Chapter 7 Bankruptcy Overview
Chapter 7 Bankruptcy allows you to discharge all eligible debts in exchange for selling any unprotected property in order to pay your creditors. Ross, Quinn & Ploppert can use the bankruptcy code to protect your property in different ways, so many clients never have anything sold.
Will I Be Able to Keep My Assets?
There are state and federal exemptions in place to make sure that you do not lose your personal belongings in a bankruptcy proceeding, which is referred to “filing for bankruptcy protection”. The state and federal exemptions work in different ways to protect different types of assets.
These state and federal exemptions are complicated. If you claim exemptions incorrectly, you may forfeit property that you should not lose. For this reason, it is important to hire an experienced local bankruptcy lawyer. Our attorneys keep up to date with all changes to bankruptcy exemptions that may affect our Chester, Berks, and Montgomery County Bankruptcy clients.
Federal and State Exemptions Protect Your Assets
Your home, car, retirement accounts, and personal belongings are protected in bankruptcy. It is important to have a knowledgeable bankruptcy lawyer who knows the specific exceptions that will allow you to keep all of your important assets. Since the federal and state exemptions work in different ways, we will work with you to develop the plan that will be most appropriate for your situation.
Some assets may not be fully protected, these assets include:
- Personal injury damages
- Workers’ compensation settlements
- Social Security Disability Insurance benefits
- Whole life insurance policies
- Equity in your home
Although these exemptions may not be protected completely under the state and federal exemptions, our attorneys will work with you to develop a plan to protect as many of these assets as possible. We develop plans specifically tailored to each client, and will not take a cookie-cutter approach in order to save on time and effort like some other attorneys or bankruptcy preparation services.
Bankruptcy and Your Credit Score
Many people are concerned that filing for bankruptcy will destroy their credit score. In fact, in many cases, bankruptcy will actually improve someone’s credit score due to their debt to income ratio’s being significantly decreased.
One of the major factors in determining a credit score is how much debt one has compared to their income. The lower the debt, the higher the credit score will generally become.
Our experienced and skilled Pottstown, Reading, and West Chester bankruptcy attorneys will be able to develop a plan that is best for your individual needs.
Discharge of Debt Increases Credit Score
The three biggest factors used in determining your credit score are:
- Timely payments on secured debt
- Total amount of unsecured debt
- Judgments on record
While a bankruptcy is a factor that is used to determine a credit score, these three factors listed above far outweigh the effect of a bankruptcy. In most cases, we will either significantly reduce or completely eliminate your unsecured debt and judgments. With other debts are being diminished, it will be much more manageable for you to make timely payments on secured debt. Since you will have less unsecured debt, along with the ability to make timely payments on secured debt, bankruptcy can actually increase a credit score in many cases.
Advertising tactics by the big debt consolidating companies often convey that bankruptcy will lower your credit score. Their motives are simply to get you to pay them rather than your creditors. Unfortunately, your interests are not their priority. Their programs do not offer you the same federal protections that a government monitored bankruptcy will offer you.
Credit Score Recovery Period After Discharge
After you file bankruptcy you can start to rebuild credit based on your new low-debt status. Many people can open new lines of credit, many times is as little as three to six months after their bankruptcy has taken place. Other debtors may have to wait a bit longer, but that is a decision that can be made with the assistance of an experienced bankruptcy attorney.
Student Loan Debt and Chapter 7 Bankruptcy
There are very few times when student loans can be discharged in bankruptcy. However, if you are facing a serious hardship such as a permanent disability or evidence that you are unable to give a minimal standard of living to yourself and your dependents, you may be able to discharge a student loan debt. One factor that Bankruptcy Courts have used in the past is whether or not you have made a good faith effort to try to keep up with your student loan payments.
Discharging student loans in bankruptcy is extremely complicated and you should only trust the most experienced and knowledgeable student loan debt attorneys with your student loan debt needs. Our Pottstown Bankruptcy office has successfully handled numerous student loan discharge cases in Southeastern Pennsylvania.
Student Loan Discharge vs. Deferment
As discussed, student loans may be eligible for discharge in certain extreme cases. Generally, to prove that your student loan debt should be completely discharged, we need evidence that you have a significant medical condition, you have been incapacitated, or have another severe hardship that impedes your ability to work and pay your loan. If our student loan debt attorneys can prove this, we can make all of your student loans disappear.
Even if we are unable to discharge your student loans through bankruptcy, filing for Chapter 7 or Chapter 13 can give you a clear path towards paying off your student loans. While your bankruptcy filing is in process, your loans will be put on deferment which means that you do not have to pay. During the bankruptcy proceedings, we will be able to clear off all other unsecured debt to free up the money you need to pay off your student loans. We may even be able to lump in your student loan debt with other debt and create a manageable repayment plan for you.
Student Loans vs. Personal Loans
Just because you borrowed money to help you get through school does not mean that you have a student loan. Many people take out independent or personal loans to help them get through school. However, unlike student loans, these personal loans are treated like regular unsecured debt and can be discharged normally through a bankruptcy.
Contact Our Montgomery, Chester, and Berks County Bankruptcy Lawyers Today
Our Montgomery, Berks, and Chester County attorneys have even successfully argued down the amount of taxes owed in Bankruptcy Court, by establishing flaws and miscalculations in the clients’ tax history. There is no substitution for experience, which is why you should contact us.
Our attorneys are ready to discuss your concerns about Chapter 7 Bankruptcy in PA and provide answers. Our attorneys represent clients in Pottstown, Norristown, West Chester, Reading, and the surrounding areas. Contact our Pennsylvania debt relief law firm today to learn more about what we can do to help you overcome your legal troubles.