Pittsburgh Chapter 7 Bankruptcy Lawyer

One of the most frequent questions we hear from our clients at Logue Law Group is, “What exactly sets Chapter 7 apart from Chapter 13 bankruptcy?” In short, a Chapter 7 bankruptcy is designed to wipe out, or “discharge,” unsecured debts immediately.

These debts typically include credit card balances, medical bills, personal unsecured loans, timeshares, certain tax obligations, and more. It is actually quite rare for a person to lose their home or car in a Chapter 7 case, except in very specific circumstances which we will explore later in this guide.

What Is Chapter 7 Bankruptcy in Simple Terms?

Chapter 7 bankruptcy is often called “liquidation bankruptcy.” It is a legal process designed for individuals or businesses who are drowning in debt. It allows them to seek relief by potentially having non-exempt assets sold to pay back creditors. In a Chapter 7 case, a court-appointed trustee oversees the sale of these non-exempt assets, which could theoretically include items like a vehicle or a house if they have significant equity.

However, once the non-exempt assets are sold and the proceeds are distributed to creditors, the remaining qualifying debt is discharged. This means you are no longer legally required to pay it. While Chapter 7 offers a fresh financial start, it does come with consequences, such as the potential loss of property that isn’t protected by exemptions. If you are unsure about your assets, a Pittsburgh bankruptcy lawyer can help you understand what is at risk.

Chapter 7 vs. Chapter 13

Chapter 7 is the “liquidation” option where assets might be sold to clear debts. It is usually the preferred route for people who have significant debt but very few assets. In contrast, Chapter 13 bankruptcy is known as “reorganization bankruptcy.” This option allows individuals with a steady, regular income to create a repayment plan. Under this plan, they pay back a portion or all of their debts over a period of three to five years.

Unlike Chapter 7, Chapter 13 does not involve the liquidation of your property. Instead, it focuses on restructuring your debt to make it manageable. Choosing between the two often comes down to your income, the value of your assets, and whether you want to keep specific possessions that might be at risk in a Chapter 7 filing. A Pittsburgh chapter bankruptcy 7 attorney can evaluate your finances to see which path is right for you.

How to File Bankruptcy Chapter 7 in PA

Filing for Chapter 7 in Pennsylvania is a multi-step process. First, you must gather all relevant financial documents. This includes income statements, tax returns, and a complete list of your debts and assets. Once you have this data, you will need to fill out the official bankruptcy forms. These forms include a petition, schedules that detail your financial life, and statements disclosing your income, expenses, assets, and liabilities.

You are also required to complete the Pennsylvania bankruptcy means test. This test is the calculation that determines if you actually qualify for Chapter 7. If you do not pass this test, Chapter 13 might be the better option for you.

After your paperwork is complete, you file it with the bankruptcy court serving your district (such as the Western District of Pennsylvania for Allegheny County). You will also need to pay a filing fee unless you qualify for a waiver based on your income, or you can request to pay the fee in installments. Consulting with a Pittsburgh bankruptcy lawyer ensures these forms are filed correctly.

Chapter 7 Bankruptcy Requirements

To file under Chapter 7, you must meet specific eligibility requirements. These ensure that the relief is going to those who truly need it:

• Means Test: This calculation looks at your income and expenses to see if you have disposable income to pay debts. If your income is below the state median, you generally qualify. If it’s above, you must pass the means test calculation.
• Credit Counseling: You must finish a credit counseling course from an approved agency within 180 days before filing.
• Residency: You generally must have lived in the district where you are filing for at least the last 180 days.
• Previous Bankruptcies: If a previous case was dismissed within the last 180 days because you failed to appear in court or follow orders, you may be ineligible.
• Debtor Education: After filing, you must complete a financial management course to learn budgeting skills.

If you are worried about meeting these requirements, a Pittsburgh chapter bankruptcy 7 attorney at Logue Law Group can review your history.

Chapter 7 Income Limits 2024

It is vital to remember that if your income exceeds a certain threshold, you might not qualify for Chapter 7. As of April 1st, 2024, the median income limits used for the means test in Pennsylvania are roughly as follows for household sizes:

• One earner: $66,923
• Two people: $81,574
• Three people: $103,172
• Four people: $125,861

How Does Chapter 7 Work in Pennsylvania?

The process begins when the debtor files a petition with the bankruptcy court. This filing triggers an “automatic stay,” which stops almost all creditor actions, including collection calls and foreclosure attempts. This gives the debtor immediate breathing room.

Next, a bankruptcy trustee is assigned to the case. Their main job is to review your assets and decide if there are any “non-exempt” items that can be sold to pay creditors. “Exempt” assets—like basic household goods and, often, your home and car up to a certain value—are protected under state and federal laws.

The trustee sells non-exempt assets (if any) and pays creditors based on priority. Unsecured debts like medical bills and credit cards are then discharged. However, debts like child support, alimony, and most tax debts usually cannot be wiped out. Once the process is done, you receive a discharge order, giving you a fresh start. Your Pittsburgh bankruptcy lawyer will guide you through this timeline.

Means Test Chapter 7

Chapter 7 means the test is the gatekeeper for eligibility. It analyzes your income and expenses to determine if you have enough disposable cash to pay back what you owe. The test compares your average monthly income from the six months before filing against the median income for a household of your size in Pennsylvania.

