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If you are dealing with overwhelming debt, it can easily be all that you can think about. You may feel helpless and unable to take any measures to better your situation. Many people avoid filing for bankruptcy, assuming they must give up their prized possessions. This is rare; most people who file for bankruptcy keep their home and car while gaining a fresh start.
At Mette Law, our business law attorneys in York, PA, help hardworking individuals like you successfully exit bankruptcy. If you would like to learn more about our services, please contact our York firm today.
Different Types of Bankruptcy in York, PA
If you are an individual who needs help managing your debt, you may consider filing for Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is reserved for lower-income individuals, who must have income from the past six months below the state’s median income (the “means test”). In filing Chapter 7, you can wipe out dischargeable debts, such as credit cards, medical bills, and personal loans, using these funds to pay off your creditors. If you are current on your mortgage and car payments, you can likely keep these possessions.
In contrast, Chapter 13 bankruptcy is intended for individuals with regular income who want to restructure their debt to pay it off faster. People disqualified from filing for Chapter 7 (i.e., being above the state median income) should consider filing for Chapter 13. However, Chapter 13 has a debt threshold that adjusts every three years, so you will want to check that your total debt does not exceed these limits before applying.
Chapter 13 allows you to formulate a repayment plan, stipulating the fixed payments you agree to make to your Chapter 13 trustee (an appointed party overseeing your case), who will then pay your creditors. The repayment plan is contingent on court approval. Most Chapter 13 debtors repay their debts in three to five years. No matter your financial situation, our skilled bankruptcy lawyers will help you from beginning to end.
For Businesses
Businesses can file under Chapter 7 or Chapter 11 bankruptcy. While Chapter 7 liquidates debts to pay creditors, Chapter 11 allows a business to restructure its debt. Most companies that file for Chapter 7 bankruptcy close, unable to continue operating after selling their assets. Typically, corporations elect to file for Chapter 11, allowing them to remain in business while working to get back on their feet financially.
Is Your Home Automatically Protected Under Bankruptcy?
No matter what chapter you are filing under, bankruptcy triggers an automatic stay. An automatic stay is an injunction that halts creditors from collecting debts (including wage garnishments) or seizing property (including through foreclosure). It is initiated when the debtor files the bankruptcy petition. However, creditors can seek relief from the automatic stay, lifting it in certain circumstances.
Informing You of the Financial Options
Retaining counsel is key to understanding your options. A York bankruptcy attorney can inform you if your financial situation meets the criteria for an automatic stay. Even if you do not qualify, there are other ways in which you can protect your home.
If you are filing for bankruptcy in Pennsylvania, you will likely use the federal exemptions, allowing you to keep a certain amount of equity in your home. This amount is protected from creditors, and most people choose to use the higher federal limits to safeguard more of their property.
Speak with a Bankruptcy Lawyer in York Today
While filing for bankruptcy without hiring counsel is possible, it is strongly discouraged. Bankruptcy is a complex process that requires accurate completion of forms and their timely submission by specific deadlines. Given the nuances of the process, you are advised to seek legal guidance to navigate the complex nature of the legal landscape. If you are considering bankruptcy, the Mette Law legal team would like to hear from you. To schedule a consultation with one of our York bankruptcy attorneys, contact us online or by phone at (717) 232-5000 today.