By:Mike Cibik

5 Steps to You Should Take Before Filing for Pennsylvania Bankruptcy


Saving and spending money is not easy, especially when everything seems to be so expensive. Over time, you may have found yourself in a troubling financial situation for multiple reasons. Suppose you owe money on college loans, credit cards, a car, or a divorce, and your income is not high enough to sustain. As hard as you try to sustain yourself or your family financially, you seem to keep digging into more debt and cannot seem to recover.


Our advice to you is not to panic; there is a solution to this hardship and people who can help.  


Filing for bankruptcy could be your answer.


Pennsylvania Bankruptcy can save you money and a lot of stress in the long run if you make the right decision. In Pennsylvania, typically you have to decide whether to file for Chapter 7 or Chapter 13 bankruptcy. However, filing for bankruptcy does not just involve signing papers.  There are steps and processes you have to take before filing your claim. A trusted bankruptcy attorney can help you along the way to ensure the best possible result for your case.


You may not be sure what to do next, or what steps come first. Here are 5 steps we have to help get you on your feet financially by filing for bankruptcy in Pennsylvania:


  • Learn More About PA Bankruptcy:  

It is important to do your research and contact a bankruptcy lawyer, so you are aware of the situation that is going on. Bankruptcy rules and exemptions are different for each state. This is important in determining what assets you get to keep and how much you need to repay to creditors. Pennsylvania bankruptcy allows you to choose if you want to use either the state or federal bankruptcy exemption system.  However, you must pick one of the two.  


  • Begin your Credit Counseling Course:

Filing for bankruptcy in Pennsylvania starts with taking a credit counseling course from an approved agency by the Bankruptcy Administrator. This course must be completed up to six months before filing a claim. The credit counseling course can either be taken in person, on the internet or over the phone.


  • Fill out PA Bankruptcy Forms:

The time has come where you begin to start your file for Chapter 7 or Chapter 13 bankruptcy.  First, you fill out a bankruptcy petition, which includes your detailed financial information and a “means test.” A means test determines if your income is above or below the median income for a household of the same size. From these results, you will see if you are eligible to file for either Chapter 7 or Chapter 13.


  • DO NOT…:

We recommend that you do not pay off some of your debts to creditors prior to filing. If you pay some of your debt, it shows the court that you favored one creditor over another.  Although you may think that it is helping your case, it is only hurting and delaying your claim. The court calls this preferential transfer, which is an unusual payment to a creditor.

Also, keep an eye on your finances. This means that you should not be using a credit card or deposit money that is not from your income. Basically, anything that makes you look suspicious or puts you in further debt is not helping your case.


  • Find A Bankruptcy Attorney:

You shouldn’t be handling this difficult financial problem on your own.  A bankruptcy attorney can be there for you to lead you through the way. When it comes to your assets, you want to ensure you receive the best possible outcome. Bankruptcy attorneys can provide you with the right guidance to make your filing process as smooth and painless as possible.


The qualified bankruptcy attorneys at Cibik & Cataldo, P.C. are here to help you file for Pennsylvania bankruptcy. Contact us today at (215) 735-1060 for a free consultation and learn more about our services.



By:Mike Cibik

Reason Why People File for Bankruptcy

Filing for bankruptcy can save money and offer peace of mind. There are also the downsides. Bankruptcy is very expensive and takes up a lot of your time. At the end of the day, however, it’s very much worth it.


Here are some reasons why people file for bankruptcy, according to the American Bankruptcy Board Certified attorneys of Cibik & Cataldo PC, who have provided high-quality debt relief in Philadelphia for the last 35 years.


Job Loss – Sure, there’s the severance pay, but there’s no guarantee knowing when that new job will come around. Losing a job obviously depletes someone’s savings and assets.


Medical Expenses – Medical expenses make up more than 60 percent of personal bankruptcies in the United States. It can be almost impossible for someone to pay for the medical attention they need on their own most of the time.


Credit Debt – Illnesses and disability, job loss, income reduction and emergency expenses are some reasons for credit card debt that doesn’t involve irresponsible spending.


