Blog - Cibik Law, P.C.: Trusted Philadelphia Bankruptcy Lawyers

Legal Strategies for Avoiding a Mortgage Foreclosure

At the end of December, more than 787,000 Americans had filed for unemployment. Many Americans have been laid off or had their work hours reduced due to the coronavirus pandemic. If you are struggling to pay your mortgage, you are not alone. Many Americans are trying to find a way to continue paying their mortgages during these challenging financial times. If you are concerned about a mortgage foreclosure, or your lender has already started the foreclosure process, there are several legal strategies you can take to avoid mortgage foreclosure. We will discuss some of the best options for preventing a mortgage foreclosure below. Still, the best thing you can do is speak with an experienced Philadelphia bankruptcy lawyer about your legal options. Payment Plans Such as Forbearances and Loan Modifications One of the options for avoiding foreclosure is negotiating a payment plan, such as a forbearance plan or a loan modification plan. Your lawyer will be able to negotiate with your mortgage company to request a repayment plan. Should your lender agree to the prepayment program, you will be able to initiate a loan workout and create a plan to begin making payments. Typically, loan modifications stop the foreclosure process. In many cases, the lender will stop the foreclosure process and push back the payment’s due dates to the end of the loan. A forbearance plan is easier to achieve in most cases, but it will only pause the foreclosure process until you have caught up with your payments, meaning there will often be less of a delay. Short Sales Has your lender filed a notice of disclosure before scheduling an auction? If you have received an offer from a buyer, your lender is required to consider the offer. If they do foreclose on your home, the lender will quickly resell your home. You have the option of presenting your loan officer with a reasonable short sale offer. In some cases, lenders will accept the short sale offer to save them the trouble and expense of finding a qualified buyer. If your home is on the market, you can keep seeking a buyer for it, even after the foreclosure process has begun. Discussing your case with an experienced lawyer will help you navigate the process of short selling your home. Defending Against Your Foreclosure It is always wise to work with an experienced lawyer if you are going through the foreclosure process, no matter what legal option you choose. It may be possible for a knowledgeable and skilled foreclosure defense lawyer to defeat the allegations in the foreclosure complaint on legal grounds. Typically, lenders use boilerplate complaints with generic legal arguments. They do not want to spend a significant amount of time arguing the case in court or writing a tailored complaint. Most homeowners will not challenge the complaint, so they use default language. However, the generic arguments may not apply to your case. Your lawyer may be able to successfully argue against all of the allegations made by your lender. By arguing against a complaint, your lawyer may be able to stall the foreclosure for months, or the lender may begin the foreclosure proceedings again. In other cases, the lender may determine that it is not worth proceeding with the foreclosure and work with you for a loan modification. Deed in Lieu When a homeowner is facing foreclosure, he or she can sign the deed to the home over to the bank voluntarily. This is typically not the best option for those facing foreclosures. Lenders generally are not willing to agree to take a deed in lieu of foreclosure. They would need to pay any subsequent mortgages or home equity lines of credit off before they could even properly execute a deed in lieu. Proceeding with the foreclosure process also allows the lender to verify that the homeowner is truly in financial distress. Deeds in lieu of foreclosures are often not accepted unless foreclosure will happen very soon, or the owner has put his or her property on the market for several months and not been able to sell it. File for Chapter 7 Bankruptcy Many homeowners facing foreclosure determine that filing for bankruptcy is their best course of action. Filing for any type of bankruptcy will immediately stop the foreclosure process. Many individuals file for Chapter 7 bankruptcy, Which allows the homeowner to dissolve all of their debt and wipe out the majority of the responsibility to pay off the debt. Filing for bankruptcy gives a homeowner between 45 and 75 days to develop a plan for avoiding foreclosure. The time frame depends on your local bankruptcy court judge and your lender’s timeline. Not everyone has the right to file for a Chapter 7 bankruptcy. Instead, the applicant must prove that his or her income and assets are below the Pennsylvania household’s median income level. If you do not qualify for a Chapter 7 bankruptcy, you will likely be eligible for a Chapter 13 bankruptcy. Your lawyer will be able to review your financial situation and advise you on which type of bankruptcy will provide you with the most benefits. File for Chapter 13 Bankruptcy Chapter 13 bankruptcies are often referred to as reorganization bankruptcies. This type of bankruptcy will work with a bankruptcy trustee appointed by the court to reorganize your debt and create an effective payment plan. If you follow the payment plan and make payments according to it, you will permanently stop the foreclosure. At the end of chapter 13 bankruptcy, you will walk away free from the majority of your debt. Contact a Philadelphia Bankruptcy Lawyer If you are unable to make your mortgage payments, you are not alone. The experienced Philadelphia bankruptcy lawyers at the Law Offices of Cibik Law are here to help. We will review your case and provide you with experienced legal advice regarding your best options. Contact us today to schedule your free initial consultation.

