West Virginia Chapter 7 Bankruptcy Lawyer

One of the most frequent questions we receive from clients regarding bankruptcy law is: “How does Chapter 7 bankruptcy differ from Chapter 13?” Essentially, a Chapter 7 bankruptcy provides an immediate discharge, effectively wiping out unsecured debts.

Debts that can be eliminated through Chapter 7 include credit card balances, medical bills, unsecured personal loans, timeshare obligations, certain tax debts, and more. It is quite rare for a home or vehicle to be included in a Chapter 7 case, except in very specific circumstances which we will discuss later.

What Is Chapter 7 Bankruptcy in Simple Terms?

Chapter 7 bankruptcy, often called “liquidation bankruptcy,” is a legal procedure where individuals or businesses struggling with unmanageable debt can seek relief. This process involves selling assets to pay off creditors. In these cases, a trustee is assigned to manage the sale of non-exempt assets, which could potentially include items like a car or house.

After the assets are sold, the funds are shared among the creditors. Any remaining debt is usually discharged, meaning the debtor is no longer legally required to pay it. While Chapter 7 offers a fresh start for those overwhelmed by financial obligations, it does have potential downsides, such as the loss of certain property. If you need guidance, a West Virginia bankruptcy lawyer can help you navigate these complexities.

Chapter 7 vs Chapter 13

Chapter 7 bankruptcy is a liquidation process where assets are sold to pay creditors, resulting in the discharge of remaining debts. This option is often chosen by those with significant debt but few assets. Conversely, Chapter 13 bankruptcy is known as “reorganization bankruptcy.” This option allows individuals with a steady income to set up a repayment plan, paying back their debts over a period of three to five years.

Unlike Chapter 7, Chapter 13 focuses on restructuring debts rather than liquidating assets. The decision between the two depends on various factors such as income, assets, and whether you wish to keep specific possessions. Consulting with a West Virginia chapter bankruptcy 7 attorney can help clarify which path is right for you.

How to File Bankruptcy Chapter 7 in PA

Filing for Chapter 7 bankruptcy in Pennsylvania involves a series of steps. First, gather all necessary financial documents, such as tax returns, income statements, and details regarding your assets and debts. With this information, you will complete the required bankruptcy forms, including a petition, schedules outlining your financial status, and statements disclosing your expenses, income, liabilities, and assets.

Next, you must complete the Pennsylvania bankruptcy means test. This test determines your eligibility for Chapter 7. If you do not qualify, Chapter 13 might be a better option. A West Virginia bankruptcy lawyer can assist you with these forms and calculations.

Once the paperwork is complete, file it with the bankruptcy court in your Pennsylvania district. You will also need to pay a filing fee, unless you qualify for a waiver based on your income, or request to pay in installments.

Chapter 7 Bankruptcy Requirements

To file under this chapter, individuals must meet specific eligibility criteria. These include:

• Means Test: This test assesses your income and expenses to check if you have enough disposable income to pay off debts. If your monthly income is below the state median or you pass the test, you likely qualify. If not, an attorney might suggest Chapter 13.
• Credit Counseling Course: You must complete a credit counseling course from an approved agency within 180 days before filing. This assesses your financial situation and explores alternatives.
• Residency: You must have lived in the district where you are filing for at least 180 days prior to the filing.
• Previous Bankruptcies: If a previous bankruptcy case was dismissed within the last 180 days due to failure to appear or comply with court orders, you may not be eligible.
• Financial Management/Debtor Education Course: After filing, you must complete a financial management course to learn budgeting skills for rebuilding your financial health.

Chapter 7 Income Limits 2024

It is crucial to note that if your income exceeds a certain threshold, you generally won’t qualify for Chapter 7 bankruptcy. As of April 1, 2024, the income limits for Chapter 7 in Pennsylvania for households of one to four people are:

• One earner: $66,923
• Two people: $81,574
• Three people: $103,172
• Four people: $125,861

If your income is near these limits, speaking with a West Virginia bankruptcy lawyer is advisable to understand your options.

How Does Chapter 7 Work in Pennsylvania?

First, the debtor initiates the process by filing a petition with the bankruptcy court. This action triggers an automatic stay, which stops most creditor actions, such as collection efforts and foreclosures, offering immediate relief from harassment.

Next, a bankruptcy trustee is appointed to manage the case. Their main duty is to review the debtor’s assets to see if any non-exempt items can be sold to pay creditors. Exempt assets, like basic household goods and certain property types, are usually protected under state and federal laws. A West Virginia chapter bankruptcy 7 attorney at Mountaineer Law Group can help you identify which assets are exempt.

The trustee then sells non-exempt assets and distributes the proceeds to creditors based on priority. Unsecured debts like medical bills and credit cards are often discharged. However, debts such as alimony, child support, and most tax debts typically cannot be discharged.

Finally, after the liquidation and distribution process, the debtor receives a discharge, releasing them from most remaining debts and providing a financial fresh start.

