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Ross, Quinn, and Ploppert

Attorneys At Law - Pottstown, PA.

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Phone: (610) 323-5300

  • About
    • About Us
    • Meet The Lawyers
  • We Can Help
    • Bankruptcy Overview
    • Chapter 7 Bankruptcy
    • Chapter 13 Bankruptcy
  • Other Services
  • FAQS
  • Dear Client
  • Contact Us
Pennsylvania Bankruptcy Law Firm
You are here: Home / Bankruptcy FAQS

Bankruptcy FAQS

What is Chapter 7 Bankruptcy?
https://youtu.be/RzB6uVgOAuE

A Chapter 7 Bankruptcy is a way to discharge all unsecured debt such as credit card debt or medical bills. If a debtor wishes to keep secured debt (such as a house or car), the payments must be current towards those debts. However, if the debtor wishes to get rid of the house or car, they may do so and they are relieved from the obligation to repay those debts. This can be a legitimate option since a debtor often owes more on a house or car than the item is actually worth. This is a relatively cut and dry process that will usually be done without any complications in three to four months.

What is Chapter 13 Bankruptcy?
https://youtu.be/sRk_lyOAjNQ

A debtor should consider a Chapter 13 Bankruptcy if they are behind on payments on secured debt such as a car or mortgage and intends to keep that property. This form of bankruptcy is usually used when someone is too far behind on mortgage and/or car payment and cannot get caught up on their own. When a person declares Chapter 13 Bankruptcy and intends to keep the property that they are currently in arrears with, the debtor must continue to pay normal mortgage and car payments after the filing of the case. They must also pay an additional payment to a Trustee based on the debtor’s excess income. That additional payment first pays back the missed payments on the secured debt and priority debts, such as recent taxes. If there is any remaining money from the plan payment, it will then be used to pay back unsecured debt such as credit cards or personal loans. The amount of the plan payment based on the debtor’s income. The payment to unsecured creditors is usually a small fraction of the actual amount owed. The remaining unsecured debt is then discharged much like it would be in a Chapter 7 Bankruptcy, and the debtor no longer has an obligation to pay it. The payment plan must be spread out over the course of 36 to 60 months (3 to 5 years), and payment is made to the Trustee, who is a judge appointed to the Bankruptcy. The length of the plan is determined by how much excess income a debtor will receive, and how long it will take for the debtor to pay back the arrearages. As long as the debtor stays current on the mortgage/car payments and plan payments, the debtor retains all property within the plan. Another advantage is that the payment is made without interest accruing and usually for a fraction of what the person owes. Therefore, payments are much more manageable than they were before the filing of the bankruptcy.

How much does bankruptcy cost?

Attorney’s fees vary on a case-by-case basis based on complexity of the case. In all Chapter 7 cases, the court filing fee is $338.00, and, in all Chapter 13 cases, the court filing fee is $313.00. These fees can be structured in different ways.

Instead of filing bankruptcy, should I consolidate my debts?
https://youtu.be/Jxr_wKGlxXo

No! Although several companies advertise that they can negotiate your debt down, in most cases, this does not work because the individuals or companies you owe money to are under no obligation to accept any deals they are offered. It can also be expensive because the company you hire usually charges you a hefty monthly fee. In many cases, these plans destroy your credit much worse than a bankruptcy case and for a longer period of time. Additionally, these companies try to alleviate your debt by making you take out a home equity loan that secures itself against your home. Finally, even when these companies negotiate your debt down, you must pay tax on whatever debt is forgiven, meaning that the more successful your debt consolidation company is, the more tax you will still need to pay. Even if you would decide to file bankruptcy afterwards, those taxes would not be dischargeable and would need to be paid. For example, if you owe $50,000 and they negotiate down your debts to $10,000, you will receive a 1099 tax form where you have to claim the $40,000 as an unearned income. On top of paying the non-dischargeable taxes on this amount, you will also have to pay the fees that the company charges and still pay on the amount left over. In bankruptcy, all unsecured debt will disappear and there will be no tax obligations on the discharged amount if you file for bankruptcy. You would only pay the attorney and court filing fees (at a much lower price than the fees for consolidation).

