Youngstown Chapter 7 Bankruptcy Lawyer

One of the most frequent inquiries a bankruptcy lawyer encounters from clients revolves around the distinction between Chapter 7 and Chapter 13 bankruptcy. Essentially, Chapter 7 bankruptcy provides an immediate discharge, effectively wiping out unsecured debts.

The types of debt that can be eliminated through Chapter 7 include credit card balances, medical expenses, personal unsecured loans, timeshare obligations, certain tax liabilities, and more. It is quite uncommon for a home or vehicle to be liquidated in a Chapter 7 case, except in very specific situations which we will explore later.

What Is Chapter 7 Bankruptcy in Simple Terms?

Often called “liquidation bankruptcy,” Chapter 7 is a legal procedure designed for businesses or individuals drowning in debt. It allows them to seek relief by having a court-appointed trustee sell off non-exempt assets to pay back creditors. These assets might include property like a car or house, though exemptions often apply.

Once these assets are liquidated, the funds are shared among the creditors. The remaining debt is then typically discharged, meaning the person who filed is no longer legally required to pay it back. While a Youngstown chapter bankruptcy 7 attorney can help you get a fresh start, it is important to understand that this path has consequences, such as the potential loss of property.

Chapter 7 vs Chapter 13

Chapter 7 bankruptcy, or “liquidation bankruptcy,” involves selling assets to settle debts with creditors, usually resulting in the discharge of whatever debt remains. It is generally the preferred route for those who have significant debt but very few assets. In contrast, Chapter 13 bankruptcy is known as “reorganization bankruptcy.” This option allows individuals with a steady income to set up a repayment plan, paying back their debts gradually over a period of three to five years.

Unlike Chapter 7, Chapter 13 focuses on restructuring your debt rather than liquidating your assets. Deciding between the two often depends on your specific financial picture, including your income, what assets you own, and whether you want to keep specific possessions. A Youngstown bankruptcy lawyer can help evaluate which chapter is right for you.

How to File Bankruptcy Chapter 7 in PA

Filing for Chapter 7 bankruptcy in Pennsylvania is a multi-step process. First, you must compile all your financial records, including income statements, tax returns, and a full list of your debts and assets. With this data in hand, you will complete the required bankruptcy forms. These forms include a petition, schedules that detail your financial status, and statements regarding your income, expenses, assets, and liabilities.

You are also required to complete the Pennsylvania bankruptcy means test. This test calculates whether you are eligible to file for Chapter 7. If you do not qualify, a Youngstown chapter bankruptcy 7 attorney might suggest Chapter 13 as a better alternative for your circumstances.

Once your paperwork is complete, you must file it with the bankruptcy court in your Pennsylvania district. You will also need to pay a filing fee, unless your income level qualifies you for a fee waiver or you request to pay in installments.

Chapter 7 Bankruptcy Requirements

To file under this chapter, individuals must meet specific eligibility criteria. The requirements for Chapter 7 bankruptcy include:

• Means test: This assessment looks at your income and expenses to see if you have disposable income to pay back debts. If your income is below the state median or you pass the test, you usually qualify. If not, you might need to look into Chapter 13 with the help of a Youngstown bankruptcy lawyer.
• Credit counseling course: Before filing, you must finish a credit counseling course from an approved agency within 180 days. This helps assess your finances and looks for alternatives to bankruptcy.
• Residency: You must have lived in the district where you are filing for at least the last 180 days.
• Previous bankruptcies: If a previous bankruptcy case was dismissed within the last 180 days because you didn’t appear in court or follow orders, you may not be eligible to file again yet.
• Financial management / debtor education course: After filing, you must complete a financial management course. This teaches budgeting skills to help you rebuild your financial health.

Chapter 7 Income Limits 2024

It is crucial to note that if your income is above a certain threshold, you likely won’t qualify for Chapter 7. As of April 1st, 2024, the income limits for a Youngstown chapter bankruptcy 7 attorney to file a case are based on household size:

• One earner: $66,923
• Two people: $81,574
• Three people: $103,172
• Four people: $125,861

How Does Chapter 7 Work in Pennsylvania?

The process begins when the debtor files a petition with the bankruptcy court. This action triggers an “automatic stay,” which stops most creditor actions immediately—including foreclosure proceedings and collection calls—giving the debtor instant relief from harassment.

Next, a bankruptcy trustee is assigned to the case. Their main job is to review your assets and decide if there are any non-exempt items that can be sold to pay back creditors. Exempt assets, like basic household goods and certain property types, are usually protected under state and federal laws, a nuance a Youngstown bankruptcy lawyer can explain in detail.

The trustee then sells any non-exempt assets and distributes the money to creditors based on priority laws. Unsecured debts like medical bills and credit cards are usually discharged, meaning you don’t have to pay them. However, debts like alimony, child support, and most tax debts typically cannot be wiped out.

Once the liquidation is finished and funds are distributed, the debtor receives a discharge. This releases them from most remaining debts, offering a fresh financial start.

Means Test Chapter 7

The Chapter 7 test is vital for determining if you are eligible to file. It reviews your income and expenses to see if you have enough disposable cash to pay off debts. The test compares your average monthly income from the six months before filing against the median income for your state.