Means Test Chapter 7

The Chapter 7 means the test is essential for determining eligibility. It evaluates your income and expenses to see if you have disposable income to repay debts. The test compares your average monthly income from the six months before filing to the state median.

If your income is below the median, you generally qualify. If it exceeds the median, further calculations are done. If your disposable income is too high, you might have to file for Chapter 13 instead. A West Virginia bankruptcy lawyer can guide you through these calculations.

Submit Your Bankruptcy Petition to a Pennsylvania Bankruptcy Court

Submitting a petition involves several steps. First, gather financial documents like income statements, tax returns, and debt details. Next, complete forms such as the petition, schedules, and financial statements.

File these forms with the bankruptcy court in your district, along with any fees or waiver requests. The court will assign a case number and issue an automatic stay. Finally, attend a meeting of creditors where the trustee and creditors may question you about your finances. Having a West Virginia chapter bankruptcy 7 attorney by your side during this meeting is highly recommended.

What Happens After Filing Chapter 7 in PA?

Upon filing, the court issues an automatic stay, a legal order stopping most creditor actions. This provides immediate relief from harassment and collection efforts.

The stay prevents creditors from making calls, sending letters, filing lawsuits, garnishing wages, or initiating foreclosure. It remains in effect throughout the process, giving you time to address your finances without pressure. Although the stay offers protection, we recommend working with a West Virginia bankruptcy lawyer to ensure your rights are fully upheld in Allegheny County.

What Can You Not Do After Filing Chapter 7 in PA?

After filing, there are specific actions you must avoid. Debtors cannot transfer assets or dispose of property, as this may be viewed as fraud. You also cannot incur new debt without court approval, including loans or credit card usage.

Additionally, debtors generally cannot dismiss ongoing lawsuits related to pre-bankruptcy debts without permission. This ensures all creditors are treated fairly. Also, you cannot favor specific creditors by repaying them selectively; all must be treated equally.

Finally, you must cooperate fully with the trustee. Failure to do so can lead to case dismissal. A West Virginia chapter bankruptcy 7 attorney can help ensure you remain compliant with all rules.

How Long Does Chapter 7 Bankruptcy Take?

The duration varies based on case complexity and court caseload. Generally, Chapter 7 bankruptcy takes about three to six months from filing to discharge.

How Often Can You File Chapter 7 in Pennsylvania?

Under the Bankruptcy Code, you must wait at least eight years from a previous Chapter 7 filing to file again and receive a discharge. This period is calculated from the filing date of the first case to the filing date of the new one.

If you previously filed for Chapter 13, you typically must wait at least four years before filing for Chapter 7. Consult a West Virginia bankruptcy lawyer if you are unsure about your eligibility based on past filings.

What Is the Success Rate of Chapter 7 Bankruptcy in PA?

If success means obtaining a debt discharge, the rate is generally high for those who complete the process. Most Chapter 7 cases result in a discharge, offering debtors significant relief.

Chapter 7 Bankruptcy FAQs

When Do I Have to Surrender My Vehicle in Chapter 7?

Surrendering your vehicle depends on your equity, state exemptions, and ability to reaffirm the debt. If you have little equity or it is exempt, you might keep it by continuing payments. If equity exceeds exemptions or you are behind on payments, the trustee might sell it. A West Virginia chapter bankruptcy 7 attorney can help you evaluate your specific situation.

Can I File Chapter 7 Before 8 Years?

Exceptions exist for extreme financial hardship or significant changes in circumstances, allowing filing before the eight-year period ends.

Can IRS Debt Be Discharged in Chapter 7?

Income tax debt may be discharged if it meets specific criteria:

• It must be income tax.
• It must be for a tax year at least three years old.
• A tax return must have been filed at least two years prior.
• The assessment must be at least 240 days old.

Discuss your tax debts with a lawyer to determine dischargeability.

Will Filing Chapter 7 Affect My Spouse?

Filing discharges your liability for joint debts but not your spouse’s. They remain responsible unless they also file. Separate debts solely in your name generally do not affect your spouse’s credit.

How Much Do You Have to Be in Debt to File Chapter 7?

There is no minimum debt requirement. Eligibility is based on income, expenses, and the means test. A West Virginia chapter bankruptcy 7 attorney can help determine if you qualify regardless of your debt amount.

How Long Can Chapter 7 Trustee Keep Case Open in Pennsylvania?

The trustee keeps the case open until all duties, such as asset liquidation and resolving objections, are completed.

Will I Lose My House If I File Chapter 7?

Non-exempt assets may be sold, but exemptions often protect primary residences up to a certain value. If your equity is within limits, you may keep your home. If it exceeds limits, the trustee might sell it, though this is uncommon. Contact Mountaineer Law Group in Allegheny County to speak with a West Virginia bankruptcy lawyer about protecting your home.

Call (304) 832-8350 today to talk about your situation and see how we can help.