Will bankruptcy appear on my credit report?
https://youtu.be/RPITX-CDcWw

Yes, a bankruptcy will remain on your credit report for 7-10 years. However, due to the fact that bankruptcy is only one of many factors that affect your credit, in many cases filing bankruptcy may end up raising your credit score dramatically. Once we perform a financial analysis, we can give you an estimate on how your score might look after a case is filed.

I am a high-income individual. Can I still file with my high income?

Yes, a bankruptcy will remain on your credit report for 7-10 years. However, due to the fact that bankruptcy is only one of many factors that affect your credit, in many cases filing bankruptcy may end up raising your credit score dramatically. Once we perform a financial analysis, we can give you an estimate on how your score might look after a case is filed.

If I file for bankruptcy, must by spouse file as well?

No. Bankruptcies can be filed by an individual or jointly by a married couple. However, if one spouse does not file, that spouse is still responsible for paying any debt for which they are listed as a debtor. So it could be advantageous if all the debt is in one spouse’s name only. However, if the debt is in both names, it would cost significantly less to file together than to file separately at different dates.

Are there disadvantages to filing bankruptcy?

There are always advantages and disadvantages. After filing for bankruptcy, the debtor’s ability to get credit after filing a bankruptcy will diminish. At first, obtaining credit will be difficult, however, in most cases, your eliminated debt in bankruptcy will allow you to create a better budget that does not require you to use credit for everyday expenses. Because you will be able to pay off your bills every month, it will be much easier to obtain credit in the long term because your credit score will reflect those repeated on time payments.

Can people find out if I file bankruptcy?
https://youtu.be/90KtQZDzo4w

The ability for people to discover your bankruptcy is limited. Although court proceedings are publicly accessible, individuals would need to specifically look in the bankruptcy courts for your case. The only parties notified of your filing are your creditors.

If I declared bankruptcy in the past, can I file now?

There is a statutory period of time which must pass before a person can file another bankruptcy, and a debtor may not have a previous bankruptcy dismissed with prejudice. The statutory period between bankruptcies depends on what type of bankruptcy your previous case was. The best way to determine if you are eligible is to schedule a free consultation with one of our attorneys so we can help determine whether you are eligible or not.

What information will my attorney need to file a case?
https://youtu.be/AXUfzMxqCxQ

Proof of income (pay advices) for 6 months prior to the bankruptcy filing, proof of insurance (home/auto), copies of medical bills and any other debts not listed on a standard credit report, copies of bank statements, and tax returns for the two years prior to filing for the bankruptcy.

How long does it take to file a bankruptcy case?

As soon as the attorney receives all information discussed above, and the debtor finishes the government-required credit counseling course, a bankruptcy may be filed.

How much credit card debt can be discharged through bankruptcy?

There is no limit! If a debtor uses a credit card for a major purchase (such as major appliances, expensive electronics, furniture sets, etc.) within a month or so before filing the case, that amount may be excluded. Otherwise, all other debts (including credit card use for essential items like gasoline, groceries, etc.) generally should be dischargeable regardless of the amount.

I have a lot of student loans, is it possible to get rid of them?

Student loans are non-dischargeable to the vast majority of debtors. While it is possible to discharge student loans, the law requires very specific criteria to be met in order for it to be considered. However, if you took out regular personal loans, for example, through your bank and just happened to use that loan for school expenses, then it would be possible to classify that loan as a dischargeable debt.

What is a Means Test?

The Means Test is used to determine if a debtor has too much income to declare a bankruptcy based on the average cost of living expenses and income for the county in which the debtor resides. The Means Test also incorporates the debtor’s number of dependents, spouse’s financial position, number and age of debtor’s vehicles, medical expenses, etc. This test is much like a tax return, and determines eligibility for bankruptcy.

What is a 341 meeting?

A 341 meeting is also referred to as a “meeting of the creditors”. Approximately 4-6 weeks after filing bankruptcy, the Trustee will schedule the 341 meeting. Here, the Trustee will ask multiple questions in regards to your debt and examine the Petition filed with the court. These questions by the Trustee will require full disclosure on income, expenses, and assets.

 

Contact Our Pottstown Area Bankruptcy Lawyers Today

Our attorneys are ready to discuss your concerns and provide answers. Our attorneys represent clients in Pottstown, Norristown, West Chester, Reading, and the surrounding areas.

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