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 ultimately decide that they are outweighed by the benefits. Bankruptcy is governed by federal law, and proceeds in federal courts. So, the procedure for filing for bankruptcy in Pennsylvania will be very similar to the procedure anywhere 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 Attorney in Lancaster County, Pennsylvania before filing.

Chapter 7 Bankruptcy in Lancaster County, Pennsylvania

There are 2 main types of consumer bankruptcies in Lancaster County, 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 types 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 types of debt, however, can't be discharged in Chapter 7 Bankruptcy in Lancaster County, Pennsylvania. These include student loans, criminal fines, and taxes, among others. If most of your debt can't be discharged, Chapter 7 might not be the best choice for you.

Chapter 13 Bankruptcy in Lancaster County, Pennsylvania

Chapter 13 bankruptcy in Lancaster County, Pennsylvania is markedly different. It may or may not be a better option than Chapter 7, depending on the facts of your particular 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 Lancaster County, Pennsylvania

Chapter 13 is usually a good option for people who have a steady income, and a large amount of non-exempt property that they can't part with. On the other hand, if most of the debtor's property is exempt, and he or she does not have a steady income, Chapter 7 might be more beneficial.

In any case, you should talk with a local Lancaster County, Pennsylvania bankruptcy Attorney. Your Attorney can advise you of your options and inform you of their likely consequences. This will make it much easier for your to make an informed choice.