Facts to Know About When Filing Bankruptcy in Philadelphia

Before you consider filing Bankruptcy in Philadelphia, make sure you understand the below 20 facts. People come in and ask what does filing bankruptcy do for me? What is personal bankruptcy and can it help me? What are the requirements to file Bankruptcy? The following are are some answers of how bankruptcy works and what it can do for you.

1. If you are filing bankruptcy and are married, you can still file bankruptcy by yourself. You do not need your spouse to join together with you to file. In some cases, it makes more sense to file individually and not together even if you are married. Although you can file without a spouse, there is a question on the bankruptcy form about your spouse’s income information which needs to be answered. However, neither your spouse’s name nor his or her social security number will appear on the bankruptcy. You can file bankruptcy chapter 7 or bankruptcy chapter 13 without your spouse.

2. In answering the question of when to declare personal bankruptcy you should know the following. You can be completely up to date on all of you your bills and still be eligible to file bankruptcy. Many people are totally up to date on all their bills. The problem is that the balance never goes down because of the interest.  By end of the month you often don’t have enough money to pay for everything that you need. If you pay the minimum payment on the debt each month,  it will take many many years to pay off the bill in full. That is the problem caused by interest compounding on your bill, even if you have never missed a payment.

3. You can own a home and still file bankruptcy. If you don’t have a lot of equity there is no problem. If you have a large amount of equity in your property, you may need to pay back some or all of your bills over a period of three to five years. But even in that situation, there is an exception. In Pennsylvania, if you jointly own a home with a spouse, but the bills are in your name alone, you can protect the house in many cases even if you have hundred of thousands of dollars in equity.

This done by using the joint exemption as provided for under Pennsylvania law. Furthermore, even if you need to pay back some of the debt, you will often wind up paying back substantially less by filing for Bankruptcy protection.  Many people who come into our office do not know what to do for their help their financial condition. For the correct bankruptcy information Philadelphia residents can come in to see us.  Our job is to give anyone considering filing bankruptcy the correct answers.

4. You can file bankruptcy Chapter 7 yourself without losing any property in most cases. If you have too much property, then filing bankruptcy chapter 13 and paying back any non exempt property over a period of three to five years will protect your property. In addition if you earn a large amount of money and are able to make payments on your bills, the payment can be combined into one affordable payment without any interest and will in almost all cases be much less than you are currently paying on the debt.

5. Some income tax debts are dischargeable. Certain tax debts such as employee withholding taxes which are considered trust fund taxes are never dischargeable and will need to be paid back. However many income tax debts can be dischargeable depending on the age of the debt, if a lien was filed by the taxing authority and a number of other factors. Contacting experienced Bankruptcy lawyers can show how filing bankruptcy can be used to your advantage when you want to discharge tax debts.

6. You don’t need to be unemployed to file bankruptcy. Many individuals and couples are working full time jobs. The problem is that the debts are outstanding and it is very hard to pay off all the bills. People who are working full time and earning a good salary still have the right to file for bankruptcy relief, just like a person who is unemployed.

7. If you are behind on your mortgage payments, you can file for chapter 13 bankruptcy relief to protect the home.  You should have a source of regular income.  The regular source of income does not have to be a job, social security, unemployment or pension.  It can even be your spouses income or family member who will help you with your payments.  You just need to be able to afford to pay the mortgage again and extra toward what you are in arrears on the mortgage.  The more bankruptcy knowledge you have the better off you are.

8. You can reduce a debt owed on an automobile or other motor vehicle by what is known as a cram down. That means the debt which you owe to auto finance company is reduced to the value of the vehicle. For you to be permitted to use this method, the vehicle needs to be at least 910 days (2 and ½ years old) from the time you purchased the vehicle. You can also reduce the interest rate charged by the finance company on the loan, and in some cases very substantially reduce the interest rate like bringing it down from 21.00 percent to 6.00 percent. These facts regarding reducing your auto loan debt are very important to know when you are considering bankruptcy protection.

9. Your utility bills can be reset to 0. Upon the filing a bankruptcy your gas, electric, water and other utility bills are reset to a zero balance. If you are facing a utility shutoff, the filing of the bankruptcy prevents the shutoff. The reason for this treatment is that utility services are considered necessary services. If a lien on your house has already been filed by the utility, the lien can remain on the property until the house is sold. In a Chapter 13 plan, some liens can be paid back before any other creditors get paid.

10. Filing Bankruptcy will  stop a tax foreclosure sale on your home by the filing of a Chapter 7 Bankruptcy Petition or Filing of a Chapter 13 Bankruptcy Petition. The filing of the case will permit you to repay the amount of taxes that you owe the taxing authority over a period of three to five years without losing your ownership interest in the property. By using the Federal and Pennsylvania Bankruptcy laws to your advantage, you have the opportunity to save your home from a tax foreclosure.

