Philadelphia Credit Card Debt Lawyer

This is one of the most important and fundamental questions to consider when making the decision to declare bankruptcy in Pennsylvania.

At Sadek Bankruptcy Law Offices, our bankruptcy attorneys have extensive experience assisting debtors with both Chapter 7 and Chapter 13 cases, enabling us to make a nuanced assessment of which is more appropriate considering your debts, assets, and income, your reasons for filing bankruptcy, and the financial goals you hope to achieve.

In bankruptcy, the term “chapter” simply refers to a form or type of bankruptcy, in reference to federal bankruptcy code. While there are many chapters of bankruptcy, the majority of debtors use Chapter 7 or Chapter 13, regardless of whether they choose to file individually or file jointly with their spouses.

Chapter 7 is called “straight bankruptcy,” “ordinary bankruptcy,” or “liquidation bankruptcy.” Chapter 7 generally takes a period of approximately four to six months to complete. A person called a “trustee” is appointed to administer the bankruptcy estate, which in this case means the trustee is authorized to sell certain possessions in order to repay the debtor’s creditors to the greatest extent possible.

However, Chapter 7 debtors seldom lose their homes or cars, because bankruptcy exemptions can be used to protect property. There are also many situations where trustees decide not to sell property because the value of the property is relatively low.

If the debtor complies with bankruptcy rules, most of his or her debts will be discharged (eliminated). This includes not only credit card debts, but also:

• Business Debts
• Debts from Personal Loans
• Medical Debt
• Past-Due Rent
• Past-Due Utility Bills

Chapter 13 is called “reorganization bankruptcy” or a “wage earner’s plan.” Chapter 13 takes a period of three or five years to complete. Chapter 13 is primarily designed for debtors with higher income and more valuable assets.

This is because Chapter 13 revolves around a “reorganization plan,” under which the debtor makes monthly payments to the trustee. The trustee then disburses the money to various creditors. In exchange, the debtor gets to keep all of his or her property.

If the debtor makes up missed mortgage and car loan payments, and continues making payments in a timely fashion, the debtor can stop home foreclosure and prevent repossession of their vehicle. Additionally, many of the same debts are dischargeable under Chapter 13 as are dischargeable in Chapter 7.

In fact, Chapter 13 allows debtors to discharge several debts which can’t be eliminated by Chapter 7 bankruptcy, such as certain debts related to divorce proceedings.