08 December, 2025

The Differences Between Chapter 7 and Chapter 11 Bankruptcy

Financial experts predict that there could be a sharp increase in bankruptcy filings happening in the next few months. Government shutdowns related to the coronavirus pandemic have caused significant financial challenges for many Americans who have lost their jobs or experienced a decrease in pay. The federal government and state governments have adopted programs to help families who cannot pay their bills. Government stimulus checks, mortgage forbearances, and government loans have helped many businesses stay open, but these loans are coming due, and these legislative aids will come to an end. As that process begins to unfold, companies will shut down, and more employees will lose their jobs, increasing bankruptcy filings. Individuals and businesses alike will be considering whether they should file for chapter 7 or chapter 11 bankruptcy. There are important differences in the processes and eligibility requirements for chapter 7 and chapter 11 bankruptcies. Chapter 7 Bankruptcy Chapter 7 bankruptcies are often referred to as liquidation bankruptcies. Individuals, partnerships, and corporations can file for chapter 7 bankruptcy to liquidate their assets, pay off their debts, and start fresh. After the debtor files for a Chapter 7 bankruptcy, the bankruptcy court will appoint a trustee who will manage the debtor’s case. The trustee will arrange for the liquidation of the debtors qualifying assets under the bankruptcy code’s rules. During the liquidation process, the bankruptcy trustee will sell all of the debtor’s non-exempt property for cash. The trustee will gather the proceeds from the sales and distribute payments to the debtor’s creditors. Eligibility for Chapter 7 Bankruptcy Chapter 7 bankruptcy is only available to individuals, corporations, partnerships, and other business entities that meet the means test. In other words, debtors with high incomes or who own too many assets are not eligible for filing a chapter 7 bankruptcy. When a debtor’s current monthly income is higher than the state median income, the courts must apply a means test to decide whether the debtor can qualify for a chapter 7 bankruptcy. When the debtor’s aggregate current monthly income over five years is over $12,850 for 25% of the debtor’s non-priority unsecured debt, as long as that amount is at least $7,700, the court will presume that the debtor earns too much to qualify for a chapter 7 bankruptcy. The debtor can still overcome this presumption, but in most cases, the court will convert the Chapter 7 bankruptcy to a Chapter 13 Bankruptcy with the debtor’s consent, or the court will dismiss the case outright. The goal of a Chapter 7 bankruptcy is to allow the debtor to discharge certain types of debts. Doing so enables an individual to a fresh start because he or she will not have to contend with liability and continue paying debts that have been discharged. Keep in mind that in a Chapter 7 bankruptcy case, the discharge of debt is only allowed to individual people, not to corporations or partnerships. An individual filing for Chapter 7 bankruptcy will be able to walk away without debt, but not all types of debts will be discharged in a Chapter 7 bankruptcy. Additionally, a Chapter 7 bankruptcy cannot extinguish the debtor’s lien on a property. Chapter 11 Bankruptcy Many businesses choose to file a chapter 11 bankruptcy because they do not want all of their assets to be liquidated. Running a business is impossible when a trustee sells all of the business’s assets to pay back creditors. For those who would like to continue operating their business during the bankruptcy process, chapter 11 bankruptcies are a much better option. Many companies across the United States have filed for chapter 11 bankruptcy due to coronavirus-related government shutdowns. Movie theaters, restaurant chains, and gyms have all filed for chapter 11 bankruptcy, petitioning the court to help them reorganize their debt so they can continue operating their businesses and not close down entirely. In a chapter 11 bankruptcy, the debtor can petition the court to adjust his or her debts by reducing the debts or by extending the time for repayment, or they may seek a more comprehensive reorganization. Chapter 11 bankruptcies are not limited to large corporations either. Sole proprietorships can qualify for chapter 11 bankruptcy. In a chapter 11 bankruptcy, the debtor will seek to reorganize his or her assets. Chapter 11 bankruptcies are often recalled reorganization bankruptcies. In this type of bankruptcy, a corporation, a partnership, and some types of qualifying individuals can reorganize their debt. One of the benefits of filing a chapter 11 bankruptcy is that the debtor will not be required to liquidate all of his or her eligible assets to pay back creditors. Instead, the debtor will create a plan with the help of a bankruptcy trustee. He or she will present the bankruptcy plan to creditors. When the creditors accept the plan and the court approves it. In that case, the debtor can choose to reorganize his or her financial, business, and personal affairs to become a financially productive business or individual again. Chapter 11 bankruptcies are among the most complicated of all different types of bankruptcies in the United States. They are also typically the most expensive type of bankruptcy proceeding. Businesses should not undergo a chapter 11 bankruptcy unless they have carefully analyzed their financial situation, spoken with an experienced bankruptcy lawyer, and explored other options for resolving their debts outside of the bankruptcy process. Contact a Bankruptcy Lawyer Today If you are one of the millions of Americans struggling to pay your bills on time, you are not alone. Filing for bankruptcy could be an option for you. The experienced bankruptcy attorneys at the Law Offices of Cibik Law will review your financial situation and advise you whether a chapter 7 or chapter 11 bankruptcy could help you start fresh. Contact us today to schedule your free case evaluation.

08 December, 2025

Michael Cibik talks with the Philadelphia Inquirer about bankruptcy as a strategy for Philly restaurants

