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Is Bankruptcy Really a Fresh Start?

The idea of a “do-over” is incredibly appealing, especially if you’ve been struggling for a long time. If your debt has become a burden that you are simply unable to get out from under, then your best bet for that do-over is probably filing for bankruptcy, particularly a Chapter 7 bankruptcy. Though bankruptcy is considered a taboo subject or black mark by some, hundreds of thousands of individuals and businesses opt to file for bankruptcy each year, providing themselves with the ability to escape from collection calls and creditors and begin with a clean slate.

Bankruptcy is not a magic wand. It will erase debts that are dischargeable, and in that way, it can definitely give you a fresh start, but it also has limitations. It cannot eliminate every debt – if you owe child support, alimony, federal, state, or local taxes, or debts incurred through fraud, you will still be liable for paying them. Additionally, if any of your debt is secured by property, as is the case with an automobile loan or a mortgage, there is a chance that your asset will need to be sold in order to pay back your creditors. And of course, if your debt was the result of undisciplined spending habits it will not automatically make you better at budgeting or money management. But a bankruptcy filing will eliminate credit card bills and other debts and put an automatic stay on collection efforts that may have led to harassing phone calls.

A bankruptcy filing is a complex process that aims at doing more than getting rid of debt. In order to have your filing approved you will be required to pass a means test, as well as to enroll in and complete a course that teaches you how to manage your money more effectively. Once your filing has been approved and your debts discharged you will be free of your debt, but you will also have to start over again in terms of building your credit and regaining the trust of any lenders that you might need in the future. Doing this takes time and patience. You will likely have to pay higher interest rates or be limited in the amount of credit that you are granted, for a significant period of time. Still, it is often the best way to get your feet back under you so that you can move forward.

If you have questions about whether bankruptcy is the right answer for you, we can help. Contact us today to set up a time to meet.

Debt-Relief Options to Try Before Bankruptcy

Getting into debt is easy. There are many ways that it can happen, ranging from things that are out of your control like medical emergencies and job losses to simply buying more than you can afford to pay for. No matter how it happened, getting out is a lot harder. Though bankruptcy is one of the most popular options available to those with bills that they simply can’t afford to pay, it is not always the best answer. Here are some of the other debt-relief options that you can try before filing for Chapter 7 or Chapter 13 bankruptcy.

Don’t do anything at all – This may not feel like an option, but it’s important to remember that there is not much that debt collectors can actually do to you if you don’t have any way of paying back your debts. If you don’t have any major possessions (like a house or a car) that can be repossessed by your creditors, then they don’t have very much recourse against you. People don’t actually go to jail for not paying their bills, and if the debt collectors are driving you crazy with threatening phone calls, you can stop the abuse by telling them to stop contacting you. Legally, they are required to comply, and if they fail to do so you can record their violations and contact either the Federal Trade Commission or your state’s consumer protection agency and report them.
Negotiate with your creditors – You may be surprised how willing they may be to work with you so that they can get some of their money back instead of none of it. You can either do this on your own or work with a debt counseling agency that will help you work out a payment plan. It’s important to remember that choosing this option will not protect you from creditors pursuing collection actions if you miss a payment.
Participate in a debt counseling program to help create a payment plan that your creditors will accept. Doing so can work much like filing Chapter 13 bankruptcy without the negative impact on your credit record that filing for bankruptcy would have.

Though filing for bankruptcy provides the chance for a fresh start and stops creditors from pursuing collection actions, it also has many disadvantages. If you’d like assistance in weighing your options, contact our experienced bankruptcy attorneys today to set up a time to talk.

How Often do People File for Bankruptcy in the U.S.?

As lawmakers in Washington, D. C. continue to wrangle over whether and how to continue providing federal coronavirus aid, the nation’s bankruptcy courts have become a leading indicator of the impact that the virus has had on consumers and businesses alike. Reports indicate that the number of businesses filing for Chapter 11 protection rose 52% in July from last year, and personal bankruptcy filings are up as well.

The rise in the number of bankruptcy filings is expected to continue for the foreseeable future, and especially if the government fails to come up with additional support for those who have been hardest hit by the pandemic. The first seven months of 2020 saw a 30 percent rise in the number of Chapter 11 filings from the previous year, with approximately 4,200 businesses submitting bankruptcy paperwork by July. Though May saw the highest number of business bankruptcy filings for the year, the month of July saw 642 new filings. Many of these filings came from prominent retailers such as Ann Taylor and Brooks Brothers which have been hard hit by the inability of consumers to shop and the drop in the need for business attire as employees continue to work from home. Restaurant and entertainment businesses have also suffered.

