If you are in a financial rut, consider filing for bankruptcy. Filing for bankruptcy is not the end of your financial options. Instead, it offers a method of rebuilding credit and getting back on track. Pennsylvania’s bankruptcy laws provide two options for debt relief: filing for Chapter 7 or Chapter 13 bankruptcy. If you’re facing unsecured debt problems, these options may offer a way out and a chance to start over.
Filing for Chapter 7 Bankruptcy
File for Chapter 7 bankruptcy if you do not have a stable income and have high unsecured debt, including credit card bills, personal loans, payday loans or medical bills. Filing for Chapter 7 bankruptcy may wipe your debt slate clean, giving you a chance to begin again.
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Bankruptcy laws in Pennsylvania offer limited protection on property, including:
- 100 percent of Veteran benefits,
- $300 for property of any kind,
- 100 percent of personal wages,
- 100 percent of all clothing, books and sewing machines.
This means that all items listed above cannot be sold, and therefore remains property of the owner even after filing for Chapter 7. However, Chapter 7 does not protect all assets, including large property and cars. To become eligible for filing Ch 7, you must meet certain income qualifications. Finally, keep in mind that a successful bankruptcy filing will be on your credit score for 10 years before it is removed; however, not filing may leave you in a worse financial position.
Filing for Chapter 13 Bankruptcy
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Chapter 13 bankruptcy differs from Chapter 7 in that it provides people ample time to recover from their debt by paying off past payments while paying off current payments. Chapter 13 bankruptcy is considered a “reorganization” of debt. Debtors who file for Chapter 13 often have more assets, including property, which would not be foreclosed or repossessed when filed. In filing Chapter 13, people have a three- to five-year period in which they follow a pre-approved debt plan. This plan is suited for people who have a steady income, but have fallen behind on bill payments due to unforeseen monetary circumstances.
It is important to understand the difference between the two, and to figure out which law is the most beneficial to you. In addition, Pennsylvania’s bankruptcy laws may be slightly different from those of other states, so be sure to understand and figure out what would work best for your particular situation.
Consult with a Bankruptcy Lawyer in Pennsylvania Today
Filing for bankruptcy is often a complicated process, especially in regards to exemptions and technicalities in wording. If you are unsure about which plan is better for you, or whether you qualify for a plan, take the time to consult a bankruptcy lawyer in your area and schedule a consultation. Filing for bankruptcy may be the only way to protect yourself from creditors and give yourself ample time to get back on track. Get your fresh start by contacting a bankruptcy lawyer today.
About the Author: Glenna Wiltbank has worked in a law firm for several years. It is important to work with a lawyer who knows the differences in laws by state. Otherwise, you may end up delaying your discharge.
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