Sadly, these tough economic times have made Bankruptcy law increasingly relevant for many Pennsylvanians.  At Harry Newman & Associates we have been providing expert bankruptcy advice to our clients for over 30 years.  In order to help, we made this list to help answer some common questions.  As always please talk to a lawyer (like us!) for more detailed answers.  We offer a free 30 minute initial consultation for all potential bankruptcy clients.

1.  Can I keep my house?

It depends.  As long as you are current on your mortgage payments, and you don’t have a lot of equity in the home (not like many of us do these days!) then, yes.  If you are behind on your mortgage you may still be able to keep the house under a Chapter 13 bankruptcy.  If you have over approximately $20,000 in equity for an individual or about $40,000 for a couple then you may be forced to sell your home to pay off some creditors.

2.  I already filed bankruptcy once, can I file again?

If you completed your previous bankruptcy (received a “court discharge”) then the wait periods are:

  • 8 years between two Chapter 7 filings
  • 4 years between filing a Chapter 7 and a Chapter 13
  • 2 years between two Chapter 13 filings
  • 6 years between a Chapter 13 and a Chapter 7 (usually)

3.  Will bankruptcy eliminate my student loans?

No.  In 99.99% of cases student loan debt is non-dischargeable.

4.  What will bankruptcy do to my credit, and will I be able to get a loan?

In short, your credit score will be lowered.  The actual effect on future credit varies but it will appear on your credit report for 10 years (the legal limit).  Some lenders will actually solicit recent bankruptcy filers because the lenders know the consumer now cannot file for several years (see question 2).  It is safe to say that your credit score will go down and you may have to pay more for a loan, however, the consequences of not paying your bills or foreclosure could be just as serious and more painful.  It’s best to talk with a lawyer to evaluate your specific situation

5.  What if a creditor has already sued me in court?

If you have been sued by one of your creditors, usually a credit card company or your mortgage company, you need to speak with a lawyer immediately.  Depending on your financial situation you may need to file bankruptcy or at least defend yourself in court.  Don’t try and do this yourself.  Filing bankruptcy will stop all creditor actions against you, and help you start over on your timeline not the credit card company’s!