If your income is below the median, you typically qualify. If it is higher, further calculations are done to check your disposable income. If that income is too high, a Youngstown chapter bankruptcy 7 attorney may advise you to file for Chapter 13 instead.

Submit Your Bankruptcy Petition to a Pennsylvania Bankruptcy Court

Submitting your petition involves several key steps. First, you gather all financial documents, such as tax returns, income statements, and debt details. Next, you fill out the necessary forms, including the petition and schedules that outline your financial life.

After the forms are ready, they are filed with the court serving your district, along with any fees or waiver requests. The court then assigns a case number, starting the automatic stay. Finally, you will attend a “meeting of creditors,” where the trustee and creditors can ask questions about your finances and petition. A Youngstown bankruptcy lawyer will guide you through this meeting.

What Happens After Filing Chapter 7 in PA?

Once you file for Chapter 7, the court initiates the automatic stay. This legal order stops most creditors from taking action against you. It starts immediately and is a powerful tool to stop collection efforts and harassment.

The automatic stay prevents creditors from making calls, sending letters, filing lawsuits, garnishing wages, or starting foreclosure. This protection lasts throughout the bankruptcy process, giving you breathing room to handle your finances. While the stay offers significant protection, we highly recommend consulting a 7 attorney to manage your case effectively.

What Can You Not Do After Filing Chapter 7 in PA?

After filing, there are specific actions you must avoid. Most importantly, you cannot give away property or transfer assets to others, as this can be viewed as fraud. You are also prohibited from taking on new debt without the court’s permission, such as using credit cards or taking out loans.

Additionally, you generally cannot dismiss ongoing lawsuits related to pre-bankruptcy debts without court approval. This ensures all creditors are treated fairly. You are also not allowed to pay back specific creditors over others; everyone must be treated equally. Finally, you must cooperate with the trustee and provide accurate information. Failing to do so can lead to your case being dismissed. A Youngstown bankruptcy lawyer can help you avoid these pitfalls.

How Long Does Chapter 7 Bankruptcy Take?

The length of a Chapter 7 case depends on the complexity of your situation, the court’s workload, and any issues that pop up. Generally, it takes about three to six months from the moment you file until your debts are discharged.

How Often Can You File Chapter 7 in Pennsylvania?

Under the Bankruptcy Code, you must wait at least eight years from the date of a previous Chapter 7 filing before you can file another Chapter 7 case and receive a discharge. This period is calculated from the filing date of the first case to the filing date of the new one.

However, if you previously filed for Chapter 13 and now want to file for Chapter 7, you typically need to wait at least four years from the Chapter 13 filing date. A Youngstown chapter bankruptcy 7 attorney can clarify these timelines for you.

What Is the Success Rate of Chapter 7 Bankruptcy in PA?

If “success” means getting your debts discharged, the rate is generally high for those who complete the process. Most Chapter 7 cases result in a discharge, giving debtors a clean slate and relief from the majority of their obligations.

Chapter 7 Bankruptcy FAQs

When Do I Have to Surrender My Vehicle in Chapter 7?

Whether you lose your car in Chapter 7 depends on your equity in the vehicle, state exemption laws, and if you can reaffirm the debt. If you have little equity or if it is covered by exemptions, you might be able to keep it by continuing payments. However, if you have too much equity or are far behind on payments, the trustee might sell it. A Youngstown bankruptcy lawyer at Youngstown Criminal Law Group can help you understand your specific risk.

Can I File Chapter 7 Before 8 Years?

There are exceptions where you might be eligible to file early, such as extreme financial hardship or if your circumstances have changed drastically since your last filing in Pennsylvania.

Can IRS Debt Be Discharged in Chapter 7?

In some cases, yes. Income tax debt might be discharged if it meets specific criteria: it must be income tax, the debt must be for a tax year at least three years old, you must have filed a return for that year at least two years prior, and the assessment must be at least 240 days old. A Youngstown chapter bankruptcy 7 attorney can review your tax history to see if you qualify.

Will Filing Chapter 7 Affect My Spouse?

Filing for Chapter 7 discharges your liability for joint debts, but not your spouse’s. They may still be responsible unless they also file. However, if your debts are solely in your name, filing shouldn’t directly impact your spouse’s credit report.

How Much Do You Have to Be in Debt to File Chapter 7?

There is no specific minimum debt amount required. Eligibility is based on your income and ability to pay, determined by the means test. A Youngstown bankruptcy lawyer can help you run the numbers.

How Long Can Chapter 7 Trustee Keep Case Open in Pennsylvania?

In Pennsylvania (including Allegheny County), a trustee keeps the case open until all duties are fulfilled, such as selling assets and paying creditors.

Will I Lose My House If I File Chapter 7?

While non-exempt assets can be sold, state or federal exemptions often protect a certain amount of equity in your primary home. If your equity is within these limits, you can likely keep your house. If it exceeds the limit, the trustee could sell it, though this is uncommon. Consult a Youngstown chapter bankruptcy 7 attorney to protect your home.

To make sure your home is protected, it’s a good idea to talk to an attorney. Call (330) 791-8104.