Chapter 7 Bankruptcy vs. Chapter 13: Pittsburgh’s Expert Breakdown

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If you’re like most of us, you’ve heard about bankruptcy and maybe even known someone who had to file…perhaps even you. But how much do you know about the process? Hopefully, you know nothing. But if you are thinking about bankruptcy, whether it be Chapter 7 or Chapter 13, something has gotten you into this situation, and this is when you need The Debt Doctors.

Bankruptcy – what brings a person to this point? Understanding is the first step in making an informed decision. 

Surely if you work hard, watch your spending, and live a careful life, it could never happen to you, right? But sometimes life happens, and the bad things – and sometimes bad choices – create a situation where you have nothing left.  In many cases, financial distress is temporary and it’s easier to overcome with the right advice. Our goal is to help you tackle your financial issues immediately and work toward a healthy financial situation.

Why do people get into situations that use up all their assets and leave them with nothing but debt? The circumstances vary from person to person, but here are some main reasons.

  • Loss of income. Maybe your employer downsized and you were laid off. Was it your fault? Did you forget to show up for work? Were you let go? Whatever the reason, income is income, and when you no longer have it, you can go from having a paycheck to a pink slip with little or no warning.
  • Medical Bills. U.S. healthcare costs are the highest in the world, with an average of over $12,000 per year per person. ( Was it your fault that your health insurance (if you even have insurance!) didn’t cover you?
  • Mortgage burden. Did that fantastic deal on your home turn into a millstone around your neck?
  • Living beyond one’s means. This one sounds like your fault, but is it? Inflation and increasing costs of living can mean that almost any purchase is unaffordable.  
  • Helping loved ones financially by lending them money. Now, how bad can this be? After all, you’ve got it, and they need it. How can you say no? 
  • You had a great business idea, but unfortunately, it didn’t work out. Now you’re cash-strapped and laden with debt. We can help you do something about it to move on from the business or restructure your debt and give you a second chance like Abe Lincoln, Milton Hershey, Walt Disney and Henry Ford.  

What is Bankruptcy, and How Do I Know Which Chapter Is Right for Me? 


The formal definition of bankruptcy is that it’s a legal proceeding that begins when you cannot pay your outstanding debts. The right to declare bankruptcy is so important that it’s actually in Article I, Section 8, Clause 4 of the U.S. Constitution. Since it’s governed by federal law, bankruptcy is pursued in federal court. You’ll need an attorney to help you with the process.

If you’re filing for bankruptcy, you’re a “debtor.” The people or businesses to whom you owe money are “creditors.” Depending on the type of bankruptcy you choose to file, you may:

  • be able to get all or most of your bills wiped out
  • be able to keep most or all of your property
  • gain extra time to pay your bills

Most individuals have access to two types of bankruptcy options: Chapter 7 and Chapter 13. Knowing which one to use is essential for your future. Note also that both Chapter 7 and Chapter 13 bankruptcy offer significant protection in the form of an automatic stay. When you file, the stay stops creditors from taking legal action and stops any current proceedings.  

Chapter 7 Bankruptcy

Filing Chapter 7 lets you wipe out most of your “unsecured” debt, which does not have collateral backing. 

  • Unsecured debt is from credit cards, medical bills, utility bills, or court judgments.  
  • Secured debt refers to loans for real estate or vehicles. The creditor can take back the collateral if you don’t pay your bills. Unless the property is exempt, you’re giving up your property to pay your debts.  

As a debtor, you have the right to retain any property legally considered exempt from the reach of creditors. You can opt to claim your exemptions either under Pennsylvania law or federal law.

Your attorney can help you decide whether you should use the federal or Pennsylvania list of exemptions. 

In Pennsylvania, you can use either the federal or state exemptions. The federal exemptions allow you to keep certain amounts of equity in your home, car, and household goods up to a designated amount. Tools, books, and items needed for your job may also be kept, along with specific amounts of jewelry and property. You may also receive benefits such as Social Security, assistance, unemployment, and pensions. Under the state exemptions, you can keep anything designated as marital property.

When a couple files their taxes jointly, the federal exemptions they receive are doubled. .

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is used by people who fail to qualify for Chapter 7 due to income, want to try to keep their home from foreclosure, restructure tax debts, and/or restructure student loans. The payment term is usually three to five years. The most important thing about filing Chapter 13 is that it can allow you to keep property, like your home, and restructure debts to make your payments more affordable. .  

Will Bankruptcy Affect My Credit Rating?

Yes, it will. A bankruptcy record is visible on your credit report for ten years. However; most people rebuild their credit within 2-4 years if they utilize credit wisely. Part of our service is providing you strategies to help you do that. 

Counting Sheep or Losing Sleep?

Filing for bankruptcy can be embarrassing, overwhelming, and can cause sleepless nights and stressful days. Call us today at The Debt Doctors. There’s no judgment here, just someone who understands your situation and can help guide you through financial distress so you can have a better financial future.  


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