Bankruptcy Attorney in Philadelphia, PA

Bankruptcy Options to Fit Your Debt

What is Chapter 7 & How Can It Help?

When consumer debt from credit card bills to medical costs, personal loans, and even a mortgage become too much to bear, many people choose to file for Chapter 7 liquidation for debt relief. This is the most common type of bankruptcy filed in the United States, and it may even be the most straightforward.

Secured Debt VS Unsecured Debt

When you file for Chapter 7 bankruptcy you can free yourself from certain unsecured and secured debts. An unsecured debt is something that isn’t tied to collateral, like your credit card or medical bills. These debts can be discharged through Chapter 7, but your bankruptcy trustee will probably seize and sell non-exempt property (liquidation) and distribute the proceeds to satisfy these creditors.

What Happens to Secured Debt in Chapter 7

Your secured debt is tied to collateral, and the most common types of secured debt people own is a mortgage or auto loan. While it is possible for a bankruptcy attorney in Philadelphia to help you keep your car and home when you file Chapter 7, typically the items tied to secured debt will simply be reclaimed by the creditor to satisfy the debt.

Reorganize Personal Debt Through Chapter 13

Chapter 13 bankruptcy works for individuals and their consumer debt in much the same way that Chapter 11 works for businesses. When you file for Chapter 13, you will submit a debt reorganization plane that can safeguard the things you own and your property from foreclosure while asking for forgiveness of other debts.

Chapter 13 works in most cases by consolidating your debt under a new loan that will then distribute your payments to your prior creditors. Although this is an even more serious type of debt relief than Chapter 7, a facet most might prefer is that no direct contact with your current creditors is necessary when you file Chapter 13.

Chapter 11 Bankruptcy – Debt Relief for Businesses in Philadelphia

Business owners who own a significant amount of unpayable debt may be able to seek relief through Chapter 11 bankruptcy. This allows them to reorganize their finances while continuing company operations and maintaining control over their businesses. Bargaining agreements can be rewritten during this process and financial obligations can be restructured in a way the company can better manage.

Unlike Chapter 7, Chapter 11 doesn’t free debtors of their obligations – it merely adjusts the terms of their loan agreements to make paying their debts more manageable. This doesn’t mean a company won’t also explore its options in Chapter 7 or undergo some form of liquidation. Doing so may help them achieve more favorable results during restructuring by securing cash to pay creditors or relieving financial obligations owed to other creditors, thus lessening a company’s overall financial burden.

Debt That No Type of Bankruptcy Will Solve

No type of bankruptcy will solve all of your problems if you own certain kinds of debt.

This is especially true of the following:

• Tax debts
• Child or spousal support
• Fines or payments owed to the government
• Student loans
• Criminal restitution and fines

If you owe any of these debts, they cannot be discharged during bankruptcy. Although getting rid of your credit card debt or medical bills can help you to better afford these debt obligations, they will stick with you until fully paid or when a statute of limitations runs out.

Call Weisberg Law (610) 550-8042 or contact us online to schedule a free consultation with one of our Philadelphia bankruptcy attorneys today!