Below is a recent Philadelphia Inquirer article, featuring Michael Cibik’s thoughts on filing for bankruptcy as a possible best strategy for local Philadelphia restaurant owners. For the original Inquirer article, read here. Why filing for bankruptcy could be the best strategy for Philly restaurants Take a walk around Center City Philadelphia and you’ll see many empty and shuttered restaurants. That’s no surprise. Running a restaurant when you cannot have customers inside and when the temperature is 35 degrees outside is not a recipe for long-term survival. Unfortunately for these restaurant owners, the short-term outlook is bleak. City restrictions will be in place until the end of the year and — given the rise in cases and hospitalizations — will likely continue in some form well into 2021. Even if these restrictions are eased, it will still be very hard for restaurant owners to make ends meet. “We shouldn’t be in this place,” Nicole Marquis, who owns three establishments in the city, told The Inquirer. “It’s utter chaos, and we’re now headed into the worst wave of business closures. We used all of our resources through summer.” So what to do? I know what. File for bankruptcy. Don’t laugh. It’s a viable option and one that many local restaurant owners should seriously consider. Why? Because “it’s a strategic financial option,” according to Michael Cibik, a Bankruptcy Board-certified attorney based in Philadelphia. In the past, filing for reorganization under the Chapter 11 bankruptcy code was an expensive, complex affair, especially for small firms. But just this year, that’s all changed. That’s because of the new Small Business Reorganization Act. The new law puts control solely in the hands of the small-business owner, and it significantly reduces paperwork, fees, and the time frame for filing and then emerging from a bankruptcy reorganization. It provides more asset protections, particularly around personal assets (as long as they weren’t previously pledged). And any small business with less than $7.5 million in outstanding debts (an amount temporarily increased from $2,725,625 thanks to the CARES Act from March) is eligible. Here’s how it works. Once an attorney is hired and a formal bankruptcy declaration has been made, a trustee is assigned and the clock starts running. A business has up to 90 days to come up with a plan. Under the law, all debts owed must be paid back in three to five years, and — very important — if an agreement isn’t reached with a creditor, a preestablished payback formula that includes the owner’s disposable income will prevail. Compared with the past, the paperwork, disclosure statements, and filing requirements have been significantly eased, which means lower legal fees for the business (although Cibik says legal fees can still be as much as $15,000 to $20,000). In the meantime, the business continues to operate as normal. Most personal assets aren’t in jeopardy, and even some debts — like a second mortgage used for purposes of paying for a business — can be included in the negotiations. Still, many restaurant owners I know may hesitate to take such drastic action. They’re concerned about what the news of a bankruptcy would do to their restaurant’s reputation, credit scores, and relationships with their suppliers. Is this a very big issue? Not according to Cibik. “Sure,” he says. “Once they file, it’ll make the news the first day or two. But then they’re still open and serving.” Credit scores will be impacted. But we’re in an unprecedented recession. What future lender won’t be impressed by the management skills of a restaurant owner who was able to navigate through these extraordinary economic times? As for suppliers, “they’ll threaten to cut restaurants off,” Cibik says. “But most likely they’ll put you on COD [cash on delivery] terms and keep doing business with you.” Some suppliers may be angry, but relationships can be repaired, particularly if by filing for Chapter 11, a restaurant can avoid going out of business altogether. “It’s not going to hurt your brand,” Cibik says. “You’re in possession of the restaurant, you’re operating. That’s the really big benefit.” One restaurant owner recently told me that bankruptcy is only the right move if you’re “tired or done with what you are doing.” I don’t agree. Going bankrupt isn’t admitting defeat. It’s a strategy to succeed. It gives the restaurant owner an important weapon: time. Vaccines are rolling out shortly, and tens of millions of people are expected to be vaccinated by the summer. Many economists predict that the economy will begin a stronger recovery by mid-2021. So we’re talking about taking whatever steps necessary to survive until then. And once things turn around — and they will turn around — I believe restaurants choosing this strategy will be positioned for greater success going forward. Will customers come back even if a restaurant filed Chapter 11? I know I would.

08 December, 2025

What Happens When You Finish Paying Off a Chapter 13 Bankruptcy?

Many Americans are struggling financially due to the coronavirus pandemic. An estimated 205 million people are at risk of their utilities being disconnected, and many more are in jeopardy of their vehicles being repossessed and their homes being foreclosed. A significant number of Americans have been laid off or experienced a reduction in their work hours, causing them not to be able to pay their bills on time. Recovering from the coronavirus shutdowns will take time, but Americans who are struggling do have options. One of those options is to file for bankruptcy. Filing for Chapter 13 bankruptcy is a viable option for helping you get back on your feet financially. What happens after you finish paying off a Chapter 13 bankruptcy? The Chapter 13 Bankruptcy Process When you file for a Chapter 13 Bankruptcy, the bankruptcy court will allow you to keep your assets in exchange for a promise to repay part of your debts. Unlike with a Chapter 7 bankruptcy, in which the debtor requests a complete discharge of his or her dad’s, in a chapter 13 bankruptcy, you will make an effort to repay your debts over time. While your chapter 13 bankruptcy is still in process, you will be required to submit monthly payments to the trustee assigned to your bankruptcy case. You will not be able to take on any more debt without the permission of the trustee. The fact that people in the process of a Chapter 13 bankruptcy cannot take on any more debt helps them tremendously. Once your payments are finished, you will start fresh without taking on any new deaths during the process. As you are nearing the end of the chapter 13 process, your trustee will complete an entire review of all of your payments and your chapter 13 case. Completing the Order Confirming Your Chapter 13 Case Once you have paid off all of your chapter 13 bankruptcy debts, you will go to the bankruptcy court for one last hearing — your discharge hearing. You have the option of directing your attorney to attend the hearing in your place. The bankruptcy judge will review all of your case details. He or she will verify that you have satisfied all of the payment requirements outlined in the original bankruptcy judgment. As long as none of your creditors object, the judge will then move to discharge your chapter 13 bankruptcy case. You should expect to receive the final paperwork for your bankruptcy within two to three weeks of your hearing. Make sure you keep all of the paperwork that arrives in your files. You may need to send a copy of the paperwork to any of your creditors who are still trying to collect debts that the bankruptcy court has forgiven. Once your bankruptcy has been discharged, creditors can no longer continue to pursue you for unpaid debts. If they do pursue you, you can report them for violating federal law. Your trustee will review your bankruptcy case to ensure that you have satisfied all of their requirements that were listed in your “Order Confirming the Chapter 13 Case.” If you are curious as to where to locate this order, you can contact the court or your attorney. They will be able to point you in the right direction and provide you with any materials you may need to finish out this last portion of your bankruptcy. After you filed the report with your bankruptcy trustee, the court presiding over your case will mail you a legal form titled “Certification of Eligibility for Chapter 13 Discharge.” You will need to sign this document and mail it back to the court. Be sure that you sign all of the signature areas and that you enter accurate and complete information. Next, you will need to make sure that you finish your second counseling course. You will need to sign the certification and hand-deliver it or mail it to the closest US bankruptcy court. After the clerk of the court receives your form, he or she will file the certificate. You should expect to receive your discharge of debts within 30 days. When you receive your discharge, you will know that your bankruptcy is officially over. The discharge is the conclusion of a Chapter 13 bankruptcy case. If you still have not completed your second financial counseling course, you will need to do so as soon as possible. You can either contact the same company you use for your first course or find another course that works for you. Regaining Control of Your Finances One of the most empowering parts of the bankruptcy process happens when debtors regain control of their own finances. During the bankruptcy process, you do not maintain complete control of your finances. For example, your trustee likely seizes your state and federal tax refund so you could use them to pay your debts. Once the court has legally discharged your chapter 13 bankruptcy, you will begin to receive your tax refunds yourself, and you can apply for new credit cards or other loans without getting permission from the bankruptcy court first. You must continue to pay any other outstanding debts that were not discharged during the bankruptcy process, including alimony, tax debts, student loans, child support, and court fines. Contact a Chapter 13 Bankruptcy Lawyer Today If you are considering a Chapter 13 bankruptcy in Philadelphia and looking forward to the day when your debts will be discharged, we can help. At the Law Offices of Cibik Law, we understand how difficult it is for our clients who cannot pay their bills due to the coronavirus pandemic. We work hard to represent our clients in Chapter 13, Chapter 7, and Chapter 11 bankruptcies so they can start fresh and embrace their financial future. If you would like to learn more about filing for bankruptcy, contact us today to schedule your initial consultation.

