Archive for the ‘Bankruptcy’ Category

Do You Qualify for Bankruptcy Exemptions in Pennsylvania?

The idea of filing for bankruptcy is extremely stressful, especially when you’re faced with the very real possibility of losing assets.  Though there are certain exemptions available, the state of Pennsylvania has particularly strict rules regarding exemptions. It’s important for any Pennsylvania resident filing for bankruptcy to work with an attorney who truly knows and understands the rules and who can guide you through the process.

When an individual who lives in Pennsylvania files for bankruptcy, they have the choice of using either the federal bankruptcy exemptions or the ones offered under Pennsylvania’s state laws. Though you’ll want to review the details, there’s a good chance that the federal exemptions will allow you to hold on to more of your belongings. Though you can’t choose both federal and Pennsylvania exemptions, if you choose Pennsylvania’s exemptions you will still be able to take advantage of non-bankruptcy exemptions.

Pennsylvania residents who file for bankruptcy have a few advantages available to them under state rules. For example, couples who file their income taxes jointly can each claim the full amount of the exemption as long as they both have ownership interest in the property that they are trying to exempt.

Also referencing spouses, Pennsylvania offers no homestead exemption, though the equity in your home cannot be liquidated to repay debts of just one spouse.

Beyond that, Pennsylvania’s most commonly-used exemptions include:

  • The Wildcard exemption, which allows up to $300 of any personal property other than real estate, or $300 cash.
  • Personal property including your clothes or uniforms, school books and bibles, and sewing machines
  • Any unpaid wages that you have earned or compensation for having been a victim of abuse or crime
  • Tax-exempt retirement accounts including 401(k) accounts, 403(b) accounts, profit-sharing and money purchase plans, SEO and SIMPLE IRAs and defined benefit plans
  • IRA and Roth IRA accounts up to a maximum amount
  • Pension accounts for county, city, state or public school employees, police officers, municipal employees
  • Any private retirement benefits whose plan specifically indicates that proceeds cannot be used to pay creditors
  • Workers’ compensation and unemployment compensation
  • Veteran’s benefits or benefits for the veterans of the Korean conflict
  • Many insurance policies or their proceeds.
  • Business partnership property
  • Applicable federal nonbankruptcy exemptions

Understanding what you can keep and what you will lose is an important part of knowing whether moving forward with a bankruptcy is right for you. For assistance, contact our office today to set up a time for us to discuss your situation.

Is a Bankruptcy Attorney Worth the Money?

When you’re so unable to pay off your debts that you are considering filing for bankruptcy, it makes sense to think that a bankruptcy attorney is money you don’t need to spend. After all, the internet has all the information that anybody needs to go through the process, right?

The truth is that even though there is no legal requirement that you use a bankruptcy attorney, there is a lot more to the process than just filling out some forms. Bankruptcy attorneys provide services and a degree of knowledge and expertise that makes their fees well worth the money.

Here is something to consider. Only a small percentage of people who file for bankruptcy do so without the benefit of a bankruptcy attorney. Of those who filed for Chapter 7 bankruptcy in 2017, only 66.7% were successful in having their debts discharged. Compare that to the 96.2% who were successful after using an attorney. The statistics for successfully getting a Chapter 13 bankruptcy approved are even more notable: Those who did not use an attorney were only successful 2.3% of the time, while those who used an attorney were successful 41.5% of the time.

When you decide to use a bankruptcy attorney, their fees cover far more than shuffling and filling out some papers. From the first moment that they meet with you, your lawyer will be reviewing your case to determine whether bankruptcy is the right route for you to take, or whether other options might give you a better outcome in the short term and the long term. A bankruptcy attorney will make sure that your paperwork is filled out correctly and completely and filed according to deadline, and they will also represent you in court.

The truth is that no matter how straightforward a bankruptcy filing may seem if you read a do-it-yourself guide, it is a complex area of the law. That’s why only one in three people who file for Chapter 7 on their own end up with the results that they’re looking for, and only one in 50 who file for Chapter 13.

