Legal Professionals in Scranton
Legal tips: when and how to file for bankruptcy in Scranton
Is your phone ringing off the hook from creditors looking to collect? Does there always seem to be more month than money? Do you have debts that you have no hope of paying off? If that sounds like you, bankruptcy may be one option to help you find debt relief.
Many see bankruptcy as some sort of catastrophic financial failure, but things can happen in life that are beyond our control. The loss of a job, the death of a loved one, a tanking economy or a demotion can all destroy a person’s financial life in irreparable ways. Even if they have the best intentions, life doesn’t always cooperate and they may need a fresh start.
The typical person who files for a bankruptcy is someone with tenuous financial circumstances, large amounts of debt and an unexpected life event like a divorce or sudden medical bills. Bankruptcy laws exist for people like this, who need a clean break to get on with their lives.
There are two types of bankruptcy:
- Chapter 7 bankruptcy wipes out unsecured debts (like credit card debt) in mere months. The down side is that you have to give over any property that is not considered exempt from bankruptcy. Many people who go this route have no un-exempt property (this is called a “no asset” bankruptcy.
- Chapter 13 bankruptcies, on the other hand, take several years to complete. But rather than giving up property, you reorganize your debts and agree to pay back a certain amount and live within your means for the duration. You’ll be closely monitored by a trustee from the bankruptcy court to make sure you are following all the guidelines. If you don’t make the required payments, the bankruptcy fails. This type of bankruptcy is commonly used by people who fall behind on secured debts (like mortgages).
The courts will use a formula called the “means test” to determine which type you qualify for. It takes into account how much you owe, what types of debt you have, your monthly income and other relevant financial data.
There are so many ins and outs to bankruptcy that hiring a lawyer is probably your best bet. He or she may be able to help you get the best outcome.