08 December, 2025

Can Filing For Bankruptcy Protection Save My Small Business?

Let’s answer the top-line question right out of the gate: yes, filing for bankruptcy protection can most certainly save your business. The benefits of the bankruptcy laws do not exist solely for big companies. In fact, they can apply with equal effectiveness to save your small business when it runs into financial difficulty. Here is how. A Quick Sketch of Business Bankruptcies Bankruptcy is a judicial process by which a debtor seeks legal protection from financial obligations to creditors. For businesses, a bankruptcy generally takes one of two forms, referred to by the chapter of the United States Bankruptcy Code that governs them: Chapter 7 business bankruptcies accomplish a partial repayment and (effectively) a cancellation of debts through the supervised liquidation of a business’s assets; Chapter 11 business bankruptcies accomplish the judicially-supervised reorganization of a business’s debts so that the business can continue to operate. People unfamiliar with bankruptcy law sometimes harbor the misconception that bankruptcy means the death of a business. In fact, the Bankruptcy Code exists principally to give individual and business debtors alike a “fresh start.” Far from killing a business, going through a Chapter 11 bankruptcy, in particular, accomplishes something much closer to a “rebirth.” The reorganized company emerges from bankruptcy free of crushing debt burdens, able to continue operating on terms that give it at least a reasonable shot at long-term success. The Chapter 11 Bankruptcy Process Seeking Chapter 11 bankruptcy protection as a small business begins with filing what is known as a “petition” in the United States Bankruptcy Court located in the jurisdiction where the business resides. That filing alone triggers one of the most powerful protections the law offers for a business: an “automatic stay” (or “freeze”) that prevents the business’s creditors from taking action to collect on debts. This freeze gives the business the time and breathing room it needs to reorganize its debts in a fair and reasonable manner, according to the process dictated by the Bankruptcy Code. In conjunction with filing its petition, the business must also file “schedules” that essentially disclose the details of its financial condition, and in particular, to whom it owes money and in what amounts. These are the business’s creditors, and they, too, have rights under the Bankruptcy Code. Specifically, they get to form a “committee” – if they so choose – that has a say in the terms on which the debtor can reorganize. Filing a bankruptcy petition also transforms a Chapter 11 business debtor, in a sense, into a special legal entity called a “debtor-in-possession.” The business continues to operate, but subject to special duties to its (now-“frozen”) creditors dictated by the Bankruptcy Code. Those duties limit the debtor’s ability to take some actions without permission, such as borrowing money or selling assets, and obligates the debtor to take others, such as preparing and filing monthly financial reports of its operations, assuming or rejecting “executory” contracts, and responding to claims by specific creditors. The ultimate aim of a Chapter 11 business bankruptcy is court and creditor approval (called “confirmation”) of a “plan of reorganization” that addresses the business’s obligations of each of its “classes” of financial stakeholders, including creditors and equity holders. The plan typically proposes to adjust terms and conditions of the business’s debts, management, and (sometimes) ownership in a manner that allows for the business to emerge from bankruptcy as a viable enterprise. A plan may, for example, propose to extend debt repayment dates, allocate certain business proceeds to the repayment of debts, or adjust equity ownership interests. For a court to “confirm” a plan of reorganization, at least one class of creditors with an “impaired” claim (that is, whose rights as creditors get affected under the proposed plan of reorganization) must accept the plan, as reflected in a vote of approval by holders of at least 1/2 of the number of allowed claims in that class, who also hold at least 2/3 of the amount of allowed claims in that class. Upon confirmation, the business “emerges” from Chapter 11 bankruptcy, no longer a debtor in possession, but a business with a “fresh start”, free of its old debts and subject instead to the terms of the confirmed plan. Small Business Chapter 11 Bankruptcies The Bankruptcy Code specifically addresses cases involving bankruptcies of small businesses. Under the Code, a small business debtor is one with total “non-contingent liquidated secured and unsecured debts” of $2,566,050 or less, which either has no creditor committee or for which the creditor committee is not active. Small businesses that qualify for this treatment must follow specific procedures, and submit to close supervision by a “trustee” appointed by the Bankruptcy Court, to demonstrate they have a solid business plan for reorganizing and that they have a realistic shot at confirming a plan of reorganization. In return, they get an exclusive 180-day period to propose that plan of reorganization. (Ordinary Chapter 11 debtors get only 120 days of “exclusivity” before other stakeholders can propose their own plans that are usually far less-favorable to the business than what its existing management proposes.) Legal Advice for Small Businesses That Need Bankruptcy Protection Small business owners know when they need help. It is one thing to operate on a shoestring. It is another to realize you cannot possibly support your current debt load and financial obligations to vendors and other “trade creditors” as things stand. Owners who reach that moment of realization should, immediately, seek the advice of an experienced business bankruptcy attorney. The steps small business owners take pre-bankruptcy can have a significant effect on the outcome of a Chapter 11 case. If you want your business to survive the bankruptcy process, which it absolutely can in most cases with the right planning and approach to a Chapter 11 filing, then get the legal advice you need as soon as possible. Contact an experienced, seasoned business bankruptcy practitioner who can begin plotting a course through the Bankruptcy Code for your business, so that it emerges free of its unsupportable financial burdens and viable for the long-term.