If you are uncertain as to whether or not to pursue bankruptcy, an experienced attorney will be able to give you straightforward guidance unique to your situation, as well as explaining the process and letting you know exactly what to expect. To speak with one of our compassionate bankruptcy attorneys, contact us today to set up  an appointment.

How to Build a Budget After Bankruptcy

Once you’ve made the decision to move forward with a bankruptcy filing, your next step should be planning for the future. If your bankruptcy was the result of a medical emergency or some other unexpected disaster, that’s one thing – but if your debt arose from misguided money handling, you need to change your way of doing things. You don’t want to mess up that clean slate with the spending habits that led to your financial trouble. The first thing you need to do is build a budget – and stick to it.

If this is the first time you’ve ever thought about having a budget, take heart. It is not a hard thing to do. Here are some simple steps to guide you through the process:

  • Identify fixed expenses, variable expenses and irregular expenses. You do this by looking at what you pay out each month and entering each expense into a column headed with one of these three categories. Fixed expenses are things like your mortgage or rent, your car payment, subscriptions and other expenses that are the same each month. Variable expenses are things that change each month, like the amount you spend on food or clothes. And irregular expenses are things that you only spend on occasionally, like insurance payments that only get charged a couple of times each year, or the cost of doctors’ appointments or buying gifts for friends and family.
  • Figure out how much you’d like to save each month. You need to start saving money, so don’t ignore this step. Ten percent of your net income is a good starting point.
  • Now compare your income with what you’re spending. Do they match? If not then you need to cut your spending. Review your fixed expenses to see how much you can get rid of or reduce. If you are paying for subscriptions, do you need all of them? Can you lower your cable bill by cutting out channels you don’t really need? Are you using your gym membership enough to make the expense worthwhile? Now do the same with your variable expenses. Are you going out drinking with friends twice a week? What if you just went out once, or once every other week. Are you buying coffee at a coffee shop instead of making it at home? Do the same with your irregular expenses. Have you been overly generous with your gift-giving? See if you can cut out enough to be equal to the amount that you’ve set aside for savings. More than that figure would be better.

Once you’ve brought your income and your spending and savings into alignment, write down the amount that you are allowed to spend each month, how much you want to save, and make a plan to stick to it. If you need help with filing for bankruptcy, we can help. Contact us today to set up a time to discuss your situation.

 

 

 

 

 

Questions to Ask Your Bankruptcy Attorney

After weeks of going back and forth about what you should do about your debt, you’ve finally taken the first step and made an appointment with a bankruptcy attorney. It’s a smart decision, as an experienced and knowledgeable lawyer can provide you with the guidance you need to set yourself on the path to financial recovery. Though you may think bankruptcy is your only option, a bankruptcy attorney will be able to assess your situation and explain the choices you have, and what the outcome of each would be.

To make sure that your appointment is productive, it’s a good idea to bring all of your financial documents with you, including bank and financial account statements and all of your outstanding bills. Your first meeting will likely cover a lot of ground, so it’s a good idea to write down your questions ahead of time so that you don’t forget what they were amidst the flood of information you’re likely to get.

Not sure what to ask? Here are some key questions to ask your bankruptcy attorney.

  • Should I file under Chapter 7 or Chapter 13 bankruptcy?

Most people assume that when they file for bankruptcy, they will automatically have all of their debts discharged, but not everybody qualifies for the type of bankruptcy that provides that as a remedy. Your attorney will go through the qualifications, as well as explain which of your debts might not be able to be discharged and which assets will be exempted from liquidation if you do file for Chapter 7.

  • How much will filing for bankruptcy cost me?

Generally speaking, people who file for bankruptcy have to pay the court’s filing fees, and those are different depending upon whether you qualify to file for Chapter  7 versus filing for Chapter 13. There are also additional administrative fees that accompany a Chapter 13 filing, and whatever fees your bankruptcy attorney will charge. The more complex your case, the higher these fees are likely to be.

  • How long will it take for my bankruptcy filing to be completed and my debts discharged?

This answer will depend on many variables, including how busy the attorney is, the speed at which the local court processes filings, how long it will take for you to gather all of your documents, and which type of bankruptcy you qualify for.

