- What is a Chapter 7? A Chapter 13? How do I know which one to file?
See the Chapter 7 bankruptcy page of this Web site for a description of this type of bankruptcy, sometimes mistakenly referred to as a “discharge” bankruptcy or a “liquidation” bankruptcy. See the Chapter 13 bankruptcy page of this Web site for a description of this type of bankruptcy, also known as “debt restructuring.” We can help you go through either type of bankruptcy and can help you select which type of bankruptcy best suits your needs.
- What about the new bankruptcy law?
On October 17th of 2005, the new bankruptcy law became effective. It added several new requirements and has complicated the process somewhat. A full discussion of all the changes is too much to go into. However, the bottom line is that in most cases, we can generally achieve for our clients the same results we achieved before — it’s just a little more time-consuming and complicated.
The common bankruptcy myths are endless, and we are never surprised anymore by what our clients think they know about the new law. Bring your fears to us and we’ll tell you the truth. The new law is nothing to be afraid of if you need a bankruptcy. We at Dethlefs, Pykosh & Murphy Law hope this Pennsylvania bankruptcy FAQ will help answer some of your questions.
- Do I have to list all of my debts?
This is perhaps the most common “urban legend” in bankruptcy. You do not get to file “on” a certain creditor and not “against” others. You do not get to decide who is “included” in your bankruptcy. The federal bankruptcy laws require you to list ALL debts you have — it does not matter whether you intend to keep paying on the debt or not. All means all. If you have some reason you do not want a specific debt discharged, discuss that with the attorney and he or she will discuss a procedure by which you can reaffirm a particular debt.
- Will my bankruptcy be published in the paper or will anyone tell my family/employer/friends? What if I lose my credit cards? I have excellent credit — will bankruptcy hurt my credit rating?
No one should ever file bankruptcy unless it is their best option because of serious financial difficulties. If bankruptcy is truly your last option, you are going to have to deal with the consequences. It’s that simple.
Bankruptcy is not a pleasant choice. In terms of stress, it ranks up there with divorce and death of a close family member. However, if you are in serious financial difficulty, about to lose your home in foreclosure, swamped with bills you can’t pay, you must realize you are faced with many choices, NONE of which come without pain and consequences. Your job is to find the least painful way out of your difficulty. We understand the terrible pressure you are under and can help you by presenting realistic choices for you to consider. Most of our bankruptcy clients find that they are able to establish credit again after bankruptcy!
It’s important to understand the ramifications of bankruptcy, and our York & Harrisburg bankruptcy lawyers can help explain them to you. Most of the time, these consequences are not a reason to avoid bankruptcy if you truly need it. If you don’t file when you really need to, your family/employer/friends most certainly would figure something was up when your creditors seized and sold your personal property, repossessed your vehicles, and evicted you or sold your house.
With that said, at present local papers do not publish individual bankruptcy information, although there is nothing to stop them (other than common decency, in our opinion) from doing so. People in your life only have to know if (1) you tell them; or (2) you list one of them as a creditor on your bankruptcy; or (3) one of them is a co-debtor of yours. Please keep in mind your bankruptcy is an open public record and those files are kept at the Federal Courthouse.
- Am I going to lose my property (furniture, cars, house, etc.)?
Not generally. Property such as homes and cars are usually pledged as collateral for a loan, known as “secured loans.” These types of loans must continue to be paid if you want to retain these items. If not, you can usually surrender them without penalty. Other personal property can be exempted, and the vast majority of clients never lose any property unless they want to. Strip-offs and cramdowns are popular tools for Pennsylvania home or vehicle owners to reduce the extent of their debt.
- What is the best way to protect my property during my bankruptcy?
Tell us what you have. Pennsylvania is a good state in which to file for bankruptcy because we can use either the federal or state exemptions. We can help you select the best set of exemptions for your situation and help you provide the level of detail necessary for your petition. Most of our clients keep everything they have, and we make sure you know whether any of your assets are at risk BEFORE you file your petition. We hate surprises, and if you are thorough in listing your assets before you file, we can make sure you protect your possessions.
- Why do I have to tell you about my car, house, etc.? I don’t want to include those in the bankruptcy.
The federal bankruptcy laws require you to disclose ALL of your debts. You can keep these items by disclosing them, exempting them and then continuing to pay on them. We send a statement to the lender that you intend to keep the property and intend to keep paying on it.
- What is a reaffirmation?
Signing an agreement making you LEGALLY LIABLE for the debt, despite the bankruptcy. It must be signed by you and the attorney and approved by the court. We strongly discourage you from doing this; please discuss the specific matter with our bankruptcy attorneys.
- Do I have to go to court or before a judge?
You will attend a hearing known as a “Meeting of Creditors” at a court-designated place and time. While your creditors have the opportunity to be there and question you, it is very rare for them to appear. The hearing is not conducted before a judge, but rather another attorney known as a “trustee.” Your attorney will be there with you and generally the process is fairly straightforward and painless. You will be prepared beforehand by your lawyer and, although everyone worries about this hearing, there is no real reason to do so if you have been completely honest with your legal counsel.
- What is the best way to have a problem during my bankruptcy?
Be evasive or careless in providing us information. Hide something from us and the court. A client who is tempted to do these things is usually afraid and believes he or she is actually protecting himself or herself and his or her family. However, the common mistakes in bankruptcy are endless; we know more than you do and can usually help you deal with that issue you’re afraid to tell us about. Most of the time your fears will prove groundless.