Are you having difficulty paying your debts? Do you live paycheck to paycheck? Are debt collectors harassing you? If so, you may want to explore filing Chapter 7 bankruptcy in Pennsylvania. The bankruptcy process gives individuals a fresh start to recover after a financial crisis. With the help of the bankruptcy court, you can eliminate debts and begin rebuilding your finances for a healthier financial future.
Understanding Chapter 7 Bankruptcy in Pennsylvania
A Chapter 7 bankruptcy can get rid of your debts quickly. However, Chapter 7 is not the best debt relief option for everyone. Before considering a Chapter 7 bankruptcy in Pennsylvania, you might want to talk to a bankruptcy lawyer or use the information below to learn more about Chapter 7 bankruptcy in Pennsylvania.
Chapter 7 vs. Chapter 13 Bankruptcy
Bankruptcy cases filed under Chapter 7 and Chapter 13 can get rid of debts. However, there are some substantial differences between the two chapters of bankruptcy.
A Chapter 13 bankruptcy is a voluntary repayment plan. You reorganize your debts into a monthly plan based on your income, expenses, debts, assets, and other factors. Most Chapter 13 plans are 60-month plans. However, some individuals might qualify for a three-year plan. A Chapter 13 bankruptcy case may be best if you need to stop a foreclosure or repossession. Chapter 13 plans can also be used to pay tax debt or catch up on domestic support payments.
A Chapter 7 bankruptcy in Pennsylvania is quicker and less costly. Most no-asset Chapter 7 cases are discharged and closed within four to six months after filing the bankruptcy petition. Most unsecured debts are discharged (forgiven) in Chapter 7 without the need to pay any more money to the creditors.
However, Chapter 7 bankruptcies do not have repayment plans. Therefore, if you are behind on your house payments or car payments, a Chapter 7 case might not help you save those assets.
On the other hand, you can get rid of those debts by surrendering the assets. You would not need to worry about a deficiency judgment in Chapter 7. A deficiency judgment is money that you owe a creditor even after the creditor takes your home or vehicle and sells it to repay the debt.
Estimating Chapter 7 Income Qualifications for Pennsylvania
Before you file a Chapter 7 bankruptcy in Pennsylvania, you need to meet income qualifications to receive a bankruptcy discharge. Chapter 7 bankruptcies are for individuals who cannot afford to pay any portion of theirs and individuals whose debts are primarily business debts. If you can afford to pay some of your unsecured debts, you may need to file under Chapter 13.
Do I Qualify For Chapter 7 Bankruptcy in Pennsylvania?
The Means Test is the bankruptcy form used to determine if you qualify for a Chapter 7 bankruptcy discharge. The Means Test computes your average monthly income and compares your median income to the median income for Pennsylvania households of your size. If your median income is below the state’s median income, you should qualify to file Chapter 7.
Monthly income is the average of your income for the six months before filing bankruptcy. It includes all household income except for Social Security income.
Calculating the Chapter 7 Means Test can be complicated. We developed a Chapter 7 calculator that estimates if you could qualify for Chapter 7. The figures for the Means Test change periodically. Our calculator has the most current information available to help you assess whether you might qualify for a Chapter 7 discharge.
My Chapter 7 Income Was Over Pennsylvania’s Median Income. Does That Mean I Don’t Qualify?
If your median income is above Pennsylvania’s median income, do not worry yet. You could still meet the requirements for a Chapter 7 bankruptcy discharge in Pennsylvania. The second section of the Means Test calculates your disposable income.
Disposable income is the money you have after paying living expenses every month that you can use to pay your unsecured debts. Some monthly expenses are based on national standards and the size of your household. The national standards are updated periodically, so make sure you use the most current figures when calculating the Means Test.
Other expenses may be limited. Expenses for luxury items may not be allowed, such as gym memberships or money used to pay for expensive extracurricular activities.
If your disposable income is a low enough, you may qualify to discharge your debts under Chapter 7.
What Does Chapter 7 Bankruptcy in Pennsylvania Cost? Can I Afford It?
The costs associated with filing a Chapter 7 bankruptcy case in Pennsylvania include:
- Court filing fee $335
- Credit Counseling Course and Debtor Education Course $10 to $50
- Bankruptcy Attorney Fee (varies)
- Postage and copy fees (usually included in an attorneys’ fee)
- Travel expense to and from the bankruptcy court
The fees for the bankruptcy courses and the bankruptcy court filing fee might be waived if you meet income requirements. Attorneys’ fees vary depending on the bankruptcy lawyer. You can use our Attorney Fee Calculator to estimate bankruptcy attorneys’ fees in your area and locate a bankruptcy attorney near you who offers free bankruptcy consultations.
Pennsylvania Bankruptcy Legal Aid
You might qualify for bankruptcy legal aid. Some of the resources that you might want to research include:
- County Bar Associations in Pennsylvania
- Philadelphia Legal Assistance
- Legal Aid in Pennsylvania
- Pennsylvania 211
- Pennsylvania Department of Human Resources
You can also contact Ascend to discuss other debt-relief options that might be available to resolve your debt problems.
Should I File Chapter 7 Bankruptcy in Pennsylvania?