As difficult as it may be to move forward with a bankruptcy filing, you will likely find that once you start moving ahead and get the answers to these questions, you’ll start feeling much more confident and in control. To set up a time to talk with one of our bankruptcy attorneys, contact us today.

Bankruptcy Tips for the Elderly

Filing for bankruptcy is frequently depicted as a fresh start – a chance to start over financially. Though the idea of new beginnings and discharged debt may be appealing in the prime of your life, it feels particularly dissonant if you are elderly and unable to generate new income. Many seniors have spent a lifetime making mortgage payments and fear that they will lose their homes outright if they file for bankruptcy, yet don’t know what else to do. Here are some helpful bankruptcy tips for the elderly.

The first thing that seniors need to understand is that bankruptcy may be unnecessary because their income may be protected from creditors. Collectors may make threats, and may even win a judgment in court, but the truth is that many seniors have so little to fear. This is especially true if they don’t have much income and don’t own your own home or have significant assets. Social Security payments cannot be touched by creditors unless your debt is for certain taxes, child support or student loans, and they can’t take more than 25% of other wages.   Those with few assets and little or no equity in their home have no fear of assets being sold, as states protect you from losing basics like clothing, some equity in a car and furniture.

For those seniors who do have assets or who own or have significant equity in their home, there are two types of bankruptcy that are available:

  • Chapter 7 allows the discharge of most or all debts but involves turning over nonexempt assets to be sold to pay off creditors. To qualify for Chapter 7, your income needs to be below a certain threshold. This income does not include either Social Security or Social Security Disability payments, both of which are not counted and which are protected from creditors. Seniors may be at risk of losing their homes unless they are protected by a homestead exemption. Each state is different, and it is a good idea to check and see what rules apply where you live.
  • Chapter 13 allows you to keep your property and create a payment plan for repaying your debts under revised or extended terms. Any Social Security income that you receive will be factored in to the calculation for your monthly repayment plan. If you want to keep your assets or are not eligible for Chapter 7 because you have too much income, Chapter 13 may be a better option.

Most seniors are concerned that a Chapter 7 bankruptcy filing would jeopardize their savings, but most retirement accounts are protected in bankruptcy to an unlimited amount. The only exception to the rule exempting retirement accounts to an unlimited degree is for traditional and Roth IRAs, which remain exempt until their combined value is over $1.2 million.

If you’re considering bankruptcy, contact our team of experienced and compassionate attorneys to discuss your unique situation.

 

 

 

What to Consider Before Making the Decision to File for Bankruptcy

If you’re struggling to pay your creditors, bankruptcy can offer a real lifeline and a chance for a fresh start. But the decision to file can also carry long-lasting negative consequences, and that means it should not be made lightly.  There is no universal right or wrong answer, so do your homework to ensure that you choose the option that is best for you.  Here’s a brief rundown of what you need to consider:

  • There are two types of bankruptcy and choosing the right one is important. While Chapter 7 will discharge almost all of your debts, Chapter 13 simply reorganizes them and gives you more time to meet your obligations. Not everybody qualifies for Chapter 7.
  • There are options other than bankruptcy, including credit counseling or taking out a loan from a 401K.
  • If you charge up a storm in anticipation of getting your debt discharged in a bankruptcy, you can be accused of bankruptcy fraud. The same is true of moving money from your bank or investment accounts into a relative’s name in order to avoid having to liquidate assets.
  • Your retirement savings are protected in bankruptcy, so don’t turn to them as a last resort … you’ll need them in the future.
  • Not all of your debts will be liquidated in a bankruptcy. If you owe child support, back taxes or student loans, you’re still going to have to pay them.
  • You might be able to keep some of your assets in a bankruptcy, but not all of them. Every state has its own rules about what is exempt or not, and a lot will be determined by whether you file for Chapter 7 or Chapter 13.
  • Bankruptcy takes several months to complete. The good news is that as soon as you file, you will get relief from creditors and bill collectors calling.
  • Bankruptcy is not a simple process, and it isn’t free either. There are filing fees required, and if you make a mistake you can end up losing assets that you’d prefer to keep. The best way to minimize its impact is to work with an experienced bankruptcy attorney who can guide you through the decisions and protect what is most important to you.

