Understanding Bankruptcy
Bankruptcy is a legal proceeding in which a person who cannot pay their bills can get a fresh financial start. All bankruptcy cases are handled in federal court, so it is highly recommended that you have an attorney to guide you through the process.
Who Is a Debtor?
A person who files for bankruptcy is called a debtor. By filing for bankruptcy, you may:
- Get most or all of your bills discharged (wiped out).
- Keep most or all of your property that might otherwise be lost to creditors.
- Get extra time to pay bills if you have regular income.
Types of Bankruptcy
The two most common types of bankruptcy for individuals are:
Chapter 7 – Liquidation Bankruptcy
- You file a petition asking the court to discharge your debts.
- The idea is to wipe out debts in exchange for giving up property (except exempt property allowed by law).
- In most cases, low-income debtors can keep most or all of their property.
- Non-exempt property is sold to pay creditors.
Chapter 13 – Debt Adjustment Bankruptcy
- You file a plan to pay some of your past-due and current debts over 3 to 5 years.
- After completing the plan, the unpaid balance on certain debts may be discharged.
- This type is ideal if you:
- Own a home and are in danger of losing it.
- Are behind on debt payments but can catch up with time.
- Have regular income (including benefits like Social Security or public assistance).
What Property Can You Keep?
You can keep all property that is exempt from creditors. You can choose Pennsylvania exemptions or federal exemptions (usually better).
Federal Exemptions Include:
- $27,900 in equity in your home
- $4,450 in equity in your car
- $700 per item in household goods (up to $13,400 total)
- $2,800 in work-related tools, books, etc.
- $1,875 in jewelry
- $1,475 in any property, plus up to $13,950 unused home exemption
- Unlimited right to receive benefits such as:
- Social Security
- Unemployment
- Veterans’ benefits
- Public assistance
- Pensions
Married couples filing jointly can double the exemption amounts.
Secured Creditors
Some creditors have a security interest (collateral) in your home or personal property. If you default, they may repossess or foreclose.
Options in Bankruptcy:
- In Chapter 13, the court can give you time to catch up on missed payments.
- For some items, you can pay the value of the property instead of the full debt.
Cost to File for Bankruptcy
(Does not include attorney’s fee)
- Chapter 7: $338
- Chapter 13: $313
- If your income is very low (up to 150% of the poverty level), the Chapter 7 filing fee may be waived.
Discharge
At the end of the process, the court issues a Discharge Order:
- Excuses you from paying discharged debts.
- Forbids creditors from trying to collect those debts.
- Can be denied if you:
- Hide property
- Provide false information
- Disobey court orders
- Attempt to defraud a creditor
Credit Impact
- Bankruptcy can appear on your credit record for 10 years.
- However, it may help you rebuild credit by clearing unpayable debts.
- Most people see significant credit improvement within 4 years.
Can You Own Property After Bankruptcy?
Yes. You can still own property after filing for bankruptcy. However, you may have to pay creditors if you receive:
- Inheritance
- Property settlements
- Life insurance benefits
…within 180 days of filing and if the property is not exempt.
What Debts Are Not Wiped Out?
In a Chapter 7 bankruptcy, the following debts generally cannot be discharged:
- Child support or alimony
- Fines, criminal restitution, and some taxes
- Debts from fraud or false information
- Debts from willful or malicious harm
- Student loans (unless repayment is an undue hardship)
- Debts from DUI-related injuries or death
- Debts incurred to pay taxes
- Debts not listed in your bankruptcy petition (with some exceptions)
Other Important Information:
Utility Service
Utilities (e.g., electric companies) cannot cut off service due to bankruptcy.
They may require a deposit for future service.
Discrimination
Employers and government agencies cannot discriminate against you for filing.
Driver’s License
Bankruptcy may help restore your license if it was suspended for unpaid civil damages from an accident.
Co-signers
If someone co-signed a loan for you, they may still have to pay the debt if you file for bankruptcy.
Why Choose Shane Weaver Law
for your Bankruptcy case?
Expertise and Experience:
With extensive experience in bankruptcy law, our attorneys understand the complexities of both Chapter 7 and Chapter 13 filings. We stay current with changing laws and court procedures to develop effective strategies that help clients achieve financial relief.
Personalized Service:
We know that every financial situation is different. That’s why we take the time to understand your unique challenges and goals, tailoring a bankruptcy plan that fits your needs. You’ll receive focused attention and a solution-oriented approach throughout the process.
Strategic Guidance:
We are committed to protecting your assets and helping you make informed financial decisions. From stopping creditor harassment to restructuring debt, we work tirelessly to help you regain financial control with confidence and clarity.
Compassionate Support:
Filing for bankruptcy can be stressful and emotionally difficult. We offer a supportive and respectful environment, answering your questions and providing reassurance at every stage. You’re not alone — we’re here to help you move forward.
Contact Us
If you are struggling with overwhelming debt or facing creditor harassment, it is important to explore your legal options without delay. We are committed to helping you find relief and regain control of your financial future. Contact us today to schedule a consultation and take the first step toward a fresh start.
Your financial recovery is our priority. Let us provide the expertise, dedication, and support you need to navigate the complexities of bankruptcy law.