FAQ About Pennsylvania Bankruptcy Laws
Many residents of Pennsylvania struggle with debt and feel overwhelmed. If you need information or have specific bankruptcy questions, we’ve got the answers you need. We’ve put together some of the most frequently asked questions about bankruptcy to help you learn the basics.
What is Bankruptcy?
Bankruptcy is a legal process designed to help individuals who can’t pay their bills to get a brand new start. The federal government gives people the right to file for bankruptcy. All bankruptcy cases are handled in federal court. When you file for bankruptcy, all creditors are directed to stop collecting debts from you. At least until your debts are sorted out, according to the law.
How Can Bankruptcy Help Me?
Bankruptcy can help ease the financial and emotional strain you’re feeling due to your inability to pay your debts. Additionally, when you file for bankruptcy in Pennsylvania, it helps:
- Stop foreclosure on your home;
- Prevent repossession of your vehicle;
- Stop wage garnishment and debt collection harassment;
- Restore or prevent termination of utility services; and
- Give you the opportunity to challenge creditors who may be trying to collect more than you actually owe.
What’s the Difference Between Chapter 7 and Chapter 13 Bankruptcy?
Chapter 7 bankruptcy is known as “straight” bankruptcy or “liquidation.” If you file Chapter 7 bankruptcy, you must give up property that exceeds certain limits called “exemptions”. Furthermore, that property can be sold to pay off your creditors.
Chapter 13 bankruptcy is also known as “debt adjustment”. If you file Chapter 13 bankruptcy, you commit to using your current income to pay off your debts, or at least parts of your debts.
Can I Prevent the Loss of My Home if I File Bankruptcy in Pennsylvania?
As long as the equity in your home is fully exempt, you can keep your home when filing bankruptcy in Pennsylvania. In the case that your home is not fully exempt, you can still keep your home if you pay its non-exempt value to creditors in Chapter 13.
However, it’s possible that a creditor will have a security interest in your home, which means you give that creditor a mortgage on your home or put up other property to use as collateral for the debt you owe.
How Much Will I Have to Pay to File Bankruptcy?
That depends on what type of bankruptcy you file for. Under Chapter 7, it currently costs $306 to file. Under Chapter 13, it currently costs $281 to file. If you cannot pay the bankruptcy fee at the time of filing, the court may set up an installment payment plan for you. If you hire a Pennsylvania bankruptcy attorney, you will be responsible for paying their fees according to the attorney’s terms.
Will All My Debts be Eliminated When I File for Bankruptcy in Pennsylvania?
Generally speaking, yes. However, filing bankruptcy will not eliminate:
- Any money you owe for child support;
- The money you owe for alimony;
- Fines and some taxes you owe that aren’t listed on your bankruptcy petition;
- Loans you obtained by intentionally providing false information to creditors;
- Debts resulting from “willful and malicious’ harm;
- Student loan debt owed to a government entity or school (unless the court determines you aren’t able to make the payments); and
- Mortgages and other liens that aren’t paid in your bankruptcy case.
Get the Bankruptcy Help You Need
At Bartifay Law Offices, we understand that the decision to file for bankruptcy is a difficult choice and not one to take lightly. We encourage you to contact us today with your Pennsylvania bankruptcy questions or for the legal representation you need.