As for personal bankruptcies, they do are on the rise, with July seeing roughly 40,000 personal filings. This represents an 11 percent increase from three months earlier. Experts say that much of the rise comes from pre-COVID debt issues being combined with a lack of sufficient new income as a result of the pandemic’s furloughs and closures. Chapter 13 filings, which are more expensive and rely upon the ability of the debtor to restructure their loan based on their income, fell by 57 percent as compared to the previous year. There were only 9,800 new filings, while the number of businesses seeking restructuring through Chapter 7 fell by 21 percent for the month. It is hoped that the introduction of eviction moratoriums and mortgage forbearance programs will help to slow this upward trend.

Choosing to file for bankruptcy is a difficult, emotional decision under the best circumstances, but when it is a result of an event that is completely out of your control it is even more of a challenge. For guidance as to whether bankruptcy is the right choice for you, contact our office today to set up a time for a consultation.

What If I Decide Divorce is not the Right Choice After Filing?

To call divorce a big decision is the epitome of understatement. There are many very good reasons to end a marriage, and just as many very good reasons to reconsider. But what happens if you’ve gone so far as to hire an attorney, file the paperwork and tell your friends, family and colleagues. Isn’t it too late to turn back?

The short answer is that it’s never too late. Not only do plenty of people reverse themselves and decide to give their marriage another chance, but there are a fair number of people who go through the entire process of divorce, only to reconnect and remarry later.

All that being said, once you’ve gotten to the point where you have notified your spouse (and others) that you want to end your marriage, there’s likely to have been a lot of pain inflicted, words said in anger and tears shed. For that reason, we strongly encourage you to think carefully before pursuing a filing and to consider some interim steps such as separation or marital counseling before beginning the legal process. Though some marriages are clearly irrevocably broken, there are others where reconciliation is possible, and the fact that you’ve filled out paperwork and paid fees to an attorney or to the courts is not reason enough to give up.

Many people choose to file for divorce during heated moments, then after their anger or pain has been dulled by time they reconsider whether they really want to live without the person who they chose as a mate for life or to force their children to split their time between two households, alternating holidays and carrying belongings back and forth every other weekend. If you find this vision intolerable and believe that it is possible to rekindle your relationship, it is strongly suggested that you simply put the divorce process on hold and pursue mediation, coaching or counseling. If, after making a committed effort at reconciliation you find that the problems that originally spurred you to divorce are still present, then you’ll know that you gave the marriage a real chance and can restart the process.

Sometimes, the best way to avoid this outcome is to speak with a divorce attorney before discussing your thoughts with your spouse. In doing so you can get a strong sense of the practicalities and realities of what divorce will entail. If you’d like to set up this type of meeting, contact our office today and we will find a time that is convenient for you.

Which is Better – Debt Consolidation or Filing for Bankruptcy?

If you’re facing serious challenges in paying your bills, and debt collectors are calling and harassing or threatening you, then you may find yourself considering either debt consolidation or filing for bankruptcy. The two options both sound appealing, and the advertisements on radio and television for debt consolidation make it sound easy, and less embarrassing then bankruptcy, but the truth is that when things are really bad, bankruptcy is the most powerful and only real solution that works to your advantage. Let’s look at the reasons why.

First, let’s look at debt settlement. In most cases, debt settlement companies charge fees for their services – and then those services end up not being very effective. Their general methodology starts with instructing you not to pay your bills at all in hopes that your creditors will get frustrated and offer a settlement option. Not only do creditors rarely make these kinds of offers, but in following these instructions you add another month or two of missed payments to your record, and damage your credit history further. There have been many occasions when panicked clients have engaged my services after having made this mistake and now facing having their wages garnished or levies placed on their bank accounts.

Another problem can arise if a settlement offer is actually proffered by the creditor and you pay them some money, but then fall behind again and are forced into filing for bankruptcy. One of the first questions that the trustee will ask is whether any settlement or monies have been paid prior to the filing, and when the answer is yes it presents additional problems, as the trustee may opt for establishing that creditor as owed preferential payment.

