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Understanding the Different Types of Bankruptcy Filings in Pennsylvania

If you are in Pennsylvania and filing for bankruptcy, then surely the one big question that is plaguing your mind is probably which type of bankruptcy you should file. Well, as much as it is necessary for you to talk to our experienced Pittsburgh bankruptcy lawyer, it is also necessary that you take a look at the following points to get a clear idea.

Chapter 7 Bankruptcy

In terms of the bankruptcy filing, Chapter 7 bankruptcy is the most common type of bankruptcy consisting of two-third of all bankruptcy cases. This is also known as liquidation bankruptcy.

This type of bankruptcy will allow you, the debtor to discharge the unsecured debts that can include medical bills, credit card bills, and many personal loans. If you are worried that it will force you to let go of your assets and properties, then you have the option of exemption, both state and federal, that will allow you to keep your home, car, or some of the other possessions.

The amount of equity will be the determining factor of the protection with the exemption. Mostly our Pittsburgh bankruptcy lawyer advises the debtors to go for federal exemption as it offers better protection of your assets and properties, sometimes Pennsylvania exemptions can be your good option too.

The court appointed trustee will determine the nonexempt property and assets to sell off and pay the creditors. Most of the time, the debtor gets to save all the assets and properties from liquidation. This is a fast process that gets over within months offering the debtor a chance to start afresh quickly.

Chapter 7 Bankruptcy as Your Appropriate Option

You will qualify for chapter 7 bankruptcy in the following circumstances:

  • You have unsecured debts
  • You either have limited equity in your home or you have rented the home or you co-own it with a spouse who is not a co-debtor
  • You have moderate income. This income will be compared with median income of the state. If your income is more, still you can file for chapter 7 depending on your mortgage plan or loans.
  • You have no money left to take care of necessary expenses
  • There is no liquid asset you can sell off to pay the debts
Chapter 13 Bankruptcy

When you are filing for Chapter 13 bankruptcy, you will get to keep your assets in return for paying your creditors according to the court-approved repayment plan. The filing will discharge the unsecured debts while you get a plan for paying your mortgage, car loans, and so on in 36 -60 months' time. The trustee will get the payment from you and pay the creditors. This is a good option for the filer if they are behind in paying the secure debts. In case, your monthly income is more than your monthly expenses, this is a suitable plan for you. Just like chapter 7 bankruptcy, this one also brings an automatic stay that will be in effect for 3-5 years during which your creditors cannot connect with you.

Benefits of Chapter 13 in the Following Situations
  • In case you are behind your payments of property loan
  • If you have tax debts that cannot be discharged in bankruptcy
  • If you have significant unsecured debt like medical bills or credit card but your income is high for filing for chapter 7
  • If you have nonexempt property that you want to keep
  • If you want to prevent the foreclosure on your property for a certain amount of time as it will buy you some time for arranging for the payments of your debts

If you are in Pennsylvania and struggling with your finances and home mortgage, then going for a short sale and loan modification can be some good options for you. Consulting a Pittsburgh bankruptcy lawyer will help you get the right value of the short sale and the right guidance.

Come to us at Pittsburgh Bankruptcy Law Group with your queries regarding bankruptcy and we will answer all your questions.

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