08 December, 2025

After Filing for Bankruptcy Can I Buy A House?

The question can be taken on several levels. To take it literally: Yes, you can buy a house if you pay all-cash so you don’t need a mortgage. Of course, that applies to very, very few individuals who declare bankruptcy under Chapter 7 (or sometimes Chapter 11) of the U.S Bankruptcy Code. On another level, the answer is: NO. You cannot be considered for any new loan when you are in the process of declaring bankruptcy. You must wait until your bankruptcy is “discharged,” which means that the court rules that the “debtor” no longer is responsible for certain debts and that creditors no longer can try to collect them. After that, you are legally permitted to seek a mortgage. Here we address what the question really means for the individual who has declared bankruptcy and been successful in having his or her debts discharged; Will you ever be able to get a mortgage with a bankruptcy on your credit record? A mortgage, after all, is the largest loan most individuals ever get in their lives. Some bankruptcy realities Start with the post-bankruptcy realities: Your credit rating takes a big hit. No question about it. There isn’t much that can go on your credit record more negative than bankruptcy. That bankruptcy will remain on your credit report for 10 years after which it must be erased. On a positive note, a successful declaration of bankruptcy usually leaves an individual in a much stronger and more promising financial position. All the years of monthly struggle to meet credit card and other payments, often taking more than half of monthly income, are over. How you use this new opportunity for building your financial future will determine, in the end, whether or not you regain your credit—including enough credit to qualify for a home mortgage. One thing is certain. You will have to be patient, exercise some discipline, and adopt some new tools for financial planning. Some necessary steps Here are some steps: Become friends with your credit report. Become familiar with your credit report and stay on top of it. Bankruptcies can introduce some confusion into your credit report. For example, be sure that debts that the court has discharged are not still listed on your credit report. Be sure some confusion of names has not introduced someone else’s credit information in your report (yes, it happens). Be sure that credit information about your former husband or wife is not still on your report because of former joint accounts. You have a right to a credit report for each of the “big three” credit agencies (TransUnion serviced the Central U.S., Experian). Here is a tip: get your free credit report from one of the agencies every four months to keep much closer track of your credit. Build up your credit step by step. How can you do this when you can’t get a credit card or loan? Two frequently recommended initial steps are to 1) get a secured credit card, one tied to your savings account so that if you miss a payment it is taken from your account, and 2) get an installment loan such as a car loan, which is “secured” by the seller’s right to reclaim the car. Pay your bills on time, every time. Nothing rebuilds your credit so effectively as paying all your bills on time. That new credit card or installment loan can turn into a negative for your credit if you are late with payments. Bankruptcy leaves you in a better position to do this because other debts have been discharged. Now, you have a chance to begin keeping an honest, consistent budget—the bedrock upon which all other financial planning stands. Before you make an expenditure or a commitment to a series of payments, you check your budget to be sure you can handle it. Here’s a tip: Be sure to consider not only immediate or monthly payments but larger annual payments such as taxes. You don’t want them to come along and bust your budget, introducing new financial stress. Now, you can save again. With your debts discharged, your paycheck is yours, again. An essential step in building toward a major purchase like a home is to save. By far the most effective strategy is to make weekly or monthly savings automatic by one of the many systems for transferred a percentage of your pay to savings. It is less important to make some big deposits than to make them regular. If letting some of your paycheck “go” to savings, rather than things you would like to buy, remind yourself that savings are simply the ability to buy bigger and even more enjoyable things later, like a new home. If you can save enough for a 20 percent down payment on a house, it is very persuasive to a bank. It speaks to your new and consistent financial management. You will definitely want to make those mortgage payments because if default on the mortgage your house is sold by the bank and any equity (such as that created by the down payment) goes first to pay the mortgage. Shop for both a home and the right mortgage When the day you can qualify for a mortgage arrives you will deserve a lot of “credit”—and not just financial. It is exciting to shop for a home, but you have learned financial planning and budgeting, so you also will shop for a mortgage. One issue may be the duration of the mortgage. The longer the repayment period (such as 30 years), the smaller the monthly payments but the more you pay, in the end, for your home. A fixed-rate mortgage protects you against rising interest rates; but if interest rates decline, you may have to refinance for the lower rate. The opposite scenario is a variable rate mortgage, with lower payment when interest rates go down—but rising monthly payments when interest rates go up. Begin the right way If you reach the day after your bankruptcy when you have rebuilt enough credit to get a mortgage, then the bankruptcy process will have succeeded for you. It all begins with the right outcome of your declaration under Chapter 7 and for that, you want highly experienced lawyers that specialize in individual bankruptcies. For 35 years, the trusted Philadelphia firm of Cibik Law, P.C., has provided bankruptcy legal services to enable more than 20,000 personal bankruptcies to be completed in a superior, cost-efficient, and personally respectful way. Thousands of clients in Philadelphia and surrounding areas have benefited from the work of bankruptcy attorney Michael A. Cibik, Esq., certified by the American Bankruptcy Certification Board. That provides you with an objective standard when making your choice of counsel on any financial and bankruptcy matters. Be sure to check back here regularly for information, insights, and update on how the often-stressful, life-altering, but potentially transformative challenge of your bankruptcy can be handled by a law firm that specializes in individual bankruptcies.