Divorce – A divorce or separation can lead to a huge loss of income and assets for either partner or both. Those lawyer fees add up too.


Overspending – Poor budgeting and not being able to control your spending.


Types of Bankruptcy to Choose From

There are two types of bankruptcy that you can file, Chapter 7 or Chapter 13.


A Chapter 7 bankruptcy discharges most types of unsecured debt and the trustee will attempt to sell any nonexempt property in an effort to repay their creditors. Chapter 7 bankruptcy is most commonly used for businesses and individuals.


In regards to the business aspect, the trustee who is handling the case goes through an intense process of assessing how every part of the business is running and then will either decide to shut down the company (if it is smaller) or sell off parts of it (if it is large).


For individuals, Chapter 7 lets them keep certain property, but if the state deems it as not exempt, it is to be sold by a trustee, and that money is used as a liquid asset to pay the creditors. If you’re lucky, your debt can be discharged if you fall into the categories of people who owe:

  • Child Support
  • Some Student Loans
  • Income taxes less than 3 years old


It is good to keep in mind that Chapter 7 bankruptcy can stay on ones credit history for up to a decade. So before filing, make sure you are ready to have that on your record for a long amount of time so no credit issues will surface when trying to make purchases once you are back on your feet. Chapter 7 bankruptcy normally takes about 3-to-4 months to finish.


Creditors with Chapter 13 bankruptcy, meanwhile, repay creditors through a repayment plan. No property is liquidated under Chapter 13 bankruptcy, only reorganized. Chapter 13 can immediately stop foreclosure for the term of repayment; it can also allow for a “super discharge” of debts, the kind that are not allowed under Chapter 7 bankruptcy.


There are many reasons why a person may choose to file for Chapter 13, but the most common reasons are:

  • Individuals facing an imminent repossession of property.
  • Individuals facing an imminent foreclosure on their home or other real estate.
  • Individuals who have recently lost their primary source of income but do not want to lose their property.
  • Individuals with a poor credit score who, due to current financial situations cannot pay off debt quickly.


Chapter 13 bankruptcy can take 3-to-5 years to finish which is much longer than the amount of time Chapter 7 requires. But, Chapter 13 bankruptcy can only stay on your credit history for 7 years, opposed to the decade Chapter 7 stays on for.


It is important to choose one of the bankruptcy plans listed above that fits you and your current situation best. Talking to an experienced attorney will help clear the air of any unanswered questions and help put your mind at ease knowing that someone is on your side.


At Cibik & Cataldo P.C., we never assume that your financial situation is the same as anyone else’s. Our team of dedicated attorneys are here for you and will work with you on your case, no matter how big or how complex it may be. Declaring for bankruptcy is never a proud moment, but is a great tactic to get you back on your feet financially.


Our legal team supplies top-notch debt help in Philadelphia, PA, and surrounding areas. To learn more about bankruptcy services and the certain areas of bankruptcy our attorneys specialize in, contact us at (215)-735-1060.  We also offer a free consultation through our website so you can get the feedback you need fast.



By:Mike Cibik

Chapter 7 Bankruptcy

There are three common forms of declaring bankruptcy: Chapter 7, Chapter 11 and Chapter 13.


Chapter 7 bankruptcy is most commonly used for businesses and individuals.The most identifiable characteristic of Chapter 7 Bankruptcy is that it is a liquidation of assets, versus Chapter 11 or Chapter 13, which are each a reorganization of assets.

Chapter 7 is applicable to both businesses and individuals; however, they are handled differently for each.


Why Should I File For Chapter 7?

By filing for Chapter 7 it means that the debtor is now no longer responsible for repaying the debt of the company. The debtor will receive a fresh start from most of their debts and will be able to keep their future income after filing for Chapter 7 without having to set up a repayment plan. The discharge of debt occurs rather quickly as individuals may see their discharge as early as three months after approval and the case is closed.


For Businesses

For businesses (LLCs) that are badly in debt, a Chapter 7 bankruptcy means that the entire businesses will shut down, unless continued by the Chapter 7 trustee. The trustee is appointed very quickly, and is tasked with examining a business’ financial affairs, dealings and standing. The trustee will then liquidate assets and distribute the liquid capital to creditors, because exemptions are not made available to business bankruptcy.


