WE ARE A DEBT RELIEF AGENCY
Bankruptcy may be an option if any of the following apply to you:
- Your bank account has been attached or garnished
- You are behind on your mortgage and your mortgage company will not work with you to resolve the debt
- A creditor has scheduled a sheriff sale of your property
- Most of your debts are unsecured debts like credit card bills, hospital or doctor’s bills, etc.
- Your total debt, not including your car or house loan, is more than you could pay, even over five or more years
- You are or are considering withdrawing money from your 401K, pension or savings to pay your debts
- Collection agencies are calling you at home and/or at work
- Your payments are more than 30 days behind on more than one bill
- There are lawsuits pending against you
- You have high medical bills not covered by insurance
- You owe income taxes that you are currently unable to pay
- Your lender is threatening to file a lawsuit against you or repossess your vehicle
- You have had property repossessed (such as a vehicle)
Learn More About the Types of Bankruptcy
Chapter 7 Bankruptcy gives you a fresh start by allowing you to discharge your unsecured debt (e.g. credit cards) and start over. It stops harassment from creditors, lawsuits, and any other attempt to collect from you. Most people are able to keep their home and personal property. The U.S. Bankruptcy Code provides liberal exemptions that protect your real and personal property from the reach of the bankruptcy process.
In order to qualify for Chapter 7 you must pass a means test. This test compares your annual household income to the median income of a household of your family’s size in Pennsylvania. The following is the current Pennsylvania median income. These amounts are adjusted periodically.
|Pennsylvania Median Income|
|1 Person||$ 48,200||$ 4,017|
|2 Person||$ 56,946||$ 4,746|
|3 Person||$ 71,703||$ 5,967|
|4 Person||$ 84,396||$ 7,033|
|5 Person||$ 92,496||$ 7,708|
|6 Person||$ 100,596||$ 8,383|
|7 Person||$ 108,696||$ 9058|
|8 Person||$ 116,796||$ 9,733|
|Additional Person||$ 8,100||$ 675|
If your annual income is below the median income for your family size you initially qualify for Chapter 7. If your annual income exceeds that amount you must complete a form comparing your monthly income to expenses determined by local standards (published by the Internal Revenue Service). If you pass this portion of the means test you may qualify to file under Chapter 7. If you don’t pass you must file under Chapter 13.
Once you file under Chapter 7, a trustee is appointed by the court. The trustee reviews your case and conducts a meeting of creditors to discuss your debts, your assets and the reasons you filed. Traditionally, few creditors attend this meeting. Meanwhile, the trustee also reviews your case to determine if there are assets that could be sold and applied to toward payment owed your unsecured creditors.
For more detailed information on Chapter 7 please click visit this U.S. Courts page.
Chapter 13 Bankruptcy enables individuals with regular income to keep their property while paying all or part of their debts over a period of three to five years. It also enables you to stop mortgage foreclosure and pay back the amount you owe during that time. When you file under Chapter 13 a plan is filed with the U.S. Bankruptcy Court and reviewed by the Chapter 13 trustee. Typically, the payments required this plan are paid to the trustee through wage attachment. Your employer deducts the required amount from each of your paychecks and forwards to the trustee each month. The trustee in turn distributes those funds to your creditors.
As part of the process, a meeting of creditors is scheduled by the Chapter 13 trustee where the trustee and your creditors have the opportunity to questions you regarding your assets, debts, reasons for filing and your Chapter 13 Plan.
For more detailed information on Chapter 13 please visit this U.S. Courts page.
Businesses and, in some cases, individuals may seek protection under Chapter 11 Bankruptcy. It allows you to reorganize free from the pressure of paying unsecured debts incurred prior to the bankruptcy filing date, dealing with creditors seeking to collect pre-filing debts. Further, it stops litigation instituted prior to filing. Under Chapter 11’s protection you continue to operate your business while you prepare a reorganization plan that must be approved by the bankruptcy court. Chapter 11 allows you to reject burdensome leases and unprofitable contracts, to reorganize, restructure and reduce many of your debts.
There is no trustee appointed in a Chapter 11 case. Instead the debtor is designated as a “Debtor in Possession” and given the position of a fiduciary with the powers, rights and duties of a trustee.
The debtor in possession has, for example, the duty to file a monthly operation report, object to certain debts and recover preference payments. A trustee may be appointed by the court upon the request of a party in interest after notice and a hearing in the event of allegations of fraud, dishonesty, incompetence, gross mismanagement or if the appointment of a trustee is in the interest of the creditors.
The Chapter 11 case is monitored by the United States Trustee’s Office. The trustee will conduct a meeting of creditors where the debtor in possession is questioned by the trustee and creditors regarding the Chapter 11 filing. There are also quarterly fees that have to be paid to the Chapter 11 trustee based on the debtor’s operating income.
In a Chapter 11 case, the trust may appoint a creditors committee comprised of the seven largest unsecured creditors. There is not always a creditors’ committee in smaller cases.
For more detailed information regarding Chapter 11 visit this U.S. Courts page.
Applicable to All Chapters of Bankruptcy
- Automatic Stay. Whenever you file under any chapter of bankruptcy, an automatic stay takes effect and stops creditors attempting to collect their debt. This means they cannot call you, send you letters or file a lawsuit against you. If a lawsuit is initiated before you file for bankruptcy protection, it is stopped and the creditor cannot proceed with the lawsuit. If a creditor has attached your bank account, the attachment must be lifted.
- Education Requirement. You cannot be a debtor under chapter 7 or 13 unless you have completed credit counseling from a credit counseling agency approved by the United States Trustee’s Office. Further, you cannot receive a Chapter 7 or 13 discharge unless you complete the debtor education or financial management course from an approved credit counseling agency. Please click here for more information regarding credit counseling.
- Discharge. Once you receive your discharge you no longer have personal liability for your dischargeable debts. Further, the creditors to whom you are indebted cannot make any attempt to collect the debt. There are debts that are not dischargeable like most student loans, certain tax debts, child support obligations, alimony, debts arising from a death or personal injury resulting from driving under the influence of drugs or alcohol, and fines and restitution arising from the conviction of a criminal offense. A creditor can object to your discharge if the debt was incurred by false pretenses or fraud while acting in a fiduciary capacity. For more information regarding discharge, please click here.
To schedule a consultation with Attorney William T. Morton regarding Bankruptcy, please call (814) 520-8700.