In the face of mounting bills that you’re simply unable to pay, personal bankruptcy is generally your most powerful, most sensible option. Though there are definitely downsides, including having the bankruptcy filing appear on your credit history for several years, it is the single most effective method available to you for wiping out your debt and giving yourself the opportunity to make a fresh start of it.

By working with an experienced South Jersey bankruptcy attorney from Reinherz Law, you give yourself a chance to carefully assess your personal situation and choose what type of bankruptcy makes the most sense for you. You will be able to put a stop to the harassing phone calls and stress and to rebuild your credit over time, while still maintaining ownership over many of the assets that are most important to you.

For a better understanding of what filing for bankruptcy would mean for you, contact the law offices of Reinherz Law today to set up an appointment. We will sit down and explain all of the advantages and disadvantages so that you can make a well-informed decision.

How Much Does Bankruptcy Cost in the state of Pennsylvania?

HOW MUCH DOES IT COST? This seems to be the first question that many folks ask me when they call me about bankruptcy. Unfortunately, this is not a one size fits all type answer, so the best answer I can give is that “IT DEPENDS”.

Chapter 7 for my firm as of this writing has a legal fee between $1000-$2000 plus costs of about $400. So it would be appropriate to budget around $1500 or so.

Chapter 13 lawyer fees are usually between $3000-$3500 although we typically let clients pay half of the fee through their re-payment Plan. In our firm, it is appropriate to budget $1500-$2000 to get a Chapter 13 filed, including all costs, with any legal fee balance paid through the bankruptcy repayment Plan.

We work with our clients with payment plans to be affordable and many of our clients will stop paying their creditors, using those fund to file their case instead.

Exact fees will Depend on many factors though, such as:

It depends on which type of bankruptcy we are filing. A Chapter 13 is more expensive than a Chapter 7, although some lawyer fees can be put on the monthly repayment plan to help ease this burden.

It depends on the details of the case. More complicated cases are usually more expensive than easier cases. An easy case may consist of one with lower debt, less assets, lower income. It takes more work to prepare a case involving multiple properties, business income, trickier assets. When I set my fee on each each it can vary a bit depending on the circumstances.

It depends on you (the client). A client who is more organized with all of their documents from the start will certainly be easier to deal with. Helpful tip- Consider have copies of your last 2 years tax returns, 6 months of your paystubs or other income, bank statements for 3-6 months, deed-mortgage balance-house valuation report if you own property, a list of your debts. You will also need to complete a pre-bankruptcy credit counseling course (usually done online) before filing.

It depends on the timing. Some lawyers may negotiate their fee if you have all of the payment in hand or a big chunk of it at the start. Otherwise, the lawyer will be dealing with multiple payment from you over time and during the time your circumstances could change. Another timing issue is whether you need an emergency fast filing done and how much time the lawyer can dedicate to your case.

It depends on the lawyer. There can be a bit of a range between what different lawyers charge. Usually the lowest fees might be from higher volume firms that are sometimes known as “bankruptcy mills”. Obviously, your case will not get as much attention with this sort of company, some of which have a national presence and typically have a young local lawyer doing the intake but a clerk in a different state preparing the papers. I would suggest avoiding that sort of company. Research the company and lawyer to see what his/her clients say in reviews and try to find referrals from others who might have used the lawyer. The lawyer with the highest fee may not necessarily be the best either, so put the time in to really research this. Experience also counts, so please take that into consideration.

It depends on what is included in the price. Many lawyers charge extra fees for extra items such as vehicle reaffirmation agreements (we include these in our price), motions, and various court appearances. I have had many clients come to me after they felt like they were mislead or overcharged from prior attorneys.

In summary, bankruptcy fees vary depending on the details. Be careful which lawyer you pick for your bankruptcy as it can have bad consequences if things are not handled properly. Carefully research the lawyer and make sure you are comfortable with your decision. Be very prepared with prior research, documents, and a plan to pay the lawyer and you will be in a much better situation. Mostly, understand that the bankruptcy process will be a “cooperative” effort between you and your lawyer. You will need to work together to get everything done right.

Bankruptcy can be a very powerful solution for those with financial problems, but it has to be done right and will require a bit of work from everyone involved.

