If your debts are out of control and you dread the next notice or phone call from your creditors, it may be the right time to start considering filing for bankruptcy. Filing comes with many advantages, including debt elimination, temporarily halting collection actions, and the chance to start improving your credit score. But while filing can be hugely beneficial, it is also an extremely complex process which is difficult to navigate without experienced legal assistance.
At Young, Marr & Associates, our knowledgeable attorneys have more than 20 years of experience helping Easton residents successfully complete Chapter 13 and Chapter 7 bankruptcy cases. Our accomplished legal team has handled filing thousands of petitions, and we offer free initial consultations for new clients.
Don’t wait another day: call our law offices at (609) 755 3115 in New Jersey or (215) 701 6519 in Pennsylvania. Your information will be kept confidential.
Why Consider Filing?
Bankruptcy has an unfair reputation which is built on myths, misconceptions, and negative stereotypes. For example, you may have been told that you’ll lose your car and home, or that you’ll be stuck with bad credit for the rest of your life. Perhaps these claims have even discouraged you from filing a petition.
In reality, none of these claims are true. It is possible to lose your car and home if you fall too far behind on your debts, but filing can actually help postpone these actions through a special creditor freeze called the automatic stay. It’s true that filing initially hurts your credit score, but once your debts are eliminated, you’ll have a clean financial slate to start rebuilding healthy credit for the future. If you’re falling behind with your creditors, it’s critical for you to address the situation now before it gets worse later.
Some of the benefits of bankruptcy include:
- Debt Relief — You can eliminate most of your major debts, including medical bills, credit card bills, and personal loans.
- Automatic Stay — The automatic stay prohibits your creditors from taking further collection actions while your case in progress. The automatic stay is meant to give filers a rest period to work out a financial plan for the future.
- Rebuild Credit — If you’re thinking about filing, it is likely that you already struggle with damaged credit. Once you take care of your debts, you can start fresh.
Chapter 7 vs. Chapter 13: Which is Better?
You’ve probably heard of corporations filing for Chapter 11. Consumer bankruptcy is also divided into “chapters,” which are named for their corresponding chapters in the U.S. Bankruptcy Code. In all but a few exceptional cases, individuals file under either Chapter 7, or Chapter 13. So how are they different? Is one better than the other?
Chapter 7 is the faster option by a wide margin, which makes it appealing to many debtors. While Chapter 13 takes anywhere from three to five years, Chapter 7 cases can be resolved in as little as four to six months. Not only is Chapter 7 faster — it’s also simpler and less financially demanding than Chapter 13. While Chapter 13 filers must repay a significant portion of their debts through a long-term repayment or “reorganization” plan, Chapter 7 debtors are excused from creating a repayment plan.
However, there are also some disadvantages to Chapter 7. While Chapter 13 takes longer and requires debtors to create a repayment plan, the trade-off is that Chapter 13 filers can typically keep their property and possessions. Because Chapter 7 debtors do not make the Chapter 13 repayments, portions of their property and assets can be seized by trustees to help pay back creditors, giving Chapter 7 its nickname of “liquidation.”
However, many Chapter 7 debtors are able to retain important assets by using strategic exemptions. The stereotypical image of immediate foreclosure and repossession is often avoidable.
In short, every case is different. There is no “best” or “superior” chapter: it simply depends upon your financial situation. Some people who qualify for Chapter 7 go on to file for Chapter 13, while some who qualify for Chapter 13 are able to deduct enough expenses to qualify for Chapter 7.
Requirements Before You File
When you begin the process, you will have to take the “Means Test.” This is a diagnostic test which weighs your income against the median income for a household of the same size to determine whether you can afford the Chapter 13 repayment plan. If you cannot, you are eligible to file under Chapter 7. If you can, you must file for Chapter 13 unless you can prove that your expenses render you unable to accommodate a Chapter 13 repayment plan.
Before you can file under either chapter, you will also be required to attend credit counseling. The purpose of credit counseling is to review your financial situation and make sure that bankruptcy is the right choice to start attacking your debts.
Finally, you must also meet the residency requirements for your state. People who plan on filing for bankruptcy in Easton must reside in Pennsylvania for at least 91 out of the 180 days prior to filing, although filers who plan on using the state exemptions over the federal exemptions must have at least two years of residency.
Contact Our Bankruptcy Attorneys
It is easy to make a mistake during the filing process, and an error could cost you favorable deductions or even your entire case. If you deliberately hide or alter assets, you could even be criminally charged. Don’t struggle without support: get experienced legal help.
The attorneys of Young, Marr & Associates will help handle your paperwork, negotiate with your creditors, and keep you informed of your legal rights. To schedule a free and private case evaluation, call our law offices today at (609) 755 3115 in New Jersey or (215) 701 6519 in Pennsylvania. Our Northampton County bankruptcy lawyers proudly serve Easton and the surrounding communities.