What are the benefits of Chapter 7 Bankruptcy?

 Chapter 7 bankruptcy, also known as "liquidation" bankruptcy, offers several benefits for individuals facing overwhelming debt:

1. Debt Discharge: One of the primary benefits is that it allows for the discharge of most unsecured debts. This means debts like credit card balances, medical bills, personal loans, and utility bills can be wiped out, giving the filer a fresh start.

2. Automatic Stay: Filing for Chapter 7 initiates an automatic stay, which halts most collection actions by creditors. This means creditors must stop wage garnishments and debt collection lawsuits. Foreclosure proceedings and repossession efforts will be stopped temporarily by the automatic stay. The Debtor will need to catch up the mortgage or auto payments to cure the loan in order to keep the property with a secured interest (lien) against it.   

3. Speed: Chapter 7 bankruptcy typically moves swiftly compared to other bankruptcy options. The process usually takes around two to six months to complete, providing a relatively quick resolution to overwhelming debt.

4. No Repayment Plan: Unlike Chapter 13 bankruptcy, which requires the filer to create a repayment plan to pay off debts over several years, Chapter 7 doesn't involve a repayment plan. Instead, non-exempt assets are sold to pay off creditors, and remaining eligible debts are discharged.

5. Fresh Financial Start: Chapter 7 bankruptcy allows individuals  to obtain a fresh financial start by eliminating burdensome debts and giving them the opportunity to rebuild their credit and finances without the weight of past debts.

6. Exemption Protections: In Pennsylvania many assets may be protected from liquidation under exemption laws. This means you may be able to keep essential assets like your home, car, and personal belongings.

7. Legal Protection: Once debts are discharged through Chapter 7 bankruptcy, creditors are legally barred from attempting to collect on those debts in the future. This provides peace of mind and protection from persistent creditor harassment.

However, it's essential to consider the potential drawbacks and eligibility requirements of Chapter 7 bankruptcy as well such as:

1. the impact on credit scores; however, by the time a person is considering bankruptcy, his/her credit score has been impacted or is on the verge of being impacted by late payments. 

2. the potential loss of non-exempt assets; however, the exemptions in PA cover many assets needed by people to have a successful fresh start.

3. the inability to discharge certain types of debts like student loans and recent taxes; however, eliminating unsecure debt can help free up income to make payments on these non-dischargeable debts. 

Consulting with a bankruptcy attorney can help people fully understand their options and make informed decisions about their financial future.

If you want assistance, legal representation, or just want to know more about Mark Medvesky or our firm Medvesky Law Office, LLC at http://www.medveskylaw.com/

#bankruptcy #Chapter7 #Chapter13 #MontgomeryCounty #lawfirm #BucksCounty #Pennsylvania

NOTE: Author used AI to help draft this blog entry.

Bankruptcy - Judgments can live for a long long time.

People should not be lulled into a false sense of finality because creditor has not pursued collection on an old, and mostly forgotten, judgment. Judgments in Pennsylvania can be collectible for years. 

Image courtesy of hywards
 at FreeDigitalPhotos.net

Over the last few weeks, I have received calls from potential clients because a creditor with an old judgment has frozen a bank account with the intent to garnish the money in the client's account. One judgment was entered December 2004 and the Writ of Execution was issued in December 2023. The people I spoke with about this issue were shocked the creditors and judgments came back for collection after being so quiet for so many years. I get a sense creditors are starting to ramp up after this long COVID collections break. Debtors should not assume a judgment debt just "went away." A bankruptcy case may help you deal with these old and dormant debts.

If you want assistance, legal representation, or just want to know more about Mark Medvesky or our firm Medvesky Law Office, LLC at http://www.medveskylaw.com/

#bankruptcy #Chapter7 #Chapter13 #MontgomeryCounty #lawfirm #BucksCounty #Pennsylvania

Bankruptcy - 401(k) ‘hardship’ withdrawals - there may be another option

Image courtesy of
Vichaya Kiatying-Angsulee
at FreeDigitalPhotos.net

I have written on this topic a few time before but It seems worth mentioning again. Your retirement saving may be safe from creditors as long as it remains in your retirement account.
I found this article:

401(k) ‘hardship’ withdrawals hit record high, Vanguard says — another sign households feel the pinch of inflation  PUBLISHED THU, DEC 8 2022 on CNBC by Greg Iacurci @GREGIACURCI

"The share of retirement savers who withdrew money from a 401(k) plan to cover a financial hardship hit a record high in October, according to data from Vanguard Group..."

The market has been turbulent and most accounts are down. A person should ask themselves "is this really the time to withdraw from retirement accounts." It is bad enough to sell in a down market but selling your future off in a down market while in carrying unmanageable debt seems to compound the problem. Finally, if a person uses retirement savings to try to get out of debt and is not successful causing  them to file bankruptcy, that is just good money after bad. Bankruptcy not only gets people back on track in the present but can protect their future as well.   