Sometimes, this means that all employees will be forced to lose their jobs, for larger businesses, however, entire sections of the company can be sold off to other employers for profit. It is now the bankruptcy trustee’s responsibility to handle all of the distribution of proceeds to creditors, as the actions following bankruptcy will be determined based on if the company was a sole proprietorship, partnership, or a corporate entity.

In Chapter 7, a corporation does not receive a bankruptcy discharge, the entity is dissolved instead.


For Individuals

Individuals who file for Chapter 7 are allowed to keep certain exempt property. State regulations vary widely on what can and cannot be deemed exempt property. An experienced bankruptcy attorney can help determine what can be ruled exempt. Assets that are not exempt are sold by a Chapter 7 trustee and then liquid capital is used to pay creditors.


Many types of debt can be discharged by Chapter 7, however, not every type is. Common exceptions to debt discharges include child support, income taxes less than 3 years old, some student loans, restitution for any crimes committed and other types of debt.

Chapter 7 bankruptcy can stay on a credit report for up to a decade, however, some who file find that to be less detrimental than the outstanding debts they had.


When considering filing bankruptcy there are a number of factors to consider. However daunting debt may seem, the dedicated attorneys at Cibik & Cataldo P.C. can help determine the best course of action to move forward from the debt that holds a business or individual back. To learn more or schedule a free consultation, contact our legal team today at (215)-735-1060.



By:Mike Cibik

Buying a Car Prior to Filing Bankruptcy

Filing bankruptcy is not easy and cannot be done alone.  It is not a matter of just going to your bankruptcy lawyer’s office, plunking your money down, and signing a few documents. It involves planning. The right planning involves an experienced bankruptcy attorney to help you through this process.


The first step in filing bankruptcy is determining what chapter you should file under, which is typically Chapter 7 or 13.  However, in a few instances, it could even be Chapter 11. Second, you and your lawyer can then start to do some bankruptcy planning to ensure that you receive the best outcome for your case. One way to start planning for your Chapter 13 bankruptcy is by buying a vehicle.


Chapter 13 bankruptcy, if you are over median income (using the six-month average prior to filing), is a five-year process. If you have an older car, you are probably better off replacing it prior to filing. If it dies or begins “nickel and diming you to death” during your bankruptcy, you will need to file a motion to incur debt. You will have to make the case and explain as to why you need that newer vehicle.  It takes about a month to get an order entered for the car.  Overall, this process is a hassle, and it is one you probably will not want to deal with if your transmission just failed or the vehicle cannot be driven because of some major mechanical failure.


Besides the perks of getting a new car, buying one will also help you on the means test that you take when filing bankruptcy.  This test analyzes your income and expense information, and then determines how much you will need to pay to your unsecured creditors in your plan. No car note means no ownership allowance on the means test. That, in turn, means (pardon the pun) that you lose $517 on the means test. Therefore, you must be mindful of how the purchase will look to the Chapter 13 trustee and, more importantly, the bankruptcy judge.


Am I saying you buy the car to do better on the means test? No. But if you are in need of a car, it is best to take care that issue prior to filing for bankruptcy. As a result, if getting a new car can benefit your day-to-day life and on the means test, then so be it.  It is better to only help yourself in any way possible prior to filing.


I do not advise my clients to buy luxury brands, such as Mercedes, BMW, Lexus, and Audi.  The reasoning behind this is that in court, this does not back your case. I just do not like how this sounds: “Your Honor, the debtor purchased a BMW two months prior to filing this case.” Even if it is an ’06 with 70,000 miles, or perhaps you got it for a good deal, I cannot get over how it sounds to a judge.


Overall, I suggest buying a high quality used car, only if you are sure that you need to buy a vehicle. For example, I tell my clients that if you have a 2008 model vehicle with 60,000 miles on it that you just paid off, I would not advise you to buy a newer car prior to filing.  This is because your car is in good condition and you do not owe more money on it. In contrast, however, if you owned a 2004 with 120,000, I would because the car probably requires work to be done. This process may sound intimidating and confusing, but an experienced bankruptcy lawyer can help you through this.  