If you’re considering bankruptcy, the Reinherz team is here to help. Don’t hesitate to contact our experienced attorneys today!

Personal Bankruptcy for Small Business Owners

If you are a small business owner facing a mountain of personal debt, you are likely concerned about how filing for bankruptcy would affect your business. The answer is not straightforward, as much depends upon the way that your business is organized and what type of business you are operating. In some cases, you may be required to close the business operations entirely. To get an idea of how a personal bankruptcy might affect your small business, we have assembled a quick reference guide.

  • Sole proprietor – If your business operates as a sole proprietorship, there’s a good chance that filing for bankruptcy will lead to your bankruptcy trustee asking you to close it temporarily. The goal of closure is to provide time for the business’ assets to be assessed for possible sale of assets. Closure will also prevent the business from incurring any more debts and protect against further liabilities for personal injuries and the like. If you operate as a freelancer or another type of business that does not have assets, you may be able to continue operating. Keep in mind that your accounts receivables will become part of the bankruptcy estate and may be used to pay your creditors.
  • Partnerships and LLCs with Multiple Members – If you own a share in a business, then your share will become part of your bankruptcy estate. This does not give the trustee the right to take any of the partnership or LLC’s assets, though they can issue a “charging order” against your business interest so that if you would be owed a distribution of profits or income, the trustee would be able to receive it for distribution to creditors. Some partnership agreements require that you end ownership interest before filing for bankruptcy in order to avoid any complication involving ownership interest, so it is a good idea to check the terms of your agreement before taking any action.
  • Corporations and Single-Member LLCs – If you own corporate shares or are the sole or majority owner of a corporation or LLC, your shares or membership interest can be taken by your bankruptcy trustee and sold or liquidated to generate assets for the satisfaction of creditors. Whether this is done will depend upon a cost/benefit evaluation of whether assets are exempt and how much they can be sold for.

As you can see, there is no simple answer to how a bankruptcy filing impacts a person who is the owner or who has ownership shares in a small business. For guidance in your specific situation, contact us today to set up a time to discuss your situation.

Will I Be Able to Buy a House After a Bankruptcy?

If you are facing financial difficulties significant enough to have you considering bankruptcy, you are probably dealing with numerous fears and uncertainties about the process. One of the most common concerns is whether doing so will keep you from buying a house in the future. The good news is that it is possible to buy a house after bankruptcy, but doing so will not necessarily be easy.

Buying a house after filing for bankruptcy requires a good understanding of your financial standing, and that should start as soon as the bankruptcy is approved. Your goal is to rebuild your credit rating as soon as possible. This will take time and discipline.

The first thing that you need to know is that you can’t consider purchasing a house until your filing has been discharged and the bankruptcy court has released you from liability for all of your previous debts. Though this doesn’t mean that your case is officially over, the discharge is the most important thing for potential lenders to see. It proves that you have no outstanding debt (or won’t have any shortly).

Even after your bankruptcy is discharged, you need to know that it can stay on your credit report for as long as ten years, and this is something that a potential creditor will consider before agreeing to loan you money. It may not mean that you’ll be turned down, but you may end up with terms that aren’t as attractive as they would have been if your credit rating was good.

One of the best ways of rebuilding your credit is to spend money. That may sound a bit counterintuitive, but you need to start charging again, using secured credit cards and installment loans that you pay off in full every month, before the due date. You also want to make sure that your credit report is correct, and that means checking in regularly to make sure that any wrong items are removed. Doing so is free, though you are limited to just one free report per year from each of the credit rating agencies. The good news is that they all have the same basic information, so you can check in with one of them every few months and rotate your inquiry.

The bottom line about buying a house after bankruptcy is that you want to prove to creditors that you are worthy of their trust. The best way to do that is to avoid the mistakes of the past. For more information on how to put yourself in the best possible position with regards to a bankruptcy filing, contact our office today.

