This section of PALawHelp.org has information and resources about Bankruptcy issues in Pennsylvania.
A Guide to Bankruptcy
Bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided for by federal law, and all bankruptcy cases are handled in federal court.
A person who files for bankruptcy may get most or all of their bills discharged (wiped out); get to keep most or all of their property which otherwise might have been lost to creditors (people to whom money is owed); and get extra time to pay bills if they have regular income.
The two usual kinds of bankruptcies for individuals are Chapter 7 (called straight bankruptcy) and Chapter 13.
Chapter 7 Bankruptcy
Under Chapter 7, you ask the court to discharge your debts. The basic idea in a Chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for giving up your property, except for exempt property which the law allows you to keep. In many cases, much or all of your property may be exempt. Property which is not exempt is sold and the money distributed to creditors.
Chapter 13 Bankruptcy
Under Chapter 13, you file a plan showing how you will pay off some of your past-due and current debts over an extended period, normally three to five years. After you complete the plan, the unpaid balance on certain debts may be wiped out. A Chapter 13 bankruptcy can allow you to keep valuable property (especially your home) which might otherwise be lost.
You should consider filing a Chapter 13 plan if you own your home and are in danger of losing it because of money problems; are behind in debt payments, but can catch up on the most important debts if given some time; and have regular income. (This can include government benefits such as social security or public assistance.)
Property in Bankruptcy
In bankruptcy you can keep all property which the law says is exempt from the claims of creditors. You can choose between your exemptions under Pennsylvania law or under federal law. The federal exemptions are better for most people. More information . . .
Your right to receive certain benefits such as social security, unemployment compensation, veterans benefits, public assistance, and pensions—regardless of the amount are usually considered to be exempt, allowing you to continue to receive the full amount of the benefits.
Secured Creditors. Some of your creditors may have a security interest in your home or personal property. This means that you gave the creditor a mortgage on your home or put your property up as collateral for a debt. If you don’t make your payments on the debt, the creditor may be able to take and sell the home or property. If you are behind in your payments, the court in a Chapter 13 bankruptcy can give you time to catch up. For some types of property, you can pay the creditor the amount that the property is worth rather than the full debt.
Debts in Bankruptcy
Bankruptcy will wipe out most of your unsecured debts, but there are certain debts that will not be wiped out under the law because they are excluded from being discharged under bankruptcy law. More Information . . .
The debts are wiped out at the end of the bankruptcy when the court grants a Discharge Order. The Discharge Order excuses you from paying all your debts, except those excluded from discharge. The Discharge Order also forbids creditors from doing anything to try to collect a debt that has been discharged. However, if someone has co-signed a loan with you and you file for bankruptcy, the co-signer may have to pay your debt.
The court can refuse to grant a discharge, but only in very limited cases if you have done something improper, such as trying to cheat a creditor by hiding your property, giving false information to the court, refusing to obey a court order, etc.
After Bankruptcy
A bankruptcy can appear on your credit record for 10 years. However, this may actually help you get credit since your old debts were eliminated, placing you in a better position to pay your current bills
After bankruptcy you can not be discriminated against by employers or govenment agencies because of the bankruptcy. Public utilities cannot refuse you service because of the bankruptcy but can require a deposit for future service. If you lost your driver's license solely because you couldn’t pay court-ordered civil damages caused in an accident, bankruptcy will allow you to get your license back. Continue reading . . .
Additional information on Bankruptcy Law and procedure, and other issues related to bankruptcy can be found listed below.
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