Request a Free Bankruptcy Consultation
If you have substantial credit card debt, medical bills, mortgage payments that you are behind your payments on, or an unsustainable second mortgage on your home, I can help you obtain relief through the bankruptcy code. Contact us for a free consultation. The goal of bankruptcy is to provide those with a high debt burden with a “fresh start.” There are two types of consumer bankruptcies which I’ll explain for you, Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
A Chapter 7 bankruptcy provides a debtor with a complete discharge of their debts without requiring the debtor to repay any of their unsecured debts. A Chapter 7 bankruptcy is not available to all debtors though. A Chapter 7 is only available to those who are unable to pay their creditors after deducting their basic living expenses. A Chapter 7 bankruptcy uses the means test to determine who is eligible to file a Chapter 7.
If your income is below the median income in Pennsylvania for your household size, you will be eligible to file a Chapter 7. The table below can help you determine whether you will qualify for for Chapter 7 based on your income and household size. If your income is over this amount, Chapter 13 is the alternative bankruptcy chapter for you to consider.
Chapter 7 Means Test Eligibility Chart (Pennsylvania)
|Household Size||Annual Income|
Updated November 1, 2014. Subject to change.
Even if your income exceeds the amount in the table above, you may still be eligible for a Chapter 7 after an analysis of your income and expenses is conducted. There are two parts the means test. The first part looks at whether your income is above or below the median income in Pennsylvania. If your income is below the median income, you will be eligible for file for Chapter 7. However, if your income is above the median income, the means test will look at additional factors such as your payroll deductions, secured debts, and other necessary expenses, to determine whether you have sufficient disposable income. Many debtors whose income exceeds the limits still qualify for Chapter 7. Feel free to contact me to discuss your eligibility. I will conduct the Means Test analysis for you at no charge. Call me at (610) 417-6345.
Chapter 7 Asset Analysis
In most Chapter 7 cases, Debtors are able to keep all of their assets and property. However, it’s important to note that under a Chapter 7, a debtor’s assets could potentially be sold in order to pay their creditors. The bankruptcy code provides several exemptions which a debtor may use to receive a discharge without having to surrender any of their property. For example, a debtor can exempt up to $22,975 in equity on their home, $12,250 worth of household goods, and $3,675 for a vehicle. Additionally, if the home-equity exemption isn’t used, a $12,725 “wild card” exemption may be used to exempt any property such as a second vehicle. Further, retirement benefits such as a 401(k) or a pension are untouchable in bankruptcy. Feel free to contact me at (610) 417-6345 to determine if you can seek Chapter 7 and keep all of your assets and property.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy establishes a payment plan for the debtor over a period of three to five years. The main benefit of a Chapter 13 bankruptcy is that it permits the debtor to reorganize their debts. This is particularly important when the debtor’s home is their main concern. If you have fallen behind on your mortgage, but wish to keep your home and prevent foreclosure, you may want to consider a Chapter 13 bankruptcy.
A Chapter 13 bankruptcy would permit you to pay the arrears on your mortgage over a period of three to five years so you can get caught up while continuing to make your regular monthly mortgage payments. If you have a second mortgage on the property and the second mortgage is completely unsecured, meaning the first mortgage is more than the value of your home, then you could use a Chapter 13 bankruptcy to “strip” the second mortgage and remove it from the property. This can relieve you of a huge debt burden created by the existence of a second mortgage on the property.
A Chapter 13 bankruptcy establishes a payment plan where a portion of a debtor’s debts are paid over a period of three to five years. Once a payment plan is established, the payment plan must be approved by the court. If the debtor completes the plan and makes all payments on time, any arrears on the debtor’s home would be satisfied and the remaining portion of other unsecured debts such as credit cards would be discharged.
Questions About Bankruptcy?
If you have questions or are interested about filing bankruptcy, please contact me at (610) 417-6345. Zachary Zawarski is a bankruptcy attorney practicing in the Lehigh Valley. His office is conveniently located in Bethlehem, PA. We also have more information about the bankruptcy process at the link below.
Our attorneys are considered Debt Relief Agents and our firm is a Debt Counselling Agency.