In most cases, filers of a bankruptcy case are required to attend a credit counselling before filing the petition. In Pennsylvania, it is necessary for a bankruptcy filer to complete a credit counselling session 6 months before filing. Through this, a professional will examine your finances and personal situation as well as provide effective financial management plan for the future. Bankruptcy options will be explained to you and whether you would qualify for a bankruptcy case.
The moment you have finally decided to declare bankruptcy in Pennsylvania, you should then choose the most appropriate bankruptcy option for your case. Although there are several options available, the most common are perhaps the Chapter 13 and the Chapter 7 bankruptcy options. Eligibility criteria vary from one option to another%3b but should a debtor fail to meet the requirements of a chapter 7 bankruptcy option in Pennsylvania, the debtor can change or shift to chapter 13 and vice versa. However, since filing for bankruptcy is a serious legal matter, it pays to carefully assess your options and other significant factors involved.
The chapter 7 bankruptcy option is also known as straight or liquidation bankruptcy. Debtors with no stable income but have assets that they are willing to use as payments to their creditors opt for this type of bankruptcy protection. Assets or personal properties which have not been claimed as exempt will be liquidated to pay off the debt. But chapter 7 filers usually have little or no assets%3b thus, they can actually walk out of their debts or be legally forgiven. However, for a debtor to be qualified for this bankruptcy option in Pennsylvania, he/she must first pass the “means test” provided in order to determine whether your annual income is really below the state’s given median annual income.
On the other hand, if you choose to deal with your debt courageously instead of just getting a clean slate easily or if you are still able to settle your debts over time, then going for a chapter 13 bankruptcy option is the bet avenue for you. Chapter 13 is referred to as repayment or debt adjustment plan%3b also a “wage earner’s plan.” This allows you to keep all or most of your priceless assets as long as you have a steady income to compensate for your debts without compromising your daily expenses. The court must approve a 3- to 5-year debt repayment plan which you and your creditors would agree upon. Once filed, your creditors would be asked to stop collection efforts or taking legal actions.
It is imperative to go over the rules and bankruptcy rules governing Pennsylvania prior to filing the case to avoid serious mistakes and further dilemmas. Provisions under each bankruptcy option in Pennsylvania may also vary from other states%3b therefore, you must fully understand the ins and outs of bankruptcy, especially the option of your choice, through the aid of a lawyer. This way, you can guarantee the success of your bankruptcy petition for a debt-free tomorrow.