If your income is below the median, you typically qualify automatically. If it is above the median, further math is done to look at disposable income. If that disposable income is too high, the law presumes you can afford to pay some debt back, and you may be forced into Chapter 13. A Pittsburgh chapter bankruptcy 7 attorney can perform this calculation for you before you file.

Submit Your Bankruptcy Petition to a Pennsylvania Bankruptcy Court

Submitting your petition is the formal start of the legal process. First, you must compile all financial documents—tax returns, pay stubs, and debt lists. Next, you complete the petition and schedules that paint a picture of your financial health.

These forms are then filed with the court serving Allegheny County or your specific district, along with the filing fee. Once filed, the court assigns a case number, and the automatic stay begins. Finally, you will attend a “Meeting of Creditors” (also called a 341 meeting), where the trustee (and occasionally creditors) can ask you questions under oath about your finances.

What Happens After Filing Chapter 7 in PA?

Once you file, the automatic stay kicks in immediately. This is a court order that stops most creditors in their tracks. It is a powerful tool that ends harassment, phone calls, lawsuits, wage garnishments, and foreclosure actions instantly.

This stay remains in place throughout the case, giving you time to resolve your financial issues without pressure. While the stay is powerful, it does not solve everything permanently, which is why we recommend working with a Pittsburgh bankruptcy lawyer to ensure your assets remain protected long-term.

What Can You Not Do After Filing Chapter 7 in PA?

After you file, there are strict rules you must follow:

• Do not hide or transfer assets: You cannot give away property or sell it for less than it’s worth to keep it from creditors. This is considered fraud.
• Do not incur new debt: You generally cannot take out new loans or use credit cards without court permission.
• Do not dismiss lawsuits unilaterally: You cannot stop legal actions related to your debts without the court’s say-so.
• Do not pay creditors selectively: You cannot pay back a family member or a favorite creditor while ignoring others. This is called a “preference payment” and the trustee can claw that money back.
• Cooperate fully: You must be honest with the trustee. Hiding info can lead to your case being dismissed.

How Long Does Chapter 7 Bankruptcy Take?

The timeline varies based on case complexity and court schedules. However, a typical Chapter 7 case in Pennsylvania takes about three to six months from the date of filing to the date your debts are discharged. Having a Pittsburgh chapter bankruptcy 7 attorney can help ensure there are no unnecessary delays.

How Often Can You File Chapter 7 in Pennsylvania?

Under the Bankruptcy Code, you cannot file for Chapter 7 whenever you want. If you received a discharge in a previous Chapter 7 case, you must wait eight years from the date that previous case was filed before you can file for Chapter 7 again.

If you previously filed for Chapter 13 and received a discharge, you typically must wait four years from that filing date before you are eligible to file for Chapter 7.

What Is the Success Rate of Chapter 7 Bankruptcy in PA?

If you define success as receiving a discharge of debts, the rate is very high. The vast majority of Chapter 7 filers who complete the required steps and are honest about their finances receive a discharge. This provides the fresh financial start they need. Working with a skilled Pittsburgh bankruptcy lawyer at Logue Law Group significantly increases the likelihood of a smooth process.

Chapter 7 Bankruptcy FAQs

When Do I Have to Surrender My Vehicle in Chapter 7?

You don’t always lose your car. It depends on how much equity you have in it and whether you can apply exemptions to cover that equity. If your car has little equity or is fully covered by exemptions, you can usually keep it as long as you continue making the loan payments (this is called reaffirming the debt). If you have too much equity that cannot be protected, the trustee might sell it to pay creditors.

Can I File Chapter 7 Before 8 Years?

Generally, no. However, there are rare exceptions if you did not receive a discharge in the previous case. If you need relief sooner, a Pittsburgh chapter bankruptcy 7 attorney might suggest Chapter 13 as an alternative.

Can IRS Debt Be Discharged in Chapter 7?

Sometimes. Income tax debt can be discharged if it meets specific rules:

• It is income tax (not payroll or fraud penalties).
• The debt is for a tax year at least three years old.
• You filed the return at least two years ago.
• The tax assessment is at least 240 days old.

Will Filing Chapter 7 Affect My Spouse?

If you file alone, your spouse’s credit is generally not affected. However, if you have joint debts, your spouse will still be 100% liable for those debts even if your obligation is wiped out. To protect your spouse from creditors on joint accounts, you should consult a Pittsburgh bankruptcy lawyer.

How Much Do You Have to Be in Debt to File Chapter 7?

There is no minimum debt amount required. Eligibility is based on your inability to pay, not a specific dollar figure. The means test determines if you are truly unable to pay your debts based on your income and expenses.

How Long Can Chapter 7 Trustee Keep Case Open in Pennsylvania?

A trustee keeps the case open until they have finished their duties. In a simple “no-asset” case, this is quick. If assets need to be sold or there are disputes, the case can remain open for months or even years, though the debtor usually gets their discharge sooner.

Will I Lose My House If I File Chapter 7?

Not necessarily. Pennsylvania allows you to use federal or state exemptions to protect equity in your home. If your equity is within the exemption limits, you can keep your house. If you have significant equity above the limit, the trustee could sell the home. A Pittsburgh chapter bankruptcy 7 attorney can calculate your equity to see if your home is safe.

Call 412-387-6901 today to talk about your situation and see how we can help.