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Pennsylvania Bankruptcy Exemptions

Bankruptcy Exemptions

In Pennsylvania, debtors have a choice to either accept exemptions outlined within the Bankruptcy Code created by Congress, or wave those exemptions and abide by Pennsylvania bankruptcy exemptions. In relation to bankruptcy, exemptions refer to the inventory of items safeguarded from collections. In short, exemptions explain what you may maintain possession of once you file for bankruptcy. Bankruptcy exemptions differ from state to state and may be determined by either federal or state statues depending on whether the state prohibits federal statues or not.

As you may have assumed, it is vital to have an understanding of Pennsylvania bankruptcy exemptions when embarking upon the bankruptcy process. It is important to know about the specific types and property values deemed untouchable to bankruptcy trustees and creditors because these items are legally exempt from being liquidated. As a result, debtors are able to maintain possession of the property in question.

Federal and Pennsylvania state law both permit claimants to keep possessions considered necessary for rebuilding their financial futures following the bankruptcy process. These items are considered “exempt property” and must be included as exempt within the debtor’s schedules, which are required to initiate the bankruptcy process. If PA bankruptcy exemptions are not challenged, the items listed are officially labeled exempt and will no longer be considered part of the bankruptcy estate.

When dealing with Chapter 7 Bankruptcy it is important to keep in mind that even though 401(k) plans and pension rights are one of the largest assets for a majority of families, debtors generally disclose but do not have to exempt them. These assets lie outside the estate and for that reason, are not included within the property of the estate so they remain protected. Although some retirement plans can be property of the estate, the majority of savings related to retirement are deemed exempt. For example, according to federal statues under the Bankruptcy Code, there is a one million dollar exemption for IRA’s. In addition, according to Pennsylvania statues pension plans exempt from seizure include: contributions to ERISA qualified retirement plans, tax deferred annuities, deferred compensation plans as well as health insurance plans.

In reference to Chapter 13 bankruptcy, the debtor usually keeps possession of their property but may be required to choose exemptions. These bankruptcy exemptions are utilized to figure out if the bankruptcy plan coincides with the requirement that creditors will receive a minimum of what they would receive had the claimant filed for Chapter 7.

As you can see, there are many different components to federal and Pennsylvania bankruptcy exemptions that are dependent on the factors of each claimant’s case, such as the state they reside in, whether they select exemptions according to the bankruptcy code or state, and the type of bankruptcy being sought. This can be overwhelming, but with the help of a Reinherz & Reinherz Pennsylvania bankruptcy attorney, claimants have nothing to fret about. Our professionals assist debtors with determining how much to exempt, which exemptions apply to their case and how to maximize exemptions and evaluate the value of exempt property.

Child Custody in PA

When people have children together and decide to end their relationship with one another and consider a PA Divorce, custody issues may become a concern. For some, reaching an agreement is easy but for others, it may prove to be quite complicated. Reaching a child custody agreement becomes problematic when a spouse wishes to disconnect their children from the other party involved and refuses to handle the situation in a mature fashion. The best advice for dealing with a child custody issue in PA is to hire an attorney to represent you.

Regardless of whether your situation is amicable or not, obtaining a lawyer can be helpful. If you and your spouse are in agreement regarding custody arrangements, a lawyer can assist with creating the stipulation and consent form. A stipulation is a written statement outlining the agreement reached and a consent form is for the judge to provide approval on behalf of the court. When drafting a stipulation, it is important to be very thorough in order to avoid potential conflicts. An attorney can help with this process because they have experience in the field and as a result, understand what needs to be addressed when drafting the stipulation and consent form.

When dealing with a conflicted situation it is important to note that child custody law differs from state to state, with some states granting more favor to the mother. Child custody in PA enforces a policy that negates providing preferential treatment to either parent and instead, places the emphasis on the unique relationship that the child, or children in question, have with each parent. The decision for what is best for the child is then based on the assessment of those relationships. As your lawyer, we will provide all necessary information about these processes and inform you of the issues that may arise during the decision making process.

When a child custody arrangement is made, the type of custody granted to each spouse must be declared whether it is temporary, sole, split, or joint custody. There are also subcategories to these fields (for example: joint custody may refer to either joint legal custody, shared physical custody, or a combination of the two set forth by a special agreement).

To help with the logistics of dealing with child custody in PA, hire one of our legal experts to handle your case. There are a lot of components to family law and hiring an attorney to handle your case is exactly what you should do. Contact us for a consultation. We guarantee to provide peace of mind as you receive helpful guidance throughout the duration of your case.