Bankruptcy filings have been dropping across the country since 2005. However, personal bankruptcy filings continue to be helpful for reclaiming financial health in Pennsylvania and elsewhere. Filing bankruptcy may be beneficial in several scenarios.

Bankruptcy may be a viable option for those whose debts are greater than over half of their annual incomes. It might also be a beneficial option for those who would need over five years to pay off their debts, even if they had meager budgets and made many sacrifices. Finally, bankruptcy may be the best choice if debt is affecting one’s significant personal relationships, health or work.

The most common type of bankruptcy filing is Chapter 7 bankruptcy, or liquidation. With this option, a debtor surrenders all of his or her non-exempt assets for the process of liquidation, with the proceeds distributed to creditors. In exchange, the debtor receives forgiveness, or a discharge, of all of his or her dischargeable debts. Meanwhile, with a Chapter 13 filing, a debtor pays off some or all debts over a period of between three and five years. Still, some debts are not dischargeable, such as certain taxes, personal injury debts stemming from driving a motor vehicle while under the influence, alimony, child support or student loan debt.

A bankruptcy proceeding is inherently complex, and one mistake may have negative long-term consequences. However, a qualified personal bankruptcy attorney can help with the filing process, taking into consideration a consumer’s individual circumstances. The goal of bankruptcy is to experience as much of a fresh financial start as possible in Pennsylvania.

Source: mpnnow.com, “John Ninfo: The basics of a consumer bankruptcy“, John Ninfo, Aug. 29, 2017