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Bankruptcy is a legal tool that enables many individuals to obtain financial relief in the face of overwhelming debt. The bankruptcy process, however, can be challenging, which makes having the professional legal counsel of an experienced lawyer in Lancaster, PA, backing you up is the surest path forward.
Chapter 7 and Chapter 13 Bankruptcy
When it comes to personal bankruptcy, most people file either Chapter 7 or Chapter 13, and each has its distinct applications and advantages, depending on the unique circumstances that apply.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is often referred to as liquidation bankruptcy. This means that all your non-exempt assets will be sold off – or liquidated – and the proceeds will be used to help pay down your debts before they are ultimately discharged. The court supervises the process, and to qualify for Chapter 7 bankruptcy, you must pass a means test. If the test determines that you do not earn enough to cover your debts, which generally translates to earning less than the state median, you are likely to qualify for this form of bankruptcy.
Exempt assets are those that you are not required to liquidate, including essential properties such as your home and car. You will, however, need to bring your mortgage and car payments up to date.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, on the other hand, results in a payment plan that allows you to pay off your debts within a specific period of either three or five years. Chapter 13 bankruptcy is often referred to as the wage earner’s plan because it’s designed to help individuals with regular incomes maintain their bankruptcy payment plans.
Once you’ve made the payments required by your court-approved plan, your debt will be discharged – and you’re likely to have paid far less than you originally owed. While Chapter 13 bankruptcy will stop the foreclosure process, you’ll need to catch up with your mortgage payments.
Signs that Bankruptcy Might Be the Answer for You
If you have questions or concerns regarding bankruptcy, consulting with a practiced bankruptcy attorney is the best place to start. However, some of the signs that bankruptcy may be the right choice for you include the following:
- You are at risk of losing your home or car.
- If you are being sued or are at risk of being sued for debt payment.
- You’re using one credit card to make payments on another, or are relying heavily on your credit cards, and are approaching the maximum limit.
- You may need to access your retirement accounts to maintain your financial obligations.
An Experienced Bankruptcy Attorney Can Help
Our accomplished bankruptcy lawyers in Lancaster, PA, have an impressive reputation for helping clients facing crushing debt turn their finances around, and we’re here for you too. Learn more by contacting us online or calling us at (717) 232-5000 today.