Best Bankruptcy Lawyers in Philadelphia

About Bankruptcy Law in Philadelphia, United States

Bankruptcy is a federal legal process that helps individuals and businesses address overwhelming debt. Cases arising in Philadelphia are handled under the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania - Philadelphia Division. Common consumer bankruptcy options are Chapter 7 and Chapter 13. Chapter 7 allows liquidation of non-exempt assets to pay creditors and can lead to a relatively quick discharge of qualifying unsecured debts. Chapter 13 creates a court-supervised repayment plan, typically lasting three to five years, allowing debtors to catch up on secured debts such as mortgage arrears while keeping property.

Pennsylvania law and local bankruptcy court rules affect exemptions, procedure, and some strategic choices. In all cases debtors must complete credit counseling before filing and debtor education after filing to receive a discharge. The filing triggers an automatic stay that stops most collection actions, including many foreclosures, repossessions, and wage garnishments, while the case proceeds.

Why You May Need a Lawyer

Bankruptcy has significant long-term consequences and procedural requirements. A lawyer can help in many common situations, including -

- You are facing imminent foreclosure, repossession, wage garnishment, or creditor lawsuits. An attorney can evaluate whether bankruptcy will stop the immediate action and preserve your key assets.

- Your financial situation is complex - for example, you have significant secured debt, co-signed obligations, multiple properties, or recent large transfers of assets. These circumstances raise legal issues like preference and fraudulent transfer claims.

- You are unsure which chapter to file - Chapter 7 may discharge unsecured debt quickly but requires passing a means test; Chapter 13 may be better to retain a home or vehicle and repay priority debts.

- You want to protect exempt assets and maximize what you can keep under state or federal exemptions. Local exemption rules and trustee practice can affect outcomes.

- A creditor alleges fraud, you have tax debt or student loans, or you face potential criminal exposure related to financial conduct. These areas involve specific defenses and litigation risk.

- You want professional representation at the 341 meeting of creditors, plan confirmation hearings, adversary proceedings, or contested motions that can be hard to handle pro se.

Local Laws Overview

Key local and regional aspects to understand when filing in Philadelphia include -

- Federal jurisdiction and local court rules - Bankruptcy is governed by the federal Bankruptcy Code and Federal Rules of Bankruptcy Procedure, but the Eastern District of Pennsylvania has local bankruptcy rules and standing orders that govern filing formats, deadlines, and court procedures. The court uses electronic filing for represented parties through CM/ECF.

- Exemptions - Exemptions determine which assets a debtor may keep. States vary in how exemptions apply. Pennsylvania law provides its own set of exemptions and there are specific rules about homestead, personal property, tools of the trade, and retirement accounts. Whether you can select federal or state exemptions depends on state election rules and timing - discuss exemption choice with counsel to avoid losing protections.

- Means test and income calculations - Eligibility for Chapter 7 depends on the means test, which compares your household income to the median income for a household of your size in Pennsylvania. The local trustee and court scrutinize income calculations and allowable deductions.

- Trustees and standing procedures - The district has appointed trustees who administer Chapter 7 estates and a standing Chapter 13 trustee who supervises plan administration and payments. Certain trustees and local court practices can affect strategy - for example, local motion practice, settlement customs, and creditor behavior.

- Foreclosure and real estate issues - Pennsylvania law sets procedures for mortgage foreclosure and redemption that interact with bankruptcy protections. Filing bankruptcy may interrupt a foreclosure sale under the automatic stay, but local timeline and lender practices influence how effective that stay is at preserving the home.

- Consumer protections and debt discharge limits - Some debts, like most student loans, certain tax obligations, alimony and child support, and debts incurred by fraud, are more difficult or impossible to discharge. Local practice may affect litigation of dischargeability claims.

Frequently Asked Questions

What are the main differences between Chapter 7 and Chapter 13?

Chapter 7 is a liquidation-style bankruptcy for individuals and businesses. It typically lasts a few months and can discharge many unsecured debts if you qualify under the means test. Non-exempt assets may be sold by the trustee to pay creditors. Chapter 13 is a repayment plan lasting three to five years that allows debtors to keep property and repay some or all unsecured and secured debts on a scheduled basis. Chapter 13 is often used to stop foreclosure and cure mortgage arrears over time.

How do I know if I qualify for Chapter 7 in Philadelphia?

Qualification depends primarily on the means test, which compares your current monthly income to the median income for a similarly sized household in Pennsylvania. If your income is below the median, you generally qualify. If it is above, you must pass additional calculations that consider allowable expenses. Local counsel can run the test and evaluate whether Chapter 7 is viable or whether Chapter 13 or another option makes more sense.

What property can I keep if I file bankruptcy in Pennsylvania?

Exemptions determine what you can keep. Pennsylvania provides statutory exemptions for items such as a homestead allowance, personal property, tools of the trade, public benefits, and certain pensions and retirement accounts. Whether you use state or federal exemptions depends on rules that can vary. An attorney can help identify applicable exemptions and plan to preserve important assets.

Will filing bankruptcy stop foreclosure on my home?

