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Understanding the Different Types of Bankruptcy Filings

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Understanding the Different Types of Bankruptcy Filings

Filing for bankruptcy in Pennsylvania can be a great option for those seeking a fresh financial start. After filing for bankruptcy, the bankruptcy court helps individuals liquidate their assets. The petitioner then pays off debts using the liquid assets or by creating a repayment plan. Bankruptcy can also be a helpful option for businesses.

Bankruptcy laws can help protect businesses that are in troubled financial states. Businesses that file for bankruptcy can pay creditors through liquidation of assets or reorganization of their business structure. If you are an individual or business in Pennsylvania who is interested in filing for bankruptcy, we can help. Contact our Philadelphia law firm today to learn how our bankruptcy attorneys can help you.

Filing for Chapter 7 Bankruptcy in Pennsylvania

Chapter 7 bankruptcy filings are often thought of as liquidation bankruptcies. During the process, the debtor’s nonexempt property is liquidated. The proceeds from the liquidation to pay creditors. Chapter 7 bankruptcy is sometimes referred to as “fresh start” bankruptcy.

In Chapter 7 bankruptcies, the court usually appoints a trustee to collect all of the debtor’s assets. Under Pennsylvania law, some assets are exempt from liquidation. Debtors can choose to use federal exemptions or Pennsylvania exemptions. Married couples who are filing for bankruptcy jointly can claim a full set of exemptions unless otherwise noted.

Filing for Chapter 11 Bankruptcy in Pennsylvania  

Chapter 11 bankruptcy is mostly used by businesses. Business owners can continue to operate their businesses after they have filed for bankruptcy. Creditors of the court must approve a repayment plan set up via the bankruptcy court. Judges do not appoint a trustee unless they decide one is necessary. Trustees take control of the property and the business when the court does appoint them.

Filing a Chapter 13 Bankruptcy in Pennsylvania

Chapter 13 of the Bankruptcy Code allows for adjustments of debts of an individual with a regular income. Typically, debtors are able to pay debts and keep their property over a period of three to five years. At the end of the process, the debtor will have paid off all or part of his or her debts.

Chapter 13 bankruptcies are beneficial to prevent the debtor’s home from being foreclosed upon. These types of bankruptcies can also help debtors make missed car payments, pay their back taxes, and prevent tax debt from accruing. Chapter 13 bankruptcies can also help individuals or married couples keep their non-exempt valuable property. Chapter 12 bankruptcy is similar to a Chapter 13 bankruptcy but is only available to family fishermen and family farmers.

Our Attorneys Can Help

While it is possible for debtors to file for bankruptcy on their own, it is not always advantageous to do so. Typically, filing for bankruptcy is not a straightforward process. A skilled Philadelphia bankruptcy attorney can advise you as to whether an alternative to bankruptcy might be advantageous. Experienced attorneys can also help you determine which type of bankruptcy is best for your unique situation. If you are considering filing for bankruptcy in Pennsylvania, call 1-866-96-GM LAW and start your path to financial freedom.