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Filing for Bankruptcy in Pennsylvania
Bankruptcy is a legal proceeding initiated when a person or business is unable to repay outstanding debts or obligations. Filing for bankruptcy can provide individuals with financial relief and a fresh start. In Pennsylvania, there are two main types of bankruptcy available: Chapter 7 and Chapter 13.
Chapter 7 bankruptcy is a liquidation bankruptcy, in which the debtor’s nonexempt property is sold to pay off creditors. Chapter 13 bankruptcy is a reorganization bankruptcy, in which the debtor proposes a plan to repay creditors over a period of time.
To be eligible for Chapter 7 bankruptcy in Pennsylvania, the debtor must meet certain income requirements. The debtor’s income must be below the median income for the state of Pennsylvania, or the debtor must pass a means test. The means test compares the debtor’s income to their expenses to determine if they have the ability to repay their debts.
To file for bankruptcy in Pennsylvania without a lawyer, the debtor must complete and file a petition with the bankruptcy court. The petition includes information about the debtor’s income, assets, debts, and expenses. The debtor must also file a statement of financial affairs and a schedule of creditors.
After the petition is filed, the debtor will attend a meeting of creditors. At the meeting of creditors, the debtor will be questioned about their financial situation. The creditors will have an opportunity to object to the debtor’s bankruptcy petition.
If the debtor’s bankruptcy petition is approved, the debtor will receive a discharge of their debts. A discharge of debts releases the debtor from their legal obligation to repay their debts.
Preparing the Bankruptcy Petition
Filing for bankruptcy in Pennsylvania requires the preparation and submission of a comprehensive bankruptcy petition. This document serves as the foundation of your bankruptcy case and must be meticulously completed to ensure a successful filing.
Documents Required
Along with the bankruptcy petition forms, you will need to include the following documents:
* A list of all your creditors and the amounts owed to each
* A list of all your assets and their values
* A statement of your income and expenses
* Tax returns from the past two years
* Proof of income, such as pay stubs or bank statements
* A copy of your driver’s license or other government-issued ID
Completing the Bankruptcy Petition Forms
The bankruptcy petition forms are complex and can be challenging to navigate. It is crucial to provide accurate and complete information in every section. If you are unsure about how to answer a question, consult with an attorney or seek guidance from a reputable bankruptcy assistance organization.
Organizing and Presenting the Bankruptcy Petition
Once you have completed the bankruptcy petition forms, organize them in a logical order and present them in a professional manner. Use a binder or file folder to keep the documents together and protect them from damage. Ensure that the documents are easily accessible and that all pages are numbered.
Filing the Bankruptcy Petition
Filing for bankruptcy in Pennsylvania requires submitting a bankruptcy petition to the bankruptcy court. Individuals can choose to file for bankruptcy with or without the assistance of an attorney. Filing without an attorney is known as “pro se” representation.
There are two main ways to file a bankruptcy petition:
- Electronically: Filing electronically is the preferred method and can be done through the Bankruptcy Noticing Center (BNC) website.
- By mail: Individuals can also mail their bankruptcy petition to the bankruptcy court in their district.
The fees associated with filing for bankruptcy vary depending on the type of bankruptcy being filed and whether an attorney is used. The filing fee for Chapter 13 bankruptcy is $313, while the filing fee for Chapter 7 bankruptcy is $335. Additional fees may apply for administrative costs and attorney’s fees.
The bankruptcy process typically takes several months to complete. After the petition is filed, the court will schedule a meeting of creditors, where individuals will be questioned about their debts and assets. The court will then issue a discharge order, which releases individuals from their debts.
The Automatic Stay
The automatic stay is a court order that goes into effect as soon as you file for bankruptcy. It stops most collection actions against you, including lawsuits, garnishments, and foreclosures. The automatic stay gives you a chance to catch your breath and reorganize your finances without being harassed by creditors.
There are a few exceptions to the automatic stay. Creditors can still take action against you if:
- You do not file all of the required bankruptcy documents.
- You commit fraud or perjury in connection with your bankruptcy case.
- The creditor has a valid lien on your property that was not avoided in bankruptcy.
- The creditor is seeking to collect a debt that is not dischargeable in bankruptcy, such as a student loan or a tax debt.