You can also check out some of my other blog entries:

Why you should not borrow from your retirement fund...

Bankruptcy - I cannot say it any better than this: "Bankruptcy is an excellent retirement strategy"

Bankruptcy - How can I file bankruptcy with $50,000 in my retirement account?

If you want assistance, legal representation, or just want to know more about Mark Medvesky or our firm Medvesky Law Office, LLC at http://www.medveskylaw.com/

#bankruptcy #Chapter7 #Chapter13 #MontgomeryCounty #lawfirm #BucksCounty #Pennsylvania

Transition from WELLS, HOFFMAN, HOLLOWAY and MEDVESKY, LLP to MEDVESKY LAW OFFICE, LLC

The law firm of WELLS, HOFFMAN, HOLLOWAY and MEDVESKY, LLP has dissolved and the members no longer practice law as a firm. Below is contact information for the members of the former firm in case you have questions or need assistance.

Mark M. Medvesky & Dawn E. Miller Medvesky

Mr. and Mrs. Medvesky continue to practice law in the Souderton area at MEDVESKY LAW OFFICE, LLC located at 601 E. Broad Street, Ste 110. Their contact number is still 215-660-3170. For more information about them and their practice, click here.

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Richard E. Wells

Mr. Wells continues to practice in the Pottstown area . He can be reached at 610-310-0115. If any client of Mr. Wells’ has questions about his/her records for services provided by Mr. Wells, please contact him at rewells545@gmail.com or 610-310-0115.

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R. Kurtz (Kurt) Holloway

Mr. Holloway has retired. He recommends that his clients seeking an attorney in the Pottstown area contact the law firm of Yergey-Daylor-Allebach-Scheffey-Picardi for any legal services. That firm’s phone number is 610-323-1400. If you wish to reach Mr. Holloway for copies of your file records, he can be reached at hollowaykurt@gmail.com.

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Thomas L. Hoffman, 1950 – 2021

Mr. Hoffman passed away September 16, 2021. His clients who need legal services should contact the law firm of Yergey-Daylor-Allebach-Scheffey-Picardi for any legal services. That firm’s phone number is 610-323-1400. If any client of Mr. Hoffman’s has questions about his/her records for services provided by Mr. Hoffman, please also contact the Yergey-Daylor-Allebach-Scheffey-Picardi law firm.

Bankruptcy - Everything is tight, should I be saving for retirement?

Image courtesy of David Castillo Dominici
at FreeDigitalPhotos.net

First of all, I need to say I am not a financial planner or an accountant. This post is not meant to replace advice of other professionals. But, if you are reading this, it may be a topic to address with them.

As a bankruptcy attorney, I have clients who come in and have either spent down their retirement savings or, in some cases, never started. I have a couple clients now who never started. They were small business owners. One did not successfully make the transition to on-line sales. The other's  problem was just poor timing. Eventually, the businesses were forced to close. They had a good deal of debt, which was personally guaranteed or placed on credit cards. Now, most of the debts are in collections or reduced to judgments and they are planning for bankruptcy. This is not an uncommon story.

As I was preparing their cases, I asked about 401(K)'s, SEP's, IRA's, etc. One told me his accountant advised that a better plan was to pay down the debt first then start his retirement savings afterwards. The other client just didn't feel like she was able to start. While my clients had some great years and paying off the debt was not a worry, times changed. Unfortunately, they never paid off the debts and bankruptcy is being considered or has occurred. Had my clients saved money in an IRA during the good times, they would have a valuable asset they could protect. 

I am not suggesting anyone should put money away to hide it from creditors. I am suggesting if you set up a "Pay Yourself First" type budget to appropriately save for retirement, you will not be penalized if you find yourself in a bankruptcy case.  

Another common step taken by clients is to withdraw money from a retirement account to try to get debt under control. I have had clients that spent all their retirement money and still needed to file for bankruptcy protection anyway. If you are thinking about dipping into your 401(K), SEP or IRA, you may be in more financial trouble than you realize. Most retirement accounts are protected in a bankruptcy case. You should consider meeting with a bankruptcy before you take that step. 

If you want assistance, legal representation, or just want to know more about Mark Medvesky or our firm of Wells, Hoffman, Holloway & Medvesky LLP, check out our website at www.whhmlaw.com.

Other Articles:

Bankruptcy - I cannot say it any better than this: "Bankruptcy is an excellent retirement strategy"

Why you should not borrow from your retirement fund...

Bankruptcy - How can I file bankruptcy with $50,000 in my retirement account?

#bankruptcy #Chapter7 #Chapter13 #MontgomeryCounty #lawfirm #BucksCounty #Pennsylvania