For people interested in filing bankruptcy in Pennsylvania, there are two main types of bankruptcy cases that comprise the vast majority of all case filings, and then there are several other types as well.
The first type is Chapter 7 bankruptcy, which is a good way to simply get rid of debts, such as credit cards, personal loans, repossessions, medical bills, payday loans, etc. Chapter 7 bankruptcy cases usually take 4 to 5 months from start to finish, and generally require one short court meeting/hearing before a bankruptcy official known as a Trustee. In Chapter 7 cases, you won’t repay any debts; they will simply be wiped out (“discharged”), however in a small number of cases, the Trustee will sell certain assets in order to repay creditors. Not everyone is eligible for a Chapter 7 case; for cases involving consumer debts, there are income guidelines, and if your household income falls above the guideline, then you will not be eligible to file. This is known as the Means Test.
The second type of bankruptcy is Chapter 13. It is ideally suited for people who are facing mortgage foreclosures, or real estate tax sales. Additionally, some filers who have previously (within the past 8 years) received a Chapter 7 discharge order may wish to file Chapter 13 instead. Finally, for people who earn more than the Means Test guideline, Chapter 13 may be a good alternative.
Chapter 11 bankruptcy is generally used for corporations or certain individuals who wish to reorganize their debts and finances. Chapter 11 filings are much less common than either Chapter 7 or 13 cases.
2 Comments on “Bankruptcy FAQs”
I paid a business a $7,200 deposit on yard work that was never started. Now the owner has filed chapter 7 bankruptcy. The notice says there is no property available to pay creditors. Is it worth participating in the meeting of creditors and throwing more money into the problem?
Hi Stephanie, yes I would suggest that you call the Chapter 7 Trustee and indicate to him or her that you wish to participate in the 341 Meeting of Creditors. These meetings are conducted by telephone, but in order to get the telephone number and access code, you will need to call the Trustee. You can listen to the answers given by the Debtor (in this case, the person who has filed the bankruptcy). The Trustee will ask general questions pertaining to the finances of the Debtor. You and other creditors will be permitted to ask a limited number of questions as well. At this meeting, you can hear what the Debtor has to say about his bank accounts or other assets. Given that other cases are called at the same hour, it might entail some waiting on your part, but in general, the meetings (even if your case is called last) might not be over an hour. And you don’t need to hire an attorney. You can represent yourself.