Tag Archive: filing bankruptcy

  1. Which Chapter of Bankruptcy Is Best for You?

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    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

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    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. A Letter to Small Business Owners…

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    Dear Small Business Owner,

    Having been a small business owner myself, I have a passion for helping other entrepreneurs like me. Businesses are a puzzle that require finding the right mix of a good product(s)/service(s), finding the right people to work in the business, finding the right customers, and controlling your expenses to make a profit. After 13 years of working with and in both successful and unsuccessful businesses, I have had a lot of valuable experiences that can help business owners.

    However, because I am a bankruptcy attorney, most business owners will avoid talking to me until it’s too late. Most people would think that seeing a bankruptcy attorney is the end of their business, but I see my job as the opposite. Good bankruptcy attorneys help businesses survive. I always remember the words of one of my colleagues: “As bankruptcy attorneys, we perform resurrections, not funerals.”

    Here are some of the ways a bankruptcy attorney can help your business:

    • We can help you structure your business to protect personal assets.
    • We can assist in selecting the right corporate structure for asset protection and tax planning.
    • We can eliminate personal guarantee liability.
    • We can lower your debt service by eliminating or restructuring debt.
    • We can develop a plan to reallocate resources to pay off secured debt or taxes.
    • We can help identify quality professionals that help with accounting, bookkeeping and efficiency.
    • We can prepare your business for sale.
    • If necessary, we can wind down an existing business while preserving value to start a new business or transitioning into a new career.

    Many of these strategies can involve solutions that may not include filing for bankruptcy. Even if you did have to file for bankruptcy you would be in good company as some of America’s greatest businessmen have utilized bankruptcy prior to building some of America’s iconic brands, including Milton Hershey, H.J. Heinz and Henry Ford.

    When is it time to see a bankruptcy attorney?

    • When you are considering taking a loan that includes collateral or a personal guarantee. Some careful planning at this point can help you avoid taking on an onerous debt obligation. Careful planning can help you protect personal assets and give you options if your business experiences a downturn or fails.
    • When your income is insufficient to cover all of your monthly bills.
    • When debt service is keeping you from making a profit.
    • When you begin to have internal issues with investors or business partners.
    • When you are considering taking a factoring or accounts receivable loan. (These are the business equivalent of check cashing loans and should be avoided at all costs.)
    • When you have a tax debt you can’t pay.
    • When you are unable to pay trust fund taxes like payroll and sales. Business owners and some employees could potentially face personal liability and criminal sanctions for failure to pay these taxes.
    • When your bank stops lending or declares you in default.
    • When you or your business receive a law suit.
    • When you can no longer take a salary or draws for your hard work.
    • When you lose your passion for the business to continue.

    As small business owners and entrepreneurs, our job is more than a place we work. Our jobs become part of us.

    It is not a 9-5 job and in good times and bad we stay up at night thinking of ways to grow our enterprise or navigate the next big challenge. If you get to the point that you need help, I can be an excellent resource for thinking out loud about creative solutions to common issues you face.

    Personally, I love helping small business owners – at all phases of building a business – and in many cases these opportunities give me a new perspective to help future clients, or incorporate into my practice.

    So, don’t hesitate to call. I offer a free consultation. An hour with me can uncover a new path forward to increase profitability, restructure your business, or put past difficulties behind you so you can reignite the passion for what you do. Most of all, please do not wait until it is too late.

     

    Sincerely,

    Matt Herron

    Managing Attorney

    The Debt Doctors at Quatrini Rafferty

     

     

  4. Bankruptcy vs. Debt Consolidation, Debt Settlement and Credit Counseling (Part 1)

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    There is a common misconception when it comes to bankruptcy.  Over the years, the term has become synonymous with failure and financial ruin. This myth is simply not true.  Ironically, we have found that when you are in financial distress, the damage you fear to your credit from bankruptcy has already been done as a result of your late and missed payments.  Bankruptcy can provide you with a new financial beginning.

    Bankruptcy Is The Better Option It’s amazing that a whole industry has been created by banks and credit card companies to take advantage of this overstated fear of bankruptcy. Debt consolidation, debt settlement and credit counseling are all essentially the same thing—a last ditch collection effort for people who should be considering bankruptcy.

    Since there are so many reasons why bankruptcy is always the better option, we will discuss the key reasons in a two-part blog series.

    Part 1

    We are Attorneys, Not Customer Service Representatives

    The Debt Doctors at QuatriniRafferty are attorneys.  We are required to adhere to a strict professional code of ethics. In addition, we must complete annual, continuing legal education. We also have the fiduciary responsibility to act solely in the best interest of our clients.

    At the Debt Doctors we take our job very seriously.  It is our professional responsibility to give you valuable advice. Our ultimate goal is to leave you in a better financial place than where we found you.

    These standards do not exist with debt consolidation, debt settlement and credit counseling services. In most cases, their objective is to make money off of your debt and sell you a service that fails more often than it succeeds.

    Bankruptcy is a Legal Remedy Provided to You Under Federal Law

    Bankruptcy protects you from your creditors. As soon as you file for bankruptcy, a federal bankruptcy court issues an order called an automatic stay. This automatic stay prohibits debt collectors from calling you, suing you, taking your property and/or collecting debt by any other means.

    Once you complete the bankruptcy process, you receive another court order called a discharge. The discharge order gives you permanent protection against collection of any and all debts which you incurred prior to filing the petition for bankruptcy.

    Bankruptcy protection also offers you other powerful tools.  These tools include:

    1. Stopping foreclosure actions
    2. Creation of a plan to catch up on a delinquent mortgage
    3. Court ordered mortgage modifications
    4. Potential to restructure auto loans
    5. Power to avoid judgment liens
    6. Ability to restructure or eliminate certain tax debts
    7. Ability to force an income based repayment plan on your student loans

    The power of the federal bankruptcy court will give you certainty. If you are honest and deal in good faith you will know a definitive timeline of when you will be out of debt, assurance of a resolution to your debts and a favorable court setting to fight your creditors if they violate a court discharge order.

    Debt consolidation, debt settlement and credit counseling do not offer you any of these protection tools. In fact, while you are in one of their plans, the creditors can still report negatively to credit reporting agencies, send you collection letters, and file a legal collection action against you that can result in the loss of property.

    As you can see, bankruptcy is a powerful financial strategy that has many tools and protections. We will continue to provide the analysis of bankruptcy vs. debt consolidation, debt settlement and credit counseling in Part 2 of this blog series.

    To get immediate advice during a free consultation contact the Debt Doctors now. Call 412 395 6001 or email us at [email protected].

  5. Bankruptcy can Effect Anyone

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    The Pittsburgh Post-Gazette recently ran a piece on the fall of Pittsburgh icon and Heinz chief executive, Anthony J.F. O’Reilly, who is spiraling towards bankruptcy (view full article here).

    One of the lessons here is that sometimes you are not as smart as you think. In many cases, you’re fortunate to have enough money just to pay the bills. And in Mr. O’Reilly’s case, you can never have enough money to be frivolous.

    As a Pittsburgh bankruptcy attorney, I urge clients to not become emotionally tied to assets such as homes and businesses. You need to recognize problems early and cut your losses as soon as possible. Mr. O’Reilly kept pouring millions into his independent publishing company and crystal manufacturing firm—two industries that have been struggling. Rather than cut his losses,  he continued to finance these doomed businesses due to his penchant for extravagance. Failure to be decisive limits your options.

    This story teaches us we can find ourselves in financial trouble at any give time. Always be thankful for what you have, but don’t let it define you.

The Debt Doctors

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Pittsburgh, PA 15232

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