Cunningham, Chernicoff & Warshawsky, P.C.

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As of May 29, 2020, Dauphin County, where our office is located, has moved from Red to Yellow status. Our office will re-open on June 1, 2020. Until further notice, Stay Safe Guidelines will be followed, including safe social distancing (6 feet), cleaning after each client and the wearing of masks by employees and clients at all times while in our office. People who are ill and those without masks will not be permitted entry into our office.

What are the advantages of Chapter 7 bankruptcy?

When you face overwhelming debts, you probably wonder if you’ll ever pay it off. For those with thousands and thousands in medical debt, or credit card debt, the stress of mounting debt can be overwhelming. That’s one reason why some decide to file for bankruptcy, even though it will affect their credit.

Personal bankruptcy is available in two types: Chapter 7 and Chapter 13. Chapter 7 is the most common, with 68% of those filing bankruptcy between 2005 and 2017 seeking Chapter 7 bankruptcy relief.

For those seeking a Chapter 7 bankruptcy, it has many advantages. These include the following:

  • Chapter 7 will wipe away many of your debts. You can have thousands and thousands of debts discharged: medical debts, credit card debts and more.
  • Chapter 7 will stop creditors from harassing you. When you file bankruptcy, creditors are no longer seek payments from you. You can free yourself of the stress of getting collection calls and mail.
  • Chapter 7 is a fast process. Often, Chapter 7 bankruptcies are finalized within two to three months of filing.

Qualifying for Chapter 7 and property exemptions

To qualify for Chapter 7 bankruptcy, you must meet a means test. In the means test, your income can’t exceed the median income for Pennsylvania. If you are married, you may want to seek bankruptcy jointly. You can keep more property this way.

In Pennsylvania, if a married couple files Chapter 7 bankruptcy jointly, they can keep $600 worth of property. Federal law allows them to keep $34,850 in property they use as a residence and $5,550 worth of vehicles.

Chapter 7 bankruptcy filers in Pennsylvania also can keep any disability payments, workers’ comp payments, pension funds and retirement funds.

How long will Chapter 7 affect your credit?

Chapter 7 bankruptcy will affect your credit score for 10 years. Chapter 13 bankruptcy only stays on your credit report for seven years, but includes you paying off debts through a payment plan.

To decide which type of bankruptcy is right for you, consult an experienced bankruptcy attorney. An attorney can help you prepare your application so you can get a fresh start as soon as possible.