In Scranton, Pennsylvania, bankruptcy is a judicial process in which the debts of a person or business can be cleared or restructured. This allows the debtor to climb out of a financial hole, and move on with a clean slate, which is often more economically useful than requiring the debtor to pay off everything they owe. Of course, one should never view bankruptcy as a "get out of debt free" card, allowing someone to be relieved of their requirement to pay their debts just because they don't want to. It is meant to serve as a lifeline, preventing uncontrollable debt from resulting in complete financial ruin. Accordingly, it is best treated as an option of last resort, because it can carry with it significant negative consequences, which must be weighed against the possible benefits. For example, filing for bankruptcy can heavily damage a person's credit rating.
Therefore, it is a good idea to talk with an experienced bankruptcy lawyer in Scranton, Pennsylvania. They will be able to advise you on the likely legal and financial consequences of filing for bankruptcy, and help you determine if it's the right option for your. Because this determination depends heavily on the facts of each individual case, the counsel of a Scranton bankruptcy attorney cannot be replaced.
Types of Bankruptcy in Scranton, Pennsylvania
In Scranton, Pennsylvania, 3 types of bankruptcy procedures are in common use: Chapter 7, Chapter 11, and Chapter 13. Being governed by federal law, the procedures involved in filing for bankruptcy in Scranton, Pennsylvania will be roughly the same as everywhere else in America. Chapter 7 bankruptcy involves liquidation of part of the debtor's assets to pay off as much of his or her debt as possible. Once the liquidation is complete, and the proceeds given to the creditors, the rest of the debt is discharged. Liquidation is essentially selling assets to the highest bidder. Only some of the debtor's assets have to be sold, and numerous classes of property are exempt, meaning that the debtor can keep them, including homes, cars, insurance policies, and retirement accounts. It should be noted that certain types of debt cannot be discharged through Chapter 7 bankruptcy, including student loans, child support payments, criminal fines, and recent taxes.
The other frequent bankruptcy scheme used by consumers in Scranton is Chapter 13 bankruptcy. In this system, debt is not discharged. Instead, it is restructured. This allows the debtor to have the terms of the agreements that gave rise to their debts in the first place thrown out, and replaced with new terms that call for a structured repayment plan, designed to allow the debtor to survive on whatever income they have, and allowing the creditors to get paid back eventually. Once a payment plan is authorized, creditors are not allowed to attempt to collect payment under the original agreements. Though available to individuals, Chapter 11 bankruptcy is mostly used by businesses. Like Chapter 13, Chapter 11 requires the restructuring of debts. Under this system, the debtor must come up with a plan to reduce debt, cut costs, and improve operations. Once this plan is proposed, it is submitted to the participating creditors, who must approve it by a majority vote before it can be implemented.
While going through Chapter 11 bankruptcy, a business can continue operating, and its stock can continue to be traded.
How Can a Scranton Bankruptcy Lawyer Help?
One should not make the decision to file for bankruptcy in Scranton easily. Before making any such decision, it would be highly advisable to contact an experienced Scranton bankruptcy attorney.