American law believes in second chances. The statute of limitations protects criminals from prosecution after a specific length of time. Bankruptcy law provides a chance for debtors to regain their financial freedom after making serious monetary errors. There are several different bankruptcy options available. While federal law is consistent across all 50 states, individual states have enacted their own bankruptcy provisions. So debtors who have businesses and homes in several states should contact a Bethlehem bankruptcy lawyer to determine the best way to proceed.
Most debtors meet with lawyers to determine if they should file for bankruptcy under Chapter 7 or Chapter 13. Chapter 7 is known as the “Fresh Start” bankruptcy proceedings. Debtors who don’t have a regular source of income to pay off their debts often turn to chapter 7. The court requires that almost all of a person’s assets be liquidated to pay off as much of their debt as possible. Each state has established which assets of a person are protected. Pennsylvania has one of the most protective statutes in the country. If a person is current on their mortgage and car payments and can continue to pay them, then their house and car can be protected. However, if they are behind on their payments they aren’t protected. Student loans and child support payments are two more debts that won’t be forgiven in a Chapter 7 liquidation process.
Chapter 13 is a reorganization plan. The court appoints a trustee to review the debtor’s income and debt. He also calculates the fixed expenses that the debtor needs to live such as housing, transportation and food. The debtor is then put on a budget and all excess funds are given to the trustee. The trustee then determines which of the creditors will be paid each month. This program can last from two to five years. Once the debtor has filed for a Chapter 13 bankruptcy they are protected from debt collections and harassing calls. There is a hearing that all creditors can attend to put for their case. It is a good strategy for the debtor to hire a Bethlehem bankruptcy lawyer to represent them at this hearing. It can be a devastating experience for a person to go through this and they may not be able to adequately represent themselves.