If your finances have gotten a bit out of control and you need some relief, you have the option of filing bankruptcy. At Schimizzi Law, LLC, we help those in Pennsylvania to file both Chapter 7 and Chapter 13 bankruptcies. Deciding which to file is largely based on your situation and the types of debts that you have.
The American Bar Association defines Chapter 7 as being a liquidation of debts while Chapter 13 is a repayment plan. Basically, this means in Chapter 13, you repay your debts as outlined in your plan with some being discharged. In Chapter 7, most of your debts will be discharged. In either case, though, some debts will remain, like student loans and taxes owed.
To file either form of bankruptcy, you need to complete credit counseling and file a petition with the court. Bankruptcy can affect the assets you own, like your home or your vehicle. In Chapter 7, you can only keep certain assets that are considered exempt because other assets are used to pay off debts. In Chapter 13, you usually get to keep your assets if you complete the plan.
To be eligible to file a Chapter 7, you have to pass a means test. Most people who have higher incomes will not pass the test and will be ineligible. There are also income limits for filing Chapter 13, but they are much higher. Both forms will remain on your credit report for 10 years, although some Chapter 13 creditors may keep it on there for only seven. To learn more about debt solutions, visit our website.