Chapter 7 Bankruptcy in Philadelphia

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What Is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is commonly known as liquidation bankruptcy. This type of bankruptcy is best for those who simply cannot repay their debts. For those struggling with debt, Cibik & Cataldo, P.C. can assist you in a Chapter 7 bankruptcy filing to reset your finances.

When filing Chapter 7 bankruptcy, the court places a stay on your debts, stopping creditors from collecting and halting foreclosure, repossession of property, and eviction proceedings. The court then assigns a bankruptcy trustee, who will oversee your assets and finances. The bankruptcy trustee helps to sell your nonexempt property and pay back debts on your behalf. The trustee also arranges a creditor meeting to answer questions about your declaration of bankruptcy and to sort out repayment of debts. 

Most consumer and small business bankruptcies file either Chapter 7 or Chapter 13 bankruptcy. The main difference between these two types of bankruptcy is that in Chapter 7, your debts are liquidated, so property, business and other belongings are subject to forfeiture. The proceeds from the liquidation of assets is used to pay off some debts, but not all outstanding debts have to be repaid under Chapter 7. Under Chapter 13, a payment plan for all debts is put in place, but your property is not forfeited or liquidated. 

Chapter 7 bankruptcy wipes out debts including credit card debt, medical debt, unsecured personal loans, and certain tax debts. Some debts, like child support, alimony, student debt, and certain tax debt is not covered by a Chapter 7 filing.

How Do I Know if Declaring Chapter 7 Bankruptcy is Right for Me?

Chapter 7 bankruptcy is a necessity for those who cannot pay off their debts. If your debt is high and your income is very low, Chapter 7 is probably the right choice for your situation. If you don’t have the means to work towards debt repayment on top of your living expenses, it may be time to consider declaring Chapter 7 bankruptcy.

Filing for bankruptcy is a daunting task. At Cibik & Cataldo, P.C. our attorneys understand the stress that clients face when dealing with mounting debts and potential bankruptcy. We examine your financial decision, give you the facts and let you take your time to determine what the next step should be. When you decide, we’ll be ready to help you move forward, getting you on the path to debt relief as quickly as possible.

Bankruptcy attorneys Michael A. Cibik, Esq. and Michael A. Cataldo, Esq. Have vast experience with Chapter 7 bankruptcy proceedings. If you’re experiencing overwhelming debt, contact our law firm today for a free consultation. Our dedicated attorneys at Cibik & Cataldo, P.C. can walk you through the process to ensure the best possible outcome.

Is Chapter 7 bankruptcy for businesses or individuals?

Both businesses and individuals can declare Chapter 7 bankruptcy.

Businesses are given a Chapter 7 trustee who is tasked with evaluating its financial situation and then selling off the assets of the business to repay the creditors who are owed.

Once the business is shut down, employees are either let go or entire departments are sold to another company. The corporation does not receive a chapter 7 bankruptcy discharge, but is instead completely dissolved.

Individuals who file for Chapter 7 bankruptcy are allowed to keep certain exempt property, but only a court can determine what belongings that might include. Similar to how a business is treated, the individual’s property is sold off to repay creditors.

Does Chapter 7 wipe out all debt? 

Chapter 7 bankruptcy wipes out most secured debt, including credit card debt, medical debt, and unsecured personal loans. Even if the sale of your assets does not cover all of this debt, it is fully discharged as a result of Chapter 7 bankruptcy. 

Not all debt is covered by Chapter 7, however. Student loans, alimony, child support, and other governmental debts such as court fines and penalties are not discharged under Chapter 7. Other types of debt that are not covered include some tax debts, homeowners association fees, and certain personal injury debts, such as those owed due to intoxicated driving. 

What can you keep when filing Chapter 7? 

When you file Chapter 7 bankruptcy, some property is subject to forfeiture. Any nonexempt assets, property with a lien on it, or property offered as collateral may be sold to repay debts. 

Some property and assets are exempt from repossession in Chapter 7, but exemptions and limits vary state by state. There are also federal bankruptcy exemptions, and in 17 states including Pennsylvania, you can choose the federal exemption system if it is more beneficial in your specific situation. 

Research the bankruptcy exemptions in your state to learn what you can keep when filing Chapter 7 bankruptcy, or contact our team at Cibik & Cataldo, P.C. to discuss your debt relief options. 

Navigating the waters of Chapter 7 bankruptcy can be difficult without a guide. When you enter the Philadelphia offices of Cibik & Cataldo, P.C., you can expect to leave with a better understanding of Chapter 7 bankruptcy and what’s entailed in the process of declaring.

For 35 years, Cibik & Cataldo, P.C. has provided debt relief to thousands of businesses and individuals in need of resolving debt around Philadelphia County, Montgomery County, Delaware County, Bucks County and Chester County. Whether dealing with debt consolidation, relief, foreclosure or car repossession, our lawyers help provide a way out.

To learn more about what Cibik & Cataldo, P.C, can provide to those considering filing for Chapter 7 bankruptcy, contact us today.

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Cibik & Cataldo: Philadelphia Bankruptcy Lawyers