Filing a bankruptcy petition triggers the automatic stay, which temporarily halts most foreclosure actions and other creditor collection steps. In many cases the stay provides immediate protection and time to negotiate or to propose a Chapter 13 plan to cure arrears. However lenders may request relief from stay from the court in certain situations, and local procedures affect how quickly lenders proceed. It is important to act quickly and consult counsel if a foreclosure sale is scheduled.

Are student loans dischargeable in bankruptcy?

Student loans are generally not dischargeable except in rare cases where the debtor demonstrates undue hardship through an adversary proceeding. Courts apply specific tests to determine undue hardship and outcomes depend on case facts. Because litigation is often lengthy and uncertain, many debtors work with counsel to explore alternatives like income-driven repayment, loan rehabilitation, or settlement options.

How will bankruptcy affect my credit score and ability to get credit in the future?

Bankruptcy will negatively impact your credit score and remain on your credit report for up to 10 years for Chapter 7 and seven years for Chapter 13. That said, many people become eligible for new credit within a year or two after filing, often at higher interest rates. Bankruptcy can also provide an opportunity to rebuild credit sooner by eliminating unmanageable debts and making consistent repayments on remaining or reaffirmed obligations.

Can I file bankruptcy without a lawyer in Philadelphia?

You may represent yourself and file pro se, but bankruptcy involves complex forms, strict deadlines, and procedural rules. Pro se filers risk errors that can result in dismissal, loss of exemptions, or other adverse outcomes. Free or low-cost legal help is available through legal aid programs and court clinics for eligible people. Consulting a bankruptcy attorney is recommended, especially if your case involves significant assets, litigation risk, or business debts.

What happens at the 341 meeting of creditors?

The 341 meeting is a required, usually brief meeting with the trustee and any creditors. The trustee will ask you under oath about your financial situation, assets, income, and schedules filed with the court. Creditors sometimes attend and may ask questions. Your attorney can represent you at this meeting or prepare you to testify. The meeting does not determine discharge by itself but is a key administrative step in the case.

How much does filing bankruptcy cost in Philadelphia?

Costs typically include court filing fees, attorney fees, and fees for required credit counseling and debtor education courses. Court filing fees change periodically, and attorney fees vary based on case complexity, attorney experience, and local market. Chapter 7 attorney fees are frequently a flat fee for consumer cases, while Chapter 13 fees may be paid through the repayment plan. Ask attorneys for fee estimates and whether payment plans are available.

What alternatives should I consider before filing bankruptcy?

Alternatives include negotiating with creditors, creating a debt management plan with a nonprofit credit counseling agency, debt settlement, loan modification for mortgages, or targeted litigation defense if a creditor lawsuit is improper. An experienced attorney or credit counselor can help compare the costs, benefits, and long-term effects of bankruptcy versus these options.

Additional Resources

Helpful resources and organizations for people dealing with bankruptcy in Philadelphia include -

- The U.S. Bankruptcy Court for the Eastern District of Pennsylvania - for local court procedures, filing information, and clerk resources.

- The U.S. Trustee Program - oversees trustees and bankruptcy administration.

- Local legal aid organizations and pro bono clinics - these may include legal services providers that offer bankruptcy assistance to eligible low-income residents.

- Philadelphia Bar Association - local lawyer referral services and consumer bankruptcy guidance.

- Approved credit counseling agencies - required for pre-filing credit counseling and post-filing debtor education. Use agencies approved by the U.S. Trustee Program or the court.

- Consumer protection and financial counseling nonprofits - provide budgeting help and information on alternatives to bankruptcy.

- Pennsylvania Department of Banking and Securities - for information about licensed debt settlement and debt management providers.

Next Steps

If you are considering bankruptcy in Philadelphia - follow these practical steps to move forward in an organized way -

1. Gather documents - collect pay stubs or proof of income, tax returns for the last two years, bank statements, recent bills, mortgage and vehicle loan statements, retirement account statements, and a list of creditors and their contact information.

2. Complete required credit counseling - before filing you must complete a U.S. Trustee-approved credit counseling course and obtain a certificate. This is mandatory for most consumer cases.

3. Consult a bankruptcy attorney - schedule a consultation to review your financial situation, determine eligibility for Chapter 7 or Chapter 13, and discuss exemptions and local court practice. Ask about fees, likely timelines, and alternatives.

4. Prepare and file the petition and schedules - your attorney or you if pro se will prepare the petition, schedules of assets and liabilities, statement of financial affairs, and other required documents. These must be accurate and complete.

5. Attend the 341 meeting and any necessary hearings - be prepared to answer questions under oath. If you filed Chapter 13, work with the trustee and attorney to obtain confirmation of your repayment plan and begin timely plan payments.

6. Complete debtor education - after filing and before discharge you must take a debtor education course to receive a discharge for eligible debts.

7. Follow post-discharge obligations - comply with any plan terms, reaffirmed debts, or other court orders. Monitor your credit reports and begin rebuilding credit.

Remember - this guide provides general information and is not a substitute for personalized legal advice. Bankruptcy law is complex and outcomes depend on facts unique to each case. If you are facing immediate creditor action or have questions about exemptions, eligibility, or the effect on specific debts, contact a licensed bankruptcy attorney for guidance tailored to your situation.