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Bankruptcy Frequently Asked Questions

The following information includes frequently asked questions about bankruptcy. The answers stated are general in nature and are not intended to apply to every bankruptcy and/or debt consolidation situation. If you require assistance with personal or business bankruptcy filing and require the assistance of an experienced bankruptcy lawyer in Philadelphia, Pennsylvania, or within the surrounding counties of Montgomery, Bucks, Chester, Delaware Counties and Southern New Jersey. Please contact the lawyers of Sadek Law Offices, LLC today at (215) 545-0008.

We provide a FREE consultation with an experienced Philadelphia debt-relief lawyer.

What is bankruptcy?

 Bankruptcy is a legal proceeding in which a person who can not pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Most often our office represents clients in the United States District Court for the Eastern District of Pennsylvania. Filing for bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.

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What can bankruptcy do for me?

 Bankruptcy may make it possible for you to:
  • Eliminate the legal obligation to pay most or all of your debts. This is called a "discharge" of debts. It is designed to give you a fresh financial start.
  • Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments. (Bankruptcy does not however automatically eliminate mortgages and other liens on your property with out payment).
  • Prevents repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
  • Stops wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
  • Restore or prevent termination of a utility service.
  • Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.


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What different types of bankruptcy cases should I consider?

 There are four types of bankruptcy cases provided under the law:
  • Chapter 7 is known as "straight" bankruptcy or "liquidation" and provides for a discharge of unsecured debts, including but not limited to credit cards, personal loans, medical bills, judgments, past due utilities and other debts.
  • Chapter 11, known as "reorganization," is used by businesses and a few individual debtors whose debts are very large.
  • Chapter 12 is reserved for family farmers and fisherman.
  • Chapter 13 is called "debt adjustment." It requires a debtor to file a plan to pay debts (or parts of debts) from a current source of income.


Most people will file for bankruptcy under either chapter 7 or chapter 13. Either type of case may be filed individually or by a married couple filing jointly.

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What is Chapter 7 (straight bankruptcy)?

 In a bankruptcy case under chapter 7 you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for you giving up property, except for "exempt" property which the law allows you to keep. In most cases, all of your property will be exempt. However, property which is not exempt is sold, with the money distributed to creditors.

If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a chapter 7 case probably will not be the right choice for you. That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.

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What is Chapter 13 (reorganization)?

 In a chapter 13 case you file a "plan" showing how you will pay off some of your past-due and current debts over the next three (3) to five (5) years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property- especially your home and car which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. in most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind.

You should consider filing a chapter 13 plan if you:

  • Own your home and are in danger of losing it because of money problems;
  • Are behind on debt payments, but can catch up if given some time;
  • Have valuable property which is not exempt, but you can afford to pay creditors from your income over time.

You will need to have enough income in chapter 13 to pay for your necessities and to keep up with the required payments as they come due.

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Can I own anything after bankruptcy?

 Yes! Many people believe they can not own anything for a period of time after filing for bankruptcy. This is not true. You can keep your exempt property and anything you obtain after the bankruptcy is filed. However, if you receive an inheritance, a property settlement, or life insurance benefits within 180 days after filing for bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt.

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Will I have to go to court?

 In most bankruptcy cases, you only have to go to a proceeding called the "meeting of creditors" to meet with the bankruptcy trustee and any creditor who chooses to come. Most of the time, this meeting will be a short and simple procedure where you are asked a few questions about your bankruptcy forms and your financial situation.

Occasionally, if complications arise, or if you choose to dispute a debt, you may have to appear before a judge at a hearing. If you need to go to court, you will receive notice of the court date and time from the court and your attorney.

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Will bankruptcy affect my credit?

 There is no clear answer to this question. Unfortunately if you are behind on your bills your credit may already be less than perfect. Bankruptcy will probably not make things any worse.

But because bankruptcy wipes out your old debts, you are likely to be in a better position to pay your current bills, and you may be able to get a new credit.

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What else should I know?

 Utility services: Public utilities, such as the electric company, can not refuse or cut off service because you have filed for bankruptcy. However the utility can require a deposit for future service and you do have to pay bills which arise after bankruptcy is filed.

Discrimination: An employer or government agency can not discriminate against you because you have filed for bankruptcy.

Driver's license: If you lost your license solely because you couldn't pay court-ordered damages caused in an accident, bankruptcy will allow you to get your license back.

Co-signers: If someone has co-signed a loan with you and you file for bankruptcy, the co-signer may have to pay your debt. If you file a chapter 13 you may be able to protect co-signers, depending upon the terms of your chapter 13 plan.

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