If a creditor violates the automatic stay, you can file a motion with the bankruptcy court to have the violation stopped. The court may impose sanctions on the creditor, including fines or imprisonment.
Tips for Dealing with Creditors During the Automatic Stay
Here are a few tips for dealing with creditors during the automatic stay:
- Do not ignore your creditors. If a creditor contacts you, be polite and explain that you have filed for bankruptcy and that the automatic stay is in effect.
- Do not make any payments to creditors without first talking to your bankruptcy attorney.
- If a creditor continues to contact you or take collection actions against you, contact your bankruptcy attorney immediately.
The Meeting of Creditors
The meeting of creditors is a mandatory meeting held after you file for bankruptcy. It is an opportunity for your creditors to ask you questions about your financial situation and your bankruptcy filing. The meeting is typically held at the bankruptcy court within 21 to 40 days of filing your petition.
At the meeting of creditors, you will be asked to provide proof of your identity and Social Security number. You will also be asked to answer questions about your income, expenses, assets, and debts. Your creditors may also ask you questions about your bankruptcy filing, such as why you filed for bankruptcy and what you hope to achieve by filing.
Preparing for the Meeting of Creditors
There are a few things you can do to prepare for the meeting of creditors:
* Gather your financial documents. You will need to bring proof of your income, expenses, assets, and debts.
* Be prepared to answer questions about your bankruptcy filing. You should be able to explain why you filed for bankruptcy and what you hope to achieve by filing.
* Dress professionally and arrive on time for the meeting.
Consequences of Failing to Attend the Meeting of Creditors
If you fail to attend the meeting of creditors, the court may dismiss your bankruptcy case. The court may also issue a warrant for your arrest.
The Discharge of Debts
The discharge of debts is the ultimate goal of filing for bankruptcy. It is the court order that releases the debtor from personal liability for most debts.
Dischargeable Debts
- Credit card debt
- Medical debt
- Personal loans
- Payday loans
- Unsecured debt
Exceptions to Dischargeability
- Student loans
- Taxes
- Child support
- Alimony
- Debts incurred through fraud
Timeline for Discharge of Debts
- Chapter 7 bankruptcy: Debts are typically discharged within 4-6 months of filing.
- Chapter 13 bankruptcy: Debts are discharged after the completion of the repayment plan, which can take 3-5 years.
Reaffirmation of Debts
Reaffirmation is a legal process in which a debtor agrees to continue to be legally obligated to pay a debt that would otherwise be discharged in bankruptcy. It is necessary when a debtor wants to keep certain assets that are secured by a debt, such as a car or a house.
There are both pros and cons to reaffirming debts. On the one hand, reaffirmation can allow a debtor to keep assets that they would otherwise lose. On the other hand, reaffirmation can also extend the time it takes to repay debts and increase the total amount of interest paid.
If you are considering reaffirming a debt, it is important to weigh the pros and cons carefully and to negotiate the best possible terms with your creditors. Here are some tips for negotiating reaffirmation agreements:
* Understand your options. Before you agree to reaffirm a debt, make sure you understand your other options, such as surrendering the collateral or negotiating a payment plan.
* Get everything in writing. Once you have reached an agreement with your creditor, make sure to get everything in writing. This will help to protect you if there is any dispute later on.
* Seek professional advice. If you are not sure whether reaffirmation is right for you, or if you have any questions about the process, it is important to seek professional advice from an attorney or a credit counselor.
Post-Bankruptcy Life
After filing for bankruptcy, debtors have certain responsibilities they must fulfill. They must continue to make payments on any debts that are not discharged in bankruptcy, such as student loans and child support. Debtors must also provide accurate and complete financial information to the bankruptcy trustee and attend all required meetings.
Bankruptcy can have a significant impact on a debtor’s credit score. A bankruptcy will stay on a credit report for 10 years, and it can make it difficult to obtain credit or qualify for loans at favorable interest rates. However, there are steps that debtors can take to rebuild their credit after bankruptcy.
Tips for Rebuilding Credit After Bankruptcy
- Make all payments on time, including rent, utilities, and credit card bills.
- Obtain a secured credit card or credit-builder loan.
- Limit the number of credit inquiries you make.
- Monitor your credit report regularly and dispute any errors.
Rebuilding credit after bankruptcy takes time and effort, but it is possible. By following these tips, debtors can improve their credit score and regain access to credit.