Deciding to file bankruptcy can be a difficult decision. Four things you need to consider before filing Chapter 7 bankruptcy in Pennsylvania are:
Pennsylvania Chapter 7 Bankruptcy Exemptions
Chapter 7 bankruptcy is a liquidation. The Chapter 7 Trustee assigned to your case may sell assets to repay your unsecured creditors. However, many of your assets are protected by bankruptcy exemptions.
Pennsylvania allows you to choose between the federal bankruptcy exemptions and state bankruptcy exemptions. However, if you want to use the Pennsylvania bankruptcy exemptions, you must have lived in the state for at least 730 days before filing your bankruptcy petition.
It is important to note that Pennsylvania does not have a homestead exemption. Therefore, if you have equity in your home, you may want to choose the federal exemptions to protect your home.
Most Chapter 7 cases filed in Pennsylvania are no-asset cases. The Chapter 7 Trustee does not sell any property in a no-asset case. If you are concerned about losing property in a Chapter 7 case, talk with a bankruptcy lawyer before filing Chapter 7. Most bankruptcy attorneys offer free consultations, so it does not cost you anything to talk to the lawyer about bankruptcy exemptions.
How Does Chapter 7 Bankruptcy Affect Your Credit?
Filing bankruptcy affects your credit. However, in most cases, a person’s credit score has already suffered because of their debt problems. Filing Chapter 7 can be the first step in improving your credit score by giving you a fresh start.
Bankruptcy cases filed under Chapter 7 remain on credit reports for ten years. However, there are ways to rebuild credit after bankruptcy. You do not need to wait ten years to get a credit card, loan, or buy a new home or vehicle.
Your bankruptcy courses teach you about managing your finances to help you rebuild your credit rating after bankruptcy.
Pros and Cons of Chapter 7 Bankruptcy
The benefits of filing Chapter 7 bankruptcy in Pennsylvania include:
- Get rid of most unsecured debts
- An affordable option for getting out of debt
- Get out from under a mortgage or car loan you cannot afford without deficiency judgments
- Stop wage garnishments for dischargeable debts
- Can complete a Chapter 7 case in four to six months
Some of the disadvantages of Chapter 7 include:
- Cannot discharge alimony, child support, most tax debts, and restitution
- Could lose an asset if there is non-exempt equity
- Must meet income qualifications to obtain a bankruptcy discharge
- No repayment plan to catch up mortgage payments or car loan payments
If you are unsure whether Chapter 7 is right for you, contact Ascend to discuss your situation. Our services are free of charge. We want to help you find a solution that works for you.
Chapter 7 Bankruptcy Alternatives
Filing a Chapter 7 bankruptcy case may not be the best way for you to get out of debt. Some individuals may benefit from a debt management or debt consolidation. In some cases, you may be able to settle your debts without filing bankruptcy.
We created the Savvy Debt Payoff app to help individuals pay off their debts quickly and efficiently without filing bankruptcy.
What Else Is Important About the Pennsylvania Chapter 7 Bankruptcy Process?
Two other things to know about filing bankruptcy in Pennsylvania is the general process for seeking bankruptcy relief and the bankruptcy districts.
Filing Bankruptcy in Pennsylvania Process
Each Chapter 7 bankruptcy case is unique. Your case may have additional steps and issues that are not common in other Chapter 7 cases. However, the general process for filing Chapter 7 bankruptcy in Pennsylvania includes these steps:
- Determine if you qualify for a Chapter 7 bankruptcy discharge
- Learn more about the pros and cons of filing Chapter 7
- Schedule a free consultation with a Chapter 7 bankruptcy lawyer
- Decide if you want to file a Chapter 7 case
- Decide if you need to hire a Chapter 7 bankruptcy lawyer
- Complete the credit counseling course
- Complete and file the Chapter 7 petition, schedules, and statements (if you hire an attorney, the attorney handles this step for you)
- A Chapter 7 trustee is assigned to your case
- Complete the debtor education course
- Attend the 341 First Meeting of Creditors (bankruptcy hearing)
- Receive your bankruptcy discharge
The Chapter 7 process can be confusing. Hiring a Chapter 7 bankruptcy lawyer to guide you through the process can help you protect your best interests.
Pennsylvania Bankruptcy Districts
Pennsylvania is divided into three bankruptcy districts. Each bankruptcy district handles bankruptcy cases filed in counties within their district. The three bankruptcy districts in Pennsylvania are:
- Western District of Pennsylvania – The Western District serves counties surrounding Erie, Pittsburgh, and Johnstown.
- Eastern District of Pennsylvania – The Eastern District serves several counties around Philadelphia and Reading.
- Middle District of Pennsylvania – The Middle District serves numerous counties in the middle part of the state.
If you are unsure which district would handle your case, you can contact the Clerk of Court for the district nearest your home to confirm the location of the court that would handle your Chapter 7 case.
What Pennsylvania Chapter 7 Bankruptcy Questions Can We Answer?
We understand that you may have more questions about filing Chapter 7 bankruptcy in Pennsylvania. Reach out to us online or by calling 833-272-3631 for more information about Chapter 7, our services, and debt relief options. You can also find a great deal of information about bankruptcy and debt relief in our free online library of articles.
You can get out of debt. Take the first step on the road to financial freedom by contacting us to discuss how we can help you with your debt problems.