Pittsburgh Bankruptcy Lawyer

The filing of a bankruptcy petition is a legal action which may be taken by any individual or corporation in the United States of America. The filing of a bankruptcy petition always invokes the "automatic stay." This means that on the day the bankruptcy petition is filed all creditors must stop collection activities immediately. The modern era for bankruptcy began in 1979 when Congress passed the "New Bankruptcy Code". Under this law, Congress created a series of "exemptions" setting forth what property individuals could keep, while still discharging their debts. The list of these exemptions is quite extensive, but the most common exemptions allow a married couple to retain up to $44,000.00 equity in their home, their automobiles, their pensions or retirement funds, all their household goods and furnishings, clothes, tools and jewelry.

Individuals have a choice of filing for bankruptcy under either Chapter 7 or Chapter 13. Under Chapter 7, an individual will normally keep paying their mortgage or auto loans if they intend to retain the collateral for those loans. However, the other "unsecured" debts will be discharged, or eliminated. Also, if the individual wants to get out from under their mortgage or car loan, they can relinquish the property and they won't be liable for any deficiency after the property is sold.

Chapter 13 is less common, but it is the appropriate choice under the right circumstances. Unlike Chapter 7, where the individual simply walks away from all unsecured debt, the Chapter 13 debtor enters into a payment plan, normally between 36 and 60 months long in which a single payment is sent each month to the trustee to cover all debt payments. This would include normal mortgage and auto payments, and sometimes includes payments to cure arrearages on the mortgage or auto or a payment to cover unsecured debt. The advantages to a Chapter 13 are that an individual with substantial mortgage arrears or tax problems will receive a longer period of protection from the court to resolve those problems. Also, in 2005 Congress passed the "Bankruptcy Abuse Prevention and Consumer Protection Act" which place a ceiling on the family income of individuals filing for Chapter 7, based upon family size and geographic location. While the allowance for family income is generous (for example a family of four filing bankruptcy in Pennsylvania in 2007 could have yearly income of over $68,000.00 per year), if a family's income exceeds those amounts may still file for relief under Chapter 13. Finally, under Chapter 13 the interest rates and monthly payments on mortgage or auto loans can often be reduced through loss mitigation with the creditor.

WHO SHOULD FILE BANKRUPTCY?

Whether to file for bankruptcy is normally a difficult decision. My recommendation is that clients concentrate on basic arithmetic in making this decision. Sit down and make a chart with your monthly income in one column and your monthly expenses in the other. Do the sums at the ends of the two columns match? If the payments to the unsecured creditors are eliminated, will these two columns come back into conformity? If not, will the elimination of one of the car loans bring your budget back into balance? This is the kind of analysis that must be made to determine if bankruptcy is right for you. If your debt problems are not great, a non-bankruptcy solution such as combining the debts into a second mortgage or getting into a payment plan with Consumer Credit Counseling Service. However, if these non-bankruptcy solutions don't make mathematical sense, they are a waste of your money and could lead to an eventual loss of assets.

THE PROCESS

The process begins with calling a lawyer. My number is 1-800-242-2412. I have three offices, in Pittsburgh, Uniontown, and Somerset. The first appointment is free, and if there is a reason you shouldn't file bankruptcy I will tell you so. If it is inconvenient for you to come to my office in person, I can conduct the interview over the telephone and I cover the same questions that I cover in the personal interview. Normally, I charge $1,100.00 and the court charges $306 to file the petition, and the payments are generally made over a three month period. The 2005 law also requires debtors to speak with a debt counseling service over the telephone and to take an on-line course, all of which costs approximately $24. There is one simple hearing in the county in which you live approximately one month after you file the bankruptcy petition. I normally meet with you at the initial appointment, a second time to go over the bankruptcy petition, and then I attend the bankruptcy hearing with you.