Tag Archive: bankruptcy law

  1. Which Chapter of Bankruptcy Is Best for You?

    2 Comments

    Find the Right Chapter for You

    Considering filing for bankruptcy? You are most likely going to file a Chapter 7 or Chapter 13. But how do you know which bankruptcy option is best for you and your situation? The Debt Doctors are here to explain the major differences between Chapter 7 and Chapter 13 and help you decipher which case would be most appropriate.

    Types of Bankruptcy for PA Residents

    There are several types of bankruptcy, but only two are common for individual debtors. Chapter 7, which is a liquidation process. And Chapter 13, which involves restructuring debt into a long-term plan

    Chapter 7 Bankruptcy in PA

    In a Chapter 7 bankruptcy, you essentially wipe out your debts and get a fresh start. Chapter 7 is a liquidation where the trustee collects all the debtor’s assets and sells any that are not exempt, (click here to see PA Exemptions.) The trustee sells the assets and pays the debtor any amount that is exempt. Then, the net proceeds of the liquidation are distributed amongst your creditors.

    However, certain debts cannot be discharged in a Chapter 7 bankruptcy such as alimony, child support, fraudulent debts, certain taxes, etc. You can read more on PA’s Non-Dischargeable Debts here.

    In many Chapter 7 cases, the debtor has a large amount of credit card debt, other unsecured bills, and very few assets. In the vast majority of these cases, Chapter 7 bankruptcy can eliminate these debts.

    Chapter 13 Bankruptcy in PA

    Under a Chapter 13 bankruptcy, the debtor proposes a 3-5 year repayment plan. This plan goes to the creditors that are offering to pay off all or part of the debts from the debtors future income. Chapter 13 can be used to:

    • prevent a home foreclosure
    • make up for missed car or mortgage payments
    • pay back taxes
    • stop interest from accruing on your tax debt
    • keep valuable, non-exempt property, and more.

    As long as you stick to the terms of your repayment agreement, all your remaining dischargeable debt will be released at the end of the plan.

    Several factors go into the amount that is to be repaid, like the debtor’s disposable income. This is usually determined as part of the Pennsylvania Means Test. In addition, the total amount paid to creditors in the Chapter 13 plan must also be as much as creditors would receive if the debtor filed a Chapter 7 bankruptcy instead.

    To file a Chapter 13 bankruptcy, you must have “regular source of income” and some disposable income to apply towards your payment plan.

    Chapter 13 bankruptcy is generally used by debtors who want to keep secured assets like a home or car. When they have more equity in those secured assets, they can protect them with PA’s bankruptcy exemptions.

    Which Chapter is the Right Fit for You?

    Understanding the ins and outs of filing for bankruptcy can help you decide if it’s the right path for you. Chapter 13 bankruptcy is a reorganization and restructuring of debt. Whereas, Chapter 7 bankruptcy is a liquidation. If you are unsure which chapter is best for you and your situation, contact us for a free consultation. Making the right decision now can enable future financial success and eliminate sleepless nights.

  2. Tax Refunds and Chapter 7 Bankruptcy

    Leave a Comment

    Can I Keep My Tax Refund in Chapter 7 Bankruptcy?

    With some simple planning, you can either keep or use your tax refund to rid your debt by filing Chapter 7 bankruptcy.

    If you’re expecting to receive or have already received a tax refund but are considering filing for Chapter 7 bankruptcy, you probably want to know if you can keep your refund. The answer is yes!

    A tax refund is part of your bankruptcy estate

    When a debtor files for Chapter 7 bankruptcy, all their assets become part of the bankruptcy estate. In order to protect these assets, we need to claim an exemption or use that assets prior to filing.

    In Pennsylvania, we utilize the Federal Exemptions, which allows for an $11,850 wildcard exemption. What does that mean? As long as your refund is less than that amount you can keep it. If it’s more, we can plan to utilize the refund to retain the value it provides.

    Conclusion 

    If you are thinking of using your tax refund to pay off some of your debts, give the Debt Doctors a call. We will be able to see if we can protect your tax refund and eliminate all of your debt with a Chapter 7 bankruptcy. Any firm can file your bankruptcy paperwork, but we believe our job doesn’t end there. A lot of our work focuses on counseling you through the stress and uncertainty that goes along with being in debt. If you’d rather inquire online, click here.

  3. Unpaid Student Loan Bills Can Cost You Your Job

    1 Comment

    A recent New York Times article is stirring up a frenzy.

    In records obtained by The New York Times, government agencies in 19 states are permitted to seize state-issued professional licenses from residents that default on their student loans. Meaning nurses, firemen, teachers, lawyers, etc. are at risk of losing their professional licenses should they default on their student debts.

