Bankruptcy is a legal process allowing an individual or business to have some or all of their debt absolved. It is almost always considered as a last resort because it can have some negative long-term consequences which must be considered, even if you ultimately decide that they are outweighed by the benefits. Bankruptcy is governed by federal law and handled in federal courts, so the procedural and substantive rules involved in Pennsylvania are often the same as anywhere else in the U.S. However, individual bankruptcy courts have slightly different rules for items such as exemptions, so it would be a good idea to consult with a local Castle Shannon, Pennsylvania bankruptcy lawyer beforehand.
Chapter 7 Bankruptcy in Castle Shannon, Pennsylvania
There are 2 main types of bankruptcy in Castle Shannon, Pennsylvania. They are known as Chapter 7 and Chapter 13 Bankruptcy. Chapter 7 liquidates some of the debtor's assets. It requires a certain percentage of the debtor's assets to be sold off to pay as much of his or her debt as possible. However, many types of property that most people own are exempt, meaning that they don't need to be sold. This often includes houses, vehicles, insurance policies, and basic personal items, like clothing. These assets are not available to creditors.
Once eligible assets are sold, and the proceeds turned over to the creditors, most remaining debt is cleared. However, some types of debt cannot be discharged in bankruptcy, including student loans, taxes, child support, personal injury awards, and fines. If most of your debt in Castle Shannon, Pennsylvania is not dischargeable, you might want to consider other options besides bankruptcy.
Chapter 13 Bankruptcy in Castle Shannon, Pennsylvania
Chapter 13 Bankruptcy in Castle Shannon, Pennsylvania is very different from Chapter 7. Whether or not it is a better option is highly dependent on the facts of each particular case. Chapter 13 does not absolve debt, but restructures it instead. Normally, various debts are consolidated into a single monthly payment. This is designed to make the debt more manageable, giving the debtor the chance to pay off the debt over a longer period of time, without all of it coming due at once. This is normally manageable, as long as the debtor can make some sacrifices.
Which Type of Consumer Bankruptcy Should I File in Castle Shannon, Pennsylvania
Whether Chapter 7 or Chapter 13 is the right choice for you depends heavily on your particular situation. If you have a steady income stream, and a lot of non-exempt property, Chapter 13 might be right for you. If you don't have a steady income, and most of your property is exempt, Chapter 7 might be a better way to go.
Whatever your situation, you should speak with a local Castle Shannon, Pennsylvania bankruptcy attorney. Your lawyer will be able to advise you of your options and their likely outcomes, which will help you make a more educated decision.