08 December, 2025

What is a Sheriff’s Sale? What You Need to Know in Pennsylvania

A sheriff’s sale can occur when a homeowner is unable to make good on their mortgage payments. It may seem like just another type of repossession sale, but there are a few factors that can cause some surprising turns. Understanding the ins-and-outs of how this type of sale works will ensure you make an educated, and hopefully lucrative, sale or purchase. What is a Sheriff’s Sale? When local law enforcement holds an auction of repossessed properties, it is called a sheriff’s sale. They can also sell properties to satisfy liens on the property from nonpayment of taxes. The money accrued from the sale is given to banks, mortgage lenders, tax collectors, and any entity that lost funds on the property. When Does a Sheriff’s Sale Happen? No properties can be auctioned at a sheriff’s sale until the foreclosure process has reached the end and the homeowners are no longer able to make mortgage payments. The mortgage lender is then able to submit the property to a sheriff’s sale for public auction to recoup all unpaid debt. Most people are familiar with foreclosure sheriff’s sales, but unpaid utilities and property taxes can also result in a sheriff’s sale. This process does not happen overnight. Several notices will arrive as more payments are missed. Lenders are required to send the Act 91 Notice at least 30 days before filing for foreclosure. It informs delinquent homeowners of their rights and responsibilities as well as routes for possible avoidance of foreclosure. Where are Sheriff’s Sales Held? Sheriff’s sales are most often conducted at a county level. They are usually held in the sheriff’s office, a community building, or courthouse. Larger sales are outdoors, commonly on the steps or front lawn of the county courthouse. The location of a sheriff’s sale is publicized for 30 days before the sale. What Can be Auctioned at a Sheriff’s Sale? Everything sold at a sheriff’s auction has been foreclosed upon. There are several types of properties that could be available including: Single-family homes – one to three-bedroom homes. Multi-family homes – duplexes, triplexes, and townhomes Apartments – one or more buildings containing several home units. Mixed-use homes – buildings with a home unit and a commercial or industrial space. Retail establishments – buildings zoned for business ventures. Industrial – buildings intended to house factory or assembly work. Vacation homes – homes generally used or rented seasonally. Bare land plots – plots of land without structures built on them. Why Do People Go to Sheriff’s Sales? Since the properties at a sheriff’s sale are all foreclosed or have liens against them, they tend to sell for much less than they are valued. Investors go to these sales to find lucrative investment deals. Other buyers are simply looking for a new home at a good deal. These sales don’t always have a lot of bidders, however, because the properties are sold “as-is”, which often means full of furniture and belongings and in a state of disrepair. How Does a Sheriff’s Sale Work? Once a borrower is unable to catch up on their mortgage payments, the property can go to auction at a sheriff’s sale. The auction is announced in newspapers and online forums. They are open to all members of the public, including lenders intending to buy back their own properties. Properties are auctioned off to the highest bidder who must make a down payment and agree to the terms to pay the rest of the money due on the property. What Happens After a Sheriff’s Sale? The sheriff’s office is required to report a schedule of distribution within 30 days of the date of sale. The following 10 days are reserved to hear any objections. A sheriff’s sale can be challenged on grounds of lack of authority and fraud. Homeowners who lose their homes due to unpaid taxes have the right of redemption in Pennsylvania. They may regain ownership of their property if they pay all taxes in full, repay the winning bidder, and reimburse all costs spent on repairs within nine months. This right is surrendered if the property was vacated less than 90 days from the sale date and it can only be used on delinquent tax sales and not foreclosures from mortgage nonpayment. Homeowners can also challenge the sale before the deed is transferred to the new owner by filing a motion to set aside the sale. The deed is generally transferred within 21 days. At that point, the new owners can ask for a court order to remove anyone still residing in the property. Can You Stop a Sheriff’s Sale? In Pennsylvania, there are three ways to possibly stop a sheriff’s sale: Tax Sale Redemption Short Sale Bankruptcy If the property was used as a residence in the last 90 days before the sale, homeowners can pay all due taxes to receive their home back in a tax redemption sale. They must do so within 90 days of the sale. They must also pay all taxes, interest, and expenses. Since homes rarely sell for more than a small percentage of their actual value at a sheriff’s sale, lenders will sometimes be willing to consider a short sale if the buyers can negotiate a profitable deal. Lenders can unlist the house from the auction at any time and accept another offer. Filing bankruptcy effectively stops all court collections actions, including a sheriff’s sale. It also buys time to consider more options, instead of reacting to creditor’s demands. A Chapter 13 bankruptcy can also keep homeowners in their homes during the process. Something to keep in mind is that the price obtained at the auction may not be enough to cover everything the homeowner owes. In that case, the lender may take out further action to recoup their expenses in the form of a deficiency judgment against the owners of the home. The prospect of facing a sheriff’s sale is a scary thing. Unfortunately, there are strict deadlines. If you are facing a sheriff’s sale, contact us as soon as possible to see how we can help before the deadlines close in. Can a Sheriff Sale be reversed? Probably not. In Pennsylvania, a homeowner does not have right of redemption once a home is sold at a mortgage foreclosure sale. In some very rare cases, a sheriff sale can be reversed if it was sold at a tax-debt sale. What happens if no one bids on a Sheriff Sale? If a home doesn’t sell at a Sheriff’s Sale, it become real-estate owned (REO) property. The home ends up in the possession of banks or other lenders until they can sell or auction off the property. Can you get a loan for a Sheriff Sale? Yes, in theory you can get a loan to buy a home at a Sheriff sale. Typically, you would get an FHA loan to purchase a foreclosed home, but you would need this loan to be approved at the time of the auction. If your home was foreclosed upon, it will be difficult to impossible to get a loan to try to win it back at the auction. Can anyone attend a Sheriff Sale? Yes, Sheriff Sales are open to the public. They typically take place in county courthouses. Who gets the money from a Sheriff Sale? The proceeds from properties sold at Sheriff Sales go toward the mortgage lenders, tax collectors, or banks that were not paid by the previous owner. This is the solution to repay those lenders whose borrowers fell into default. How much do foreclosed homes sell for at auction? The amount that a house sells for at a Sheriff Sale depends on various factors, including the appraised value, market conditions, and availability of interested buyers or investors. More often than not, foreclosed homes sell well below the appraised value at foreclosure auctions, making it a good opportunity to find a cheap investment property. If your home has been foreclosed upon and is headed to a Sheriff Sale, there is still a chance for you to get it back under redemption rights. Repossessing your home after foreclosure is difficult, however, so contact our attorneys at Cibik Law, P.C. to learn more about the laws around foreclosure and your options. Come in for a free consultation to discuss your debt, finances, and opportunities to keep your home.

