Suite 2800, Gulf Tower
Pittsburgh, PA 15219
412-391-8000
1-800-360-9392
General Questions and Answers
Bankruptcy is a collection of laws passed by the Congress of the United States that allows people, or companies, to obtain control of their debts. Bankruptcy can result in the elimination of debts completely or the restructuring of these debts through a payment plan that is approved by the court. Just about anyone, and most businesses, with minor exceptions. The United States Bankruptcy Code and Rules determine who is eligible for the different chapters of bankruptcy. Your attorney can explain how the Bankruptcy Code and Rules apply to your particular situation. Q. What are the different types of bankruptcy? Chapter 7, or straight bankruptcy; Chapter 11, which is a reorganization most commonly used for businesses but also available for individuals or married couples; Chapter 12, a reorganization for those in the business of farming; and Chapter 13, which is a reorganization used by individuals, married couples, and individually-owned businesses. Q. What is the best bankruptcy for me? This is a question that is best answered by an attorney who is highly skilled in this area of law. Bankruptcy laws are somewhat detailed, and it is important to speak with an attorney who can explain each of the different types. The attorney can then determine whether your situation is one that would be best served by one of the types of bankruptcy, or if bankruptcy is not the best solution for you. Q. What are some of the important features of bankruptcy in general? Probably the most important feature for most people is the "automatic stay". The "automatic stay" prevents almost all creditors from taking any further action to collect on their debts until the bankruptcy case is over, unless the creditor obtains special permission from the bankruptcy court. This means that the creditor is no longer able to call you, to write you, or to attempt to collect the debt in any way unless granted Court permission. Other features include the opportunity to save much, and often all, of one's property; the opportunity to restructure one's debt under certain circumstances; the opportunity to help control the liquidation of one's assets in certain situations; even the opportunity to make a payment plan with the Internal Revenue Service that might be more favorable than any arrangement you might have been able to work out with them prior to the filing of the bankruptcy! This depends on the type of bankruptcy filed. But in general, one can keep up to $20,200 worth of equity in one's house (to determine equity, take the market value of your house and subtract the amounts of all mortgages and liens), $3,225 equity in a car, all of one's normal household furnishings and clothing, some tools, jewelry, insurance proceeds, compensation benefits, and more. The amounts can be doubled when a spouse joins in the bankruptcy. And sometimes the amounts on certain items that you can keep are much higher. Contact your attorney and review the specifics of your case with him or her so that the attorney can apply the laws that work for you. Chapter 7 can be on your credit report for up to ten years; Chapter 13 can be on your credit report for up to seven years. However, in most instances, our clients have been able to obtain credit within one to two years subsequent to the end of their bankruptcy, often sooner or even immediately after the end of the bankruptcy. Come see us. We'll explain legitimate ways to get your credit back. Chapter 7, commonly called "straight bankruptcy", is a bankruptcy one might consider filing if there is insufficient income and insufficient assets to pay creditors. An example of this might be a household whose net income per month is $3000.00, after taxes, but whose expenses total $3000.00 or more. By expenses, we mean fixed items like mortgage or rent payments, utilities, car or truck payments, and insurance, as well as other necessities like food, clothing, gasoline and car or truck repairs and maintenance. Expenses generally will not include charge cards, personal loans, and the like (unless secured by a lien on you property), because these are some of the items that you will be attempting to discharge in the bankruptcy. One can keep a reasonable amount of property in a Chapter 7 bankruptcy, including certain amounts of equity in a house, car, furniture, tools, jewelry, and other items. See the above section entitled "What property can I keep?" for details, but you should consult with a skilled attorney for answers about your particular situation. There are, of course, many other situations when a Chapter 7 Bankruptcy might be considered, including the closing of a business. We'll be glad to answer any questions you might have about your particular circumstances. You have read about major corporations filing for reorganization under this chapter, but did you know that this is also available to small businesses and individuals? Again, this is a reorganization, which means the repayment of all or part of the debt. These reorganizations are, in general, initially much more costly than those under Chapter 13, but corporations cannot use Chapter 13, so they don't have a choice if they are going to use the bankruptcy laws to reorganize. We have represented several businesses and individuals who have had successful Chapter 11 Plans confirmed. We'll be glad to answer questions you might have about Chapter 11. This is a bankruptcy that can be used by one who is engaged primarily in the business of farming and agriculture. In many ways, it is similar to a Chapter 13, described below. Our office is not currently handling cases under Chapter 12. We like Chapter 13's a lot, because they give you a chance to pay back your creditors, in whole or in part, over a period of time up to five years, and almost always at no interest on the unsecured debt. At the same time, you retain all of the normal advantages of bankruptcy: creditors cannot call you (they must call us), and all creditor collection action must stop. Chapter 13 can also stop foreclosures and sheriff's sales, car and truck repossessions, wage attachments by tax authorities, and tax sales, while you develop a plan with your attorney to pay your creditors back. Best of all, most Chapter 13 Plans allow you to keep all of your possessions, even those that you might not have been allowed to keep in a Chapter 7. There are certain requirements that you must meet in order to have a Chapter 13 Plan approved by the Court:
Get answers to many Commonly Asked Bankruptcy Questions. Get answers to many questions about the mechanics of Filing Bankruptcy. |