    The full article can be read here: NY Times Student Loans Licenses

    Luckily, Pennsylvania is not one of those 19 states. However, should you find yourself in financial distress, The Debt Doctors at QuatriniRafferty can play an important role in helping you decide what is the best financial plan for you. To receive the guidance you need for a brighter financial future, you can schedule a free consultation today.

    Advice from The Debt Doctors at QuatriniRafferty on student loan debt:

    If you are facing debt as a result of student loans, here are some tips and best practices from The Debt Doctors:

    1. Be sure to utilize all of the programs available including income based repayment, forbearance and deferment.
    2. If you are a parent, think twice about co-signing on student loans. In a lot of cases, a parent will co-sign for his/her child, but can’t afford it. It’s important to remember it’s your child’s education and you should explore all options available so they can finance this education themselves.
    3. Parents should also avoid taking money out of their retirements to pay for their child’s education. There are a lot of options available to fund education but very few to fund retirement.
    4. Avoid using a home equity loan to fund college. If you lose income or have any other financial distress it could make it difficult to keep your home. You don’t need to put your home at risk when there are many other options to fund education.
    5. If you have a student loan garnishment or a student loan company has begun any type of legal proceeding, contact The Debt Doctors at QuatriniRafferty. In many cases our attorneys can use a Chapter 13 bankruptcy filing to stop these negative actions and force the student loan company to defer your loans or accept an income based repayment.
    6. In general, student loan interest rates are some of the lowest. Don’t be in a hurry to pay them off. Instead, use your resources to build regular and retirement savings before you write a big check to your student loan servicer.

    What do you think? Comment below or share your thoughts on our Facebook!

  4. Student Loans and Credit Cards

    Leave a Comment

    Is It Possible To Manage Both Credit Card & Student Loan Debt?

    Going off to college comes with new found financial freedoms, and for many students that means their first foray into a world of credit and debt.

    The Credit CARD Act of 2009 restricted students under the age of 21 to open a card without a co-signer and direct promotional card offers on college campuses. This helped reduce the number of cards issued to students, but unfortunately only made a small dent in decreasing debt for those graduating.

    According to an Experian College Graduate Survey conducted in April 2016, 58 percent of soon-to-be-graduates said they had a credit card, while 30 credit cardspercent said they had credit card debt with an average balance of $2,573. Another survey found 63 percent made purchases without having funds to pay the bill.

    It’s no secret that average student loan debt has been steadily growing. In 1993-94, about half of bachelor’s degree recipients graduated with debt averaging more than $10,000. Two-thirds of the Class of 2017 graduated with debt and the average student loan debt was at $35,000 after graduation. This number more than tripled in two decades.

    We wouldn’t be overreaching to say there is a correlation between higher student loan and credit card debt. As a new grad, you’re facing some tough financial decisions as you begin life in the real world. For instance, which debt do you pay off first?

    Credit card interest rates are typically higher than student loan interest rates, which means this debt is more expensive. For example, a $10,000 student loan at a 6.8 percent APR paid over 20 years would cost $8,321 in interest. A $10,000 credit card balance at 17 percent APR paid over 20 years would cost $25,230 in interest, and that’s assuming both interest rates remain fixed over that payment period. The long-term interest cost goes up if the interest rate increases.

    In the end, both student loans and credit cards can keep you in debt for many, many years and it’s easy to get overwhelmed by them if you’re only making minimum payments. What it comes down to is making the proper decisions to meet your financial goals. Making the a few smart decisions when your in 20’s could set you up financial success instead of struggling with debt for years.

    This is where The Debt Doctors can play an important role in helping you decide what is the best financial plan for you to manage your debt. To receive the guidance you need for a brighter financial future, you can schedule a free consultation today.

     

  5. Save For Retirement Now, Benefit Later

    Leave a Comment

    Start Your Retirement Investments Now to Better Your Financial Future

    When is the best time to start saving for retirement? The answer is simple: as soon as possible. But like most things in life, that is easier said than done. Given the job market, high student loan payments and other personal situations, the last thing young adults want to do is sacrifice a portion of their retirementhard-earned paycheck for a retirement that is not happening for at least 30-40 years.

    A recent Pittsburgh Post-Gazette article highlights how putting away even as little as $20 a month can compound and grow into much more by the time retirement rolls around:

    Click for Post-Gazette Article

    As the article explains, saving money takes discipline and financial planning. Our financial expert, Matt Herron strongly believes the only way to acquire wealth is through saving and earning interest, not paying interest. So take advantage of your automatic deduction 401k plans to help save without effort. Additionally, avoid borrowing and taking withdraws from you retirement or 401k. Your 401k is not a checking account. Early withdraws and loans are expensive and will dilute your ability to compound money.   If debt is keeping you from making your best effort to save call us to eliminate your debt and develop a plan to start saving your financial future depends on it.

The Debt Doctors

607 College Street, Suite 101
Pittsburgh, PA 15232

© 2024 Debt Doctors. All rights reserved.