11. Student loans are generally not dischargeable in bankruptcy. The only exception is if you are able to pass the undue hardship test. This is a very difficult burden to meet and generally only people who are totally disabled or people who have no income and no future prospect of having sufficient income to be able to make payments on the student loan will pass the test. People who are employed full time but don’t earn a large income will have a very difficult time passing this test.

12. Bill collectors must stop calling you after you have filed for protection. The automatic stay which is effective upon the filing of the bankruptcy prohibits bill collectors from calling or contacting you. If the creditor continues to contact you after it has been put on notice of the bankruptcy filing, the creditor can face financial penalties and be sanctioned by the bankruptcy judge, along with you potentially being award substantial amounts of money by the Court.

13. Only bad people file for bankruptcy is an old myth put out by creditors to help them collect money from honest people. The fact is just about everyone who files for bankruptcy is an honest good and hard working individual or couple. People file bankruptcy because of job loss, illness, inability to get a higher paying job, retirement, death of a loved one, divorce, money mistakes, unexpected expenses, paying high interest rates and just not earning enough. No one plans to get into debt. The number of famous people who have filed for bankruptcy is quite long. You should not in the slightest way feel bad at all. You didn’t plan out your situation.

14. Almost everyone is able to keep all their property. Only people who have too much equity in their home or who own too much property face a potential problem if they file under Chapter 7. In that case, the solution which is to file under chapter 13 . By filing a chapter 13 bankruptcy you only need to pay back the amount of non exempt property in your chapter 13 case and at the end of the case all of your unsecured debts are discharged except for student loans, child support and certain other non dischargeable debt such as criminal fines, etc. If you have too much property to file under Chapter 7 and no income to make payments under Chapter 13 then in such a case the best move may be to not file bankruptcy at all at that time.

15. Some people who have debt problems incorrectly believe that if they transfer a house or other asset into someone else’s name that no one can go after the asset. Intentionally transferring valuable assets out of your name and not getting paid the fair market value can be considered a fraudulent transfer which can be undone by the Bankruptcy Court. In addition without having transferred the asset, you may have even been able to exempt the property in the Bankruptcy case from any creditors.  It is very important to have the correct bankruptcy information if you are considering filing bankruptcy.

16.You want to list only certain creditors in the bankruptcy but leave off others? You can’t do it. The bankruptcy code requires equal treatment of creditors in the same category. That means if you have loans from two banks but you also have a credit card with another bank that you don’t want to list, you can’t. You have to disclose all of your debts. There are cases however, in which you may be able to pay the account that you wanted to keep such as by paying back all your creditors, or if the debt is co-signed by someone else. You need to discuss your situation with an experienced bankruptcy attorney who can properly advise you how to achieve your objectives.

17. Even if you have a $100,000 in credit card debt, but you can only afford to pay $250 per month, you may only have to pay $250 per month for a period of 36 to 60 months and that payment can completely wipe out all of your personal loans, credit cards and other unsecured debt. In addition, you will not have to worry about a creditor causing you the problem of you being required to pay taxes on debt cancellation income after you have filed for bankruptcy protection.

18. Bankruptcy can get your drivers license back. If you have a judgment which has been entered against you because of an accident in which you didn’t have car insurance and someone sued you, filing bankruptcy can protect you from the suspension of your drivers license. In addition, Traffic Court fines are presently dischargeable in a Chapter 13 case, but not in a Chapter 7 Bankruptcy filing.

19. Bankruptcy can help you get rid of a timeshare. You buy a timeshare thinking it is a great deal. Then you realize you have these same monthly payments for the next 15 years. On top of that you have yearly maintenance fees which costs the same as a hotel or condominium would cost for a week. The timeshare company refuses to take back the timeshare or let you out of the contract. The bankruptcy will allow you to surrender your timeshare back to the company. Having the correct information when filing for bankruptcy will allow you to change your life for the better.

20. Filing bankruptcy can help you quickly get your vehicle back if it was just repossessed. The automatic stay provided by the bankruptcy code requires the vehicle to be returned to you if was not yet sold at auction. In addition, the bankruptcy gives you time to repay your missed payments on the vehicle. You are however required to maintain insurance coverage on the vehicle.  By having the correct bankruptcy information, you will understand how to get claim bankruptcy to immediately get your vehicle back. In most cases chapter 11 bankruptcy is not for consumers, as you will find when you ask for information on how to claim bankruptcy.

If you want to know what filing bankruptcy will do for your financial situation call us today to get answers to all your questions. The Law Offices of David M. Offen (215)625-9600