Bankruptcy is a legal process allowing an individual or business to have some or all of their debt discharged. 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 eventually decide that they are outweighed by the benefits. Bankruptcy is controlled by federal law, and proceeds in federal courts. So, the process for filing for bankruptcy in Pennsylvania will be very similar to the process everywhere else in the U.S. However, individual bankruptcy courts have different rules for exemptions, so it might be a good idea to consult with a local lawyer in Kutztown, Pennsylvania before filing.
Chapter 7 Bankruptcy in Kutztown, Pennsylvania
There are 2 main forms of consumer bankruptcies in Kutztown, Pennsylvania: Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy involves a liquidation of some of the debtor's assets, which pays off part of his or her debt. Once this is done, the remaining debt is discharged. Fortunately for debtors, many forms of property are exempt from liquidation, including homes, vehicles, essential personal items, and retirement accounts.
Once the eligible property is sold, and the funds transferred to the creditors, the dischargeable debt is excused. Some forms of debt, however, can't be discharged in Chapter 7 Bankruptcy in Kutztown, Pennsylvania. These include student loans, criminal fines, and taxes, among others. If most of your debt can't be discharged, Chapter 7 may not be the best choice for you.
Chapter 13 Bankruptcy in Kutztown, Pennsylvania
Chapter 13 Bankruptcy in Kutztown, Pennsylvania is very different from Chapter 7. Whether or not it is a better option is very dependent on the facts of each individual case. Chapter 13 bankruptcy does not eliminate debt, it restructures it. This involves a court coming up with a new repayment plan designed to be manageable for the debtor. This new plan sets aside the terms of the original agreements that created the debt in the first place. This creates a new payment structure, usually involving a single monthly payment, that the debtor should find manageable.
Which Type of Consumer Bankruptcy Should I File in Kutztown, Pennsylvania
Whether Chapter 7 or Chapter 13 is the right choice for you depends heavily on your individual situation. If you have a stable income stream, and a lot of non-exempt property, Chapter 13 might be right for you. If you don't have a stable income, and most of your property is exempt, Chapter 7 might be a better way to go.
Of course, you should always seek the counsel of an accomplished local Kutztown, Pennsylvania bankruptcy attorney before you make the decision to file. He or she will be able to advise you of your options, and suggest the best possible course of action for your particular situation.