Understanding Chapter 7 Bankruptcy in Harrisburg, PA

Chapter 7 bankruptcy is a helpful option for individuals and businesses who cannot repay their creditors. It is also known as “liquidation bankruptcy” because it involves the sale of the debtor’s non-exempt assets to pay off creditors. However, not all debts can be discharged. Fortunately, our bankruptcy attorneys can use their extensive knowledge to assess your finances and how bankruptcy will impact you and your family. Chapter 7 bankruptcy is better suited to those who do not have the money to pay their debts.

Filing for Chapter 7 Bankruptcy

When filing for Chapter 7 bankruptcy in Harrisburg, it is important to understand the various steps involved in the process. Firstly, you must complete a credit counseling course from an agency approved by the U.S. Trustee in Pennsylvania. This course aims to provide you with a better understanding of your financial situation and how to manage your debts more effectively.

After completing the credit counseling course, you must pass the means test. This test compares your income to the median income in Pennsylvania. If your income is below the state median, you will qualify for Chapter 7 bankruptcy. However, if your income is above the state median, you might still be eligible for Chapter 7 bankruptcy, but you will need to pass an additional test to determine your eligibility.

Once you have passed the means test, you will need to complete the necessary bankruptcy forms. These forms will require you to provide detailed financial information, including income, expenses, assets, and debts. Ensuring that all information provided is accurate and up-to-date is important, as any mistakes could delay or even jeopardize your bankruptcy case.

Finally, you will need to file the completed bankruptcy forms with the bankruptcy court. The filing fee for Chapter 7 bankruptcy in Harrisburg is $3,386, payable at the time of filing. Once your bankruptcy case has been filed, though, an automatic stay will go into effect, preventing creditors from taking any further action against you or your assets without permission from the bankruptcy court.

Benefits and Drawbacks of Chapter 7 Bankruptcy

Chapter 7 bankruptcy can offer several benefits to those drowning in debt. Most notably, it provides a fresh financial start by discharging most unsecured debts. Additionally, numerous bankruptcy exemptions allow debtors to keep certain assets, such as a portion of their home and personal property equity.

However, there are misconceptions surrounding Chapter 7 bankruptcy. Despite popular belief, filing for bankruptcy does not mean you will lose all your possessions or that it is the end of your financial future. In fact, many people find that they can rebuild their credit after bankruptcy and go on to achieve financial stability.

Despite its benefits, Chapter 7 bankruptcy also has potential drawbacks. It will significantly impact your credit score, and the bankruptcy will remain on your credit report for ten years. Additionally, not all debts can be discharged in a Chapter 7 bankruptcy, including student loans, alimony, child support, and certain tax debts.

Understanding Chapter 13 Bankruptcy in Harrisburg, PA

Unlike Chapter 7 bankruptcy, which discharges most unsecured debts, Chapter 13 bankruptcy allows individuals to repay their debts over a period of three to five years. Known as the “wage earner’s plan,” it provides debtors with regular income an opportunity to devise a repayment plan to pay off all or part of their debts.

Filing for Chapter 13 Bankruptcy

To qualify for Chapter 13 bankruptcy, an individual must have a steady source of income to demonstrate their ability to repay their debts. In addition, their unsecured debts and secured debts must fall within certain limits, which are subject to change based on state laws.

Moreover, the debtor cannot have had a bankruptcy petition dismissed within the previous 180 days because of their willful failure to comply with court orders or appear before the court. Furthermore, the debtor must receive credit counseling from an approved agency before filing.

Once the credit counseling is completed, the debtor must file a petition with the bankruptcy court in their district, along with schedules of assets, liabilities, income, expenditures, and a statement of financial affairs.

Most importantly, the debtor must submit a proposed repayment plan outlining how they plan to repay their debts over the next three to five years. The repayment plan must be feasible and affordable, taking into account the debtor’s income and expenses. Once the court approves the repayment plan, you must make regular payments to the trustee, who will distribute the funds to your creditors.

Benefits and Drawbacks of Chapter 13 Bankruptcy

Chapter 13 bankruptcy offers several advantages over other forms of bankruptcy, like Chapter 7. One of the key benefits of Chapter 13 is that it allows individuals to keep valuable assets, like a house or car, which might otherwise be lost under the liquidation process of Chapter 7 bankruptcy. This is because Chapter 13 involves creating a repayment plan that allows the debtor to pay back their debts rather than having their assets sold to pay off creditors.

Another advantage of Chapter 13 bankruptcy is that it provides a chance to reschedule secured debts and extend them over the life of the Chapter 13 plan. This means that debtors can spread out their payments over a longer period, making it easier to manage their finances.

However, Chapter 13 bankruptcy also has its downsides. For one, it requires a commitment to a long-term repayment plan that lasts up to five years. This means that debtors must be prepared to make regular payments over an extended period. Furthermore, it restricts spending, as the debtor must budget carefully and live within their means. This can be difficult for some individuals who might be used to a certain standard of living.

Lastly, a Chapter 13 bankruptcy stays on your credit report for seven years, making it difficult to obtain credit during that time. This can impact one’s ability to get loans, credit cards, or even rent an apartment.