Bankruptcy is a legal process allowing an individual or business to have some or all of their debt excused. 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, Pennsylvania before filing.
Chapter 7 Bankruptcy in Lancaster, Pennsylvania
There are 2 typical types of consumer bankruptcies in Lancaster, 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 excused. Fortunately for debtors, many types of property are exempt from liquidation, including homes, vehicles, necessary personal items, and retirement accounts.
Once the appropriate property is sold, and the funds transferred to the creditors, the dischargeable debt is absolved. Some types of debt, however, can't be excused in Chapter 7 Bankruptcy in Lancaster, Pennsylvania. These include student loans, criminal fines, and taxes, among others. If most of your debt can't be excused, Chapter 7 might not be the best choice for you.
Chapter 13 Bankruptcy in Lancaster, Pennsylvania
Chapter 13 bankruptcy in Lancaster, Pennsylvania is markedly different. It may or may not be a better option than Chapter 7, depending on the facts of your specific case. Chapter 13 bankruptcy does not absolve debt, it restructures it. This involves a court coming up with an adjusted repayment plan designed to be manageable for the debtor. This new plan sets aside the terms of the original arrangements that created the debt in the first place. This creates a new payment structure, typically involving a single monthly payment, that the debtor should find manageable.
Which Type of Consumer Bankruptcy Should I File in Lancaster, Pennsylvania
Chapter 13 is typically 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.
Regardless of your situation, you should speak with an attorney in Lancaster, Pennsylvania who is experienced in bankruptcy before making a decision. They will be able to advise you of your options, and the likely results of each one, allowing you to make a much more informed decision.