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Greensburg Pennsylvania Legal Blog

Personal bankruptcy differs from debt consolidation

Numerous consumers in Pennsylvania struggle with overwhelming debt that drastically decreases their quality of life. In some situations, consumers turn to debt consolidation for help. Meanwhile, others find relief after filing for personal bankruptcy protection. Here is a glimpse of the differences between these two processes.

Debt consolidation is the process of assuming new debt in an effort to pay for old debt. For instance, some consumers borrow unsecured personal loans to cover their existing debts. Ideally, these personal loans come with lower interest rates and simplify the debt repayment process. Meanwhile, with Chapter 7 bankruptcy, a consumer can discharge a portion or even all of his or her debt. With a Chapter 13 bankruptcy filing, consumers can repay their debts in part or in full using brand-new repayment plans.

Debt may make property division more challenging during divorce

Going through the divorce process can be emotionally challenging. However, financial challenges can make the process worse, particularly for those who have large amounts of debt on credit cards or personal loans. Here is a look at how property division -- including debt division -- is handled during a divorce proceeding in Pennsylvania.

Pennsylvania is an equitable distribution state. This means that all property acquired in the course of the marriage must be split in a fair manner during the divorce proceeding. This property includes both assets and debt.

Divorce mediation may make property distribution easier

Conflict is a common part of the dissolution of a marriage. This is true even in the most amicable of marital breakup situations. However, deciding to go through divorce mediation from the start -- from the moment that the divorce papers are filed -- may make the process easier overall.

For a marriage to be dissolved, just one person has to desire a divorce. Then, divorce courts in states such as Pennsylvania will attempt to equitably divide divorcing couples' property. In other words, a divorce court will strive to split up a couple's estate in the fairest way possible given the circumstances surrounding the breakup.

Estate planning as a new parent

As a new mom or dad, you probably have a lot on your mind. Between diaper changes, pediatrician appointments and just trying to get enough sleep, your plate is too full for more than the most essential items.

You may not consider estate planning important enough to make time for at this busy stage of your life, especially since you are young, your family is just beginning and you may not have many assets. However, laying the foundation for your estate plan now may provide more benefits than you can imagine.

New tax law may impact property division decision during divorce

Ending a marriage can understandably be challenging both emotionally and financially. This is particularly true when the family home is at the center of a divorcing couple's property division dispute. The new tax law has made the decision about what to do with the family home even more complicated for many couples in Pennsylvania and elsewhere.

Some divorcing spouses consider it a top priority to keep the marital home. Others would rather leave the home behind and take other assets instead. Still others prefer to sell the home and split the proceeds, thus allowing both parties to walk away from it.

Waiting to file for personal bankruptcy may be a major mistake

Sometimes, consumers in Pennsylvania find themselves struggling to keep their heads above water financially. However, some view filing for bankruptcy as the admission of both financial failure and personal failure. The reality, though, is that filing for personal bankruptcy may be one of the smartest moves a struggling consumer can make, and waiting might end up costing him or her more in the long run.

Research shows that, when people wait to proceed with a bankruptcy filing, they end up struggling longer. When they finally break down and file, their financial lives and well-being are already damaged. This ultimately undermines the fresh financial start that personal bankruptcy can offer them.

Obtaining a loan is possible following personal bankruptcy

At times, consumers find themselves facing mountains of debt with seemingly no place to turn. Fortunately, they can turn to bankruptcy court to overcome their debt situations. The question is, can those who file for personal bankruptcy in Pennsylvania still take out personal loans in the future?

More than 766,000 businesses and individuals filed for bankruptcy protection last year. The benefit of bankruptcy is that it can restructure a consumer's debt or eradicate his or her debt altogether. However, it can also hurt the consumer's credit score, causing it to drop between 130 and 240 points. As a result, qualifying for personal loans or lines of credit may prove challenging. Still, it is not impossible.

Chapter 7 and 13 personal bankruptcy options available

Most people in Pennsylvania experience financial setbacks at one time or another. In many cases, consumers can dig themselves out of their debt situations. However, if they cannot, one of the best ways in which to eradicate overwhelming debt is to file for personal bankruptcy.

Both Chapter 7 and Chapter 13 bankruptcy exist for consumers. Chapter 11 bankruptcy is typically reserved for financially struggling companies, whereas Chapter 12 bankruptcy is usually reserved for fishermen and farmers. Chapter 7 and Chapter 13 bankruptcy both have their unique benefits.

Divorce settlements include asset and debt division

You and your spouse may be treading new waters as you face divorce. This is an event you never expected and one for which you feel uncertain and confused. You may be facing emotions that are new to you, such as those you felt as you and your spouse systematically divided your belongings. Now comes a new challenge.

Pennsylvania is an equitable division state, meaning all assets accumulated during your marriage are divided fairly, though not necessarily evenly, between you and your spouse. However, this equitable distribution also includes your debts.

Maintaining sanity is possible during divorce property division

Managing finances is a complicated process. However, getting a divorce may make this already-complicated process even more complex. A few tips may help those going through divorce in Pennsylvania to maintain their sanity when navigating its financial aspects, such as property division.

First, it is critical to consider both sides of the property division issue. This can be difficult considering that tempers often flare during a marital breakup. However, making smart financial decisions -- ones that benefit both parties -- will lead to more harmony in both the short run and the long run.

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