08 December, 2025

Famous People Who Have Filed for Bankruptcy

Making financial commitments and incurring debts is a normal part of life for any ambitious person. These debts and financial obligations can become a burden for even the most successful people. When the burden becomes too heavy, smart people seek relief by filing for bankruptcy protection. Indeed, several famous people ranging from entertainers to politicians, have filed for bankruptcy to get out of tricky financial situations. Toni Braxton Toni Braxton was a highly prolific and successful R&B star of the 1990s, but several chart-topping hits and Grammy Awards did not save her from financial difficulties. Apparently, she did not make much from her first music releases and was always in debt. Compulsive spending and career-related financial problems forced her to seek bankruptcy protection in 1998. She continued to record hit songs, but poor returns from the music made her declare bankruptcy again. It was only in 2013 that she cleared her bankruptcy problems. Kim Basinger The Oscar-winning actress ran into a legal dispute when she breached a commitment to perform in the movie Boxing Helena. The courts ordered her to pay Main Line Pictures $8.1 million in damages. This financial setback forced her to file for bankruptcy. However, the filing was not enough as some of her assets were liquidated to generate funds. Nevertheless, her acting career continued to thrive with starring roles in films such as The Nice Guys and Fifty Shades Darker. She eventually settled the dispute with the production company out of court. Donald Trump While Trump has never declared bankruptcy as an individual, several of his business interests have filed bankruptcy protection. Trump’s hotel and casino investments filed for bankruptcy protection several times between 1990 and 2009. He settled these cases, by relinquishing some percentage of the ownership or surrendering management responsibilities to the creditors. Trump views filing bankruptcies as a strategic business move to protect his investments. Mark Twain Mark Twain left an indelible mark on the American literary landscape, but even he was not immune to financial problems. His financial woes resulted from a wrong investment decision related to his publishing business. Twain’s publishing business also endured cash flow problems. He declared personal bankruptcy in 1893 but soon recovered after writing and publishing several bestsellers. Larry King Long before Larry King became the king of talk show, he had faced criminal charges that led to financial difficulties. His troubles started with a former business partner accused him of stealing $5,000. Even though the charges were eventually dropped, his career suffered as he was out of work for over four years. This chain of events forced him to declare bankruptcy in 1978 to protect himself from creditors who were claiming more than $300,000. He reignited his career with the Larry King Show on radio before switching to cable TV and hosting Larry King Live, which ran for over 20 years. 50 Cent Forbes once ranked 50 Cent among the five top-earning hip-hop artists with a net worth of over $150 million. However, poor investment decisions and a big lawsuit that set him back $5 million forced him to file Chapter 11 bankruptcy in 2015. He estimated his debts to be in the range of $10 to $50 million while his assets were around $20 million. 50 Cent managed to settle the debt problems in 2016 by committing to pay $23 million to his creditors over five years. Henry Ford Henry Ford might be the most famous industrialist of the 20th century, but it was not always smooth riding for him. Ford’s troubles began when his Detroit Automobile Company failed to make enough car sales to sustain operations. He filed for bankruptcy in 1899. However, he was to bounce back with Ford Motor Company, which became one of the most successful automobile manufacturers globally. Teresa Giudice The reality TV star was not just inventing financial problems for TV as seemed be in financial trouble in real life. She first declared bankruptcy in 2009, together with her husband. This was only the beginning of her legal problems. The creditors claimed that they had not declared all their assets leading to a charge of bankruptcy fraud. The couple was convicted of fraud and served time. Giudice cleared her bankruptcy fraud problems in 2016 but is still paying her back taxes. Marvin Gaye The Prince of Soul was electric on stage, but even his musical brilliance could not save him from financial troubles. His financial problems emanated from unpaid alimony costs amounting to $600,000. These debts coupled with low performance income forced him to seek bankruptcy protection in 1976. However, his award-winning hit, Sexual Healing, topped the billboard and went a long way into solving his financial problems. Meat Loaf Meat Loaf’s financial troubles resulted from disputes with producer and business partner Jim Steinman. The pair had so many disagreements that at one time, Meat Loaf was the subject of 45 lawsuits claiming over $80 million in damages. He decided to file Chapter 11 bankruptcy protection to stop the record label from making frivolous suits. They eventually resolved the problem in the early 1990s. Meat Loaf later relaunched his music career with a highly successful album. Isaac Hayes Hayes’ had trouble with a bank that advanced loans to his production house Stax Records. The bank claimed over $6 million, forcing him to seek bankruptcy protection in 1976. However, he still lost personal property and rights to all future performances and royalties. Hayes later reinvented himself by being the voice of a character in South Park, which was highly successful on Comedy Central. The show has been on TV since 1997 and has been nominated for over 15 Emmy Awards. Need a bankruptcy lawyer? Anyone can experience financial troubles that need bankruptcy protection. It helps to work with a reliable partner who is well versed in bankruptcy law. Cibik Law, P.C. are bankruptcy lawyers with over 40 years’ experience of serving Philadelphia clients. Our bankruptcy attorneys counsel clients on legal protections for different types of personal and business financial problems.