The dedicated attorneys at Cibik & Cataldo P.C. can help you throughout the process of filing for bankruptcy as well as give you legal advice. Contact our legal team today at (215)-735-1060 for a free consultation or if you have any questions regarding a case.


By:Mike Cibik

Bankruptcy can discharge income tax if certain conditions are met.  One required condition is that returns must have been filed.  Some bankruptcy courts have recently taken the position that a return filed after the statutory deadline does not qualify as a return for the purpose of bankruptcy discharge.  (more…)


By:Mike Cibik

After filing bankruptcy people are often interested in trying to rebuild their credit, and a Chapter 7 or Chapter 13 bankruptcy can be a good first step to repairing your credit. The information contained in your credit report is important and that information must be accurate. Credit reporting agencies (CRA) such as Experian, Equifax and Transunion are the gate keepers between you and potential lenders. (more…)


By:Mike Cibik

An illegal immigrant can file for bankruptcy in the United States.  There is no reference to a citizenship requirement in the Bankruptcy Law.  US Code §109 provides the requirements to be a “debtor.” (more…)

By:Mike Cibik

A chapter 13 bankruptcy is a plan to re-organize a debtor’s liabilities and get a fresh start unburdened by mounting unsecured debt (credit cards, medical bills, etc.). Such a plan requires payments to a bankruptcy trustee or administer. But how much are those payments? (more…)


By:Mike Cibik

Corporations and LLC’s don’t get a discharge in a Chapter 7 bankruptcy, so what’s the point of filing? Ensuring that business assets go to pay payroll, benefits, and taxes is a compelling reason. (more…)


By:Mike Cibik

1. STRESS: Being deep in debt, receiving harassing calls from creditors, being threatened with garnishment, repossessions and foreclosure will often cause you and your spouse to experience overwhelming stress and anxiety. Your children, even young ones, also feel the stress. It affects their school work and their emotional and physical health Uncontrolled debt often leads to marital conflict and divorce. The kids become the biggest losers. Filing for bankruptcy will usually relieve the debt burdens and the stress. This will often save a marriage and restore emotional as well as financial security for the entire family.

2. PROVIDING FOR YOUR FAMILY: When you’re paying out all of your income to try to cover your minimum debt payments, you often have difficulty paying for even life’s basic necessities. The little extras that mean so much to children, such as music lessons, dance lessons, tutoring, summer camp and regular health exams, are often neglected. After filing for bankruptcy, your family budget can afford to give your children much of the nourishment they need to grow into healthy and well adjusted adults.

3. EDUCATIONAL EXPENSES: When you are having financial difficulty, it is often difficult to properly afford your children’s educational expenses. In the 2005 changes to the bankruptcy law Congress specifically allowed parents to include in their allowable expenses some educational costs for their children under 18 years old. For older children, however, Congress felt that paying college tuition at the expense of unsecured creditors should not be allowed.

4. STUDENT LOANS: Several factors should be considered regarding student loans. First, student loans, including parent PLUS loans, are generally not dischargeable in bankruptcy without a showing of undue hardship. The burden to prove undue hardship is very great. Second, if you are in financial difficulty, you may not have a high enough credit score to get a parent loan to help your child pay for college. So if you are having debt problems when your children are still several years away from going to college, you should consider filing bankruptcy to wipe out your debts, so that you have more money available to help out your college bound kids, and your credit score can recover by the time you have to get loans to help your kids pay for college.

5. CO-OWNERSHIP AND COSIGNED LOANS: Many parents want to try to help out by setting up joint bank accounts with their minor children. If you have done this, and then file for bankruptcy, you may find that your bankruptcy trustee attempts to seize the bank account and use it to pay towards your creditors. There are ways to set up accounts to prevent this from happening. Similarly, if you cosign a loan for your child to help them out, if they ever get into financial difficulty and have to file bankruptcy, your credit score will be negatively affected and you will be hounded to pay the bill.