Is Bankruptcy My Only Debt Relief Option?

For many people, bankruptcy is the best answer to overwhelming debt, but that is not true for everybody. If you are questioning whether you want to put yourself into the position of having a bankruptcy on your credit report for several years, you might want to consider some of these other debt relief options.

  • Credit Counseling – For some people, out of control debt is less an issue of insufficient income and funds than it is simply not knowing how to manage their finances. If you fall into this category, then credit counseling can make a real difference. When you meet with a credit counselor, they will sit down with you to review all of your debt and your available income, advising you as to how to cut down on unnecessary expenses and spending, prioritizing high-cost debt as the first that needs to be paid and helping you to create a budget and plan that will allow you to get out from under your bills. They will often contact your creditors to see whether they can negotiate a reduction in rates or extend payment terms to make repayment easier for you.
  • Consolidate your bills – Debt consolidation is a step that combines all of your outstanding debt into a single debt. This essentially restarts the clock and eliminates varying interest rates, giving you a single monthly payment to be made and managed. You can arrange to consolidate your debts in a number of ways, including taking out a personal loan from a bank with which to pay off existing debts, then only needing to pay the bank back; or combining all of your debt into one credit card.
  • Debt settlement – This type of debt relief is managed by a debt settlement company, which essentially arranges for debt consolidation on your behalf. The process involves discontinuing your payment of your debts and instead making payments into an escrow account that will grow to the point where the company can offer to accept the amount that you’ve saved up to discharge your debt. For many creditors, taking something is better than taking nothing, especially as it allows them to discontinue costly collection efforts and to write off their loss.
  • Fair Debt Collection Practices Act – If you’re less concerned about your debt then you are about the annoying or intimidating phone calls you’re getting from collection agencies or your creditors themselves, this law gives you a potent weapon against them, keeping them from calling between the hours of 9 p.m. and 8 a.m., preventing them from using abusive language or threatening you with violence, and forbidding them from calling you at work if that is against your employer’s standards, among other things.

If none of these debt relief options seems right for you, or if you’re still unsure our team can help you sort it out. Contact us today for more information and find out if bankruptcy can help you! 

Differences Between Corporate and Personal Bankruptcy

We tend to think of corporations as being very different from people – and they are, in a lot of ways. But there are also a lot of commonalities between individuals and businesses too, and one is that both can get into big money trouble. No matter whether you’re an individual or a corporation, if you get yourself into insurmountable debt you have the option of filing for bankruptcy. But there are significant differences in the types of bankruptcy available to each, as well as the rules for qualifying.

When an individual can’t pay their bills, there are two options for filing for personal bankruptcy: Chapters 7 and Chapter 13. If they feel that they just need an adjustment to the amount of time they have available to pay off the debt, they can opt for Chapter 13, which reorganizes their debt by extending their payment terms, or lowering their interest rate, or even reducing their total debt. Chapter 7 is available for those who know they simply will not be able to pay off their debt. They may have to liquidate assets in order to pay some of what they owe to their creditors.

When a corporation can’t pay off their debt, they also have two options, and like individuals they can choose Chapter 7. But if a corporation chooses to file for Chapter 7 bankruptcy that means that they are closing their business down entirely, with no hope of reopening. By contrast, they can choose a Chapter 11 bankruptcy that reorganizes their debts under a plan that represents their own proposal as well as input from their creditors.

Though the options available to corporations and individuals seem very similar, there are some very important differences between the two. The first is that businesses have the ability to get out of contracts with their creditors if both agree to that happening. Individuals aren’t able to do that – if they have a contract to pay student debt, or taxes, alimony, child support, and other kinds of debt, bankruptcy will not let them escape their obligation. Individuals are also required to submit to a “means test” that is not required of corporations. Means tests involve submitting detailed financial information to the bankruptcy court so that it can be determined which of the two available bankruptcy chapters the individual qualifies for. An individual can’t just say that they want to file under Chapter 7: They have to prove that they are unable to pay what they owe.

If you need information about the best option for your financial situation, we can help. Contact us today to set up a time to discuss your situation.

 

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