08 December, 2025

What is the Small Business Reorganization Act? (SBRA)

For years, small business debtors struggled to reorganize effectively after filing for Chapter 11 Bankruptcy. However, the signing into law of the Small Business Reorganization Act of 2019 (SBRA) aims to address some of these issues. SBRA (aka new Chapter 11v) will strike a balance between chapters 7 and 11 bankruptcies for small-business debtors. As such, it will make small business bankruptcy processes faster and less expensive. Apart from lowering the cost of filing for Chapter 11v bankruptcy, the act also streamlines the reorganization plan confirmation process. As a result, small businesses can survive bankruptcy and retain operational control. What is the Small Business Reorganization Act (SBRA)? Legal commentators had long lamented the high costs and complexities of chapter 11 bankruptcy and the toll it took on small businesses’ ability to reorganize successfully. In response, Congress legislated and passed the Bankruptcy Code amendments called the Small Business Reorganization Act (SBRA). President Donald Trump signed SBRA into law on August 23, 2019 and was enacted on February 19, 2020. The Difference between Chapter 7 and new Chapter 11v Before SBRA, struggling businesses that considered bankruptcy faced two options: Chapter 11 or Chapter 7. Chapter 7 Upon filing, the court creates a bankruptcy estate comprised of a debtor’s nonexempt property. The U.S. Trustee then appoints a trustee and tasks him or her with liquidating the assets of the debtor (bankruptcy estate) and distribute the proceeds to creditors. It’s not an option for a business that hopes to survive bankruptcy and retain operational control over its affairs. Chapter 11 Under chapter 11, a debtor retains control over his or her business operations and restructures all debts through a court-approved plan. However, the operational control that the debtor maintains is contingent on increased oversight from the U.S. Trustee and the bankruptcy court. The debtor’s plan to repay debts is subject to the bankruptcy court’s stringent requirements. What’s more, the court must confirm (approve) everything before allowing the debtor to exit bankruptcy. Throughout the bankruptcy period, the debtor must obtain the court’s approval of non-ordinary business transactions. They must also comply with all the monthly reporting requirements of the U.S. Trustee. A plan of reorganization had to be voted on by the creditors after filing a comprehensive disclosure statement for reorganization. As a result, many small businesses could not afford chapter 11 costs, and they found the requirements challenging to keep. Why the Need for SBRA? The new Chapter 11v SBRA strikes a balance between chapter 11 and chapter 7. Under the Chapter 11v some debtors could retain control over their daily business operations while reorganizing. Fortunately, they won’t be subject to the costly requirements in regular chapter 11. In short, many of the amendments of the SBRA will streamline the plan confirmation processes and potentially reduce their total costs. Provisions of the Small Business Reorganization Act (SBRA) The new Chapter 11v SBRA contains several key provisions intended to simplify and streamline the small business reorganization process and reduce costs. They include the following: Appointment of a Trustee The U.S. Trustee will appoint a trustee to each small-business debtor case whose functions and duties are similar to those of a chapter 13 trustee. They will also help ensure the reorganization process stays on track. While the small business owner will have authority over the daily operations, the trustee will perform specific oversight functions such as payments administration under a confirmed plan. No Creditor Committees It further provides that there will not be an appointment of a committee of creditors unless the bankruptcy court orders one for cause. It will decrease the costs associated with the regular chapter 11 since, after the appointment of a creditor committee, it can decide to hire its professionals at the expense of the debtor. No Disclosure Statement SBRA does not require disclosure statements. However, the debtor’s plan must include information generally found in a disclosure statement, such as a liquidation analysis, summary of historical operations, and projections that demonstrate an ability to make all payments under the proposed plan. No Potential Competing Plans The SBRA permits only debtors to file plans of reorganization. Thus, the debtor reserves the exclusive right to file their plan within 90 days from the bankruptcy petition date, unless extended for cause. No Absolute Priority Debtors need not observe the absolute priority rule that generally prohibits business owners from retaining equity unless creditors are paid in full. What’s more, the confirmation of plans is possible despite the objection of one or more impaired creditor classes. To obtain such conformation through a “cramdown,” the debtor need only demonstrate that their plan is fair, equitable, doesn’t unfairly discriminate, and it provides for the contribution of all the projected disposable income of the debtor. Discharge Provisions After the confirmation of a debtor’s plan with the consent of the affected creditors, they will receive a discharge of their debts upon plan confirmation. Deferral of Administrative Expense Payments Debtors can differ administrative expense payments over the life of the reorganization plan for up to five years. These expenses are typically due on the effective date of the reorganization plan. Residential Mortgage Modification The SBRA authorizes small business debtors to modify residential real estate mortgages to the extent that loan proceeds go into the business. Such relief was previously unavailable. The Bottom Line For years, the benefits of the regular Chapter 11 reorganization were elusive to small business debtors due to their size, their limited financial resources, as well as the requirements and expense of filing for bankruptcy. The Small Business Reorganization Act (SBRA) attempts to remedy a lot of these challenges to ensure successful small business reorganizations. The Chapter 11v SBRA’s elimination of potential competing plans and disclosure statements will prevent contested hearings that only prolong the reorganization process while increasing costs for debtors. It also relaxes the requirements to confirm plans over creditors’ objections provided they are fair, equitable, and don’t discriminate unfairly. Ultimately, by lowering reorganization costs and simplifying plan confirmation processes, the Chapter 11v SBRA aims to provide a suitable option for small businesses that wish to reorganize. When you feel like your small business debts have taken control of your life, Philadelphia bankruptcy attorneys Cibik Law, P.C., can help you find the right bankruptcy option. Contact us or call us today at (215) 735-1060 and start your journey to financial freedom.

08 December, 2025

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