The Emergency Bankruptcy Petition

The bankruptcy code allows for special emergency circumstances and permits debtors to file an emergency bankruptcy petition when all of the documents which are normally required or not immediately available.

A bankruptcy petition is normally somewhere between 40 and 80 pages of information. Sometimes all of this information is not readily available when a bankruptcy must be filed. An example would be a bankruptcy that needs to be filed in order to stop an imminent sheriff sale or foreclosure. If a debtor waits too long to get to a bankruptcy attorney, there may not be enough time to put together the full petition. Luckily, under the Bankruptcy Code less than the full petition can be filed in order to stop the sheriff sale or foreclosure by applying the automatic stay of bankruptcy.

The automatic stay stops all creditor actions including collections and any legal actions, such as sheriff sales and foreclosures. Therefore, there are times when filing is absolutely necessary. But, what is required to file an emergency petition?

The debtor and his or her attorney must file three things. First, the cover sheet of the voluntary petition must be filed. This includes basic information such as the debtor’s full name, address, and Social Security number. Second, a full creditor matrix must be filed. This means the debtor must submit a full list of all of their creditors. Finally, the first bankruptcy course must be completed and uploaded to the court. This course usually takes about an hour-and-a-half to file, so you must get it done immediately. Once these three documents are filed, the bankruptcy is considered to be started, and the automatic stay will protect you from any creditor actions.

However, it is important to note that the bankruptcy must be completed in full within 14 days, or the bankruptcy will be dismissed. At that point, the automatic stay would be terminated as well, and any legal action against the debtor could continue. So, there will be no time to waste.

If you think you may need to file bankruptcy soon, do not wait to speak with a bankruptcy attorney. Even though the emergency petition can provide bankruptcy relief on short notice, you should not count on an attorney being available immediately before your case needs to be filed. Call us at 412-414-9366 to discuss your current situation and see if bankruptcy is a good option for you.

What is a Dischargeable Debt?

When considering a bankruptcy, you will often hear your attorney refer to "dischargeable" debts. It's important to fully understand what the term means, because discharging your debt is the primary purpose of filing a bankruptcy.

A debt is dischargeable when bankruptcy can essentially eliminate it, or make it go away. The most common types of dischargeable debt are credit cards, medical bills, unsecured loans, and personal loans. Federal Income Taxes are sometimes dischargeable (if they were filed on time and are more than three years old), but in most cases taxes are not dischargeable. Student loans and government fines are rarely dischargeable.

When are your debts discharged? Debts are discharged when all the steps of your bankruptcy are completed. In a Chapter 7 bankruptcy, this happens relatively quickly, within 3 or 4 months of filing. A Chapter 13 bankruptcy takes much longer... the plan itself will be 3 to 5 years long, and the official discharge will take months longer.

The good news is, as long as you are complying with your bankruptcy requirements, the automatic stay prevents creditors from attempting to collect on your debts. So, in the time between filing and discharge, you will be protected from your creditors.

Why are some debts dischargeable, while others are not? The policy of Congress, as manifested through the United States Code,  largely determines what is discharged and what isn't. Congress has determined credit cards can be discharged... usually. If you used your credit cards to pay taxes or make a large purchase right before filing bankruptcy, they are NOT discharged.

Congress has taken the policy stand that student loans, whether Federal or private, are NOT dischargeable, except under the most extreme circumstances. It can be argued that a student loan is a debt not much different than a credit card. They both can be used to purchase services or goods. Both can prevent a debtor from enjoying the "fresh start" promised through bankruptcy. But, at least for now, Congress has taken the policy stance that student loan debts will survive through bankruptcy, to the point where your wages (or even Social Security benefits!) can be garnished.

Taxes and student loans involve money originating from or directed to the Federal government. So, maybe it should be no surprise that Federal bankruptcy law demands that they be repaid in full. For debtors facing financial hardship, relief is often denied. Unfortunately, the bankruptcy "fresh start" is not a reality for may debtors.

Contact us to meet with an experienced Pittsburgh bankruptcy attorney who can discuss which of your debts can be discharged, and what to do about those that cannot.

Summertime and Debt Problems

Memorial Day has passed, and summer is officially here. As a Pittsburgh bankruptcy attorney, I have always found there is a noticeable dip in people calling to consult about filing bankruptcy in the height of summer (and Christmas, as well). It makes sense in a lot of ways. It's a time to enjoy the outdoors (those days are certainly limited in Pittsburgh and Western Pennsylvania!) and it is the time most families use to take a vacation. It's not a natural time to think about debt.

However, there are several circumstances when you should probably put off thoughts of BBQs and the beach, even just for a couple hours to consider your options in a free consultation.

1. Creditor lawsuit- if a creditor has sued you, you might be facing a default judgment and resulting lien on your property. This includes liens on bank accounts, which could lead to direct deposit paychecks being lost to your creditor. Chapter 7 and Chapter 13 bankruptcy can wipe out these lawsuits and liens. Filing a bankruptcy is something you should consider immediately if you are facing a lawsuit. My office can inform you if any lawsuits are pending.
2. Increase in income- if your income is due to increase in the near future, you may want to consult a Pittsburgh bankruptcy attorney immediately. The increase in income could push you from a Chapter 7 to Chapter 13 bankruptcy, which means you will need to repay some or all of your creditors. It could also increase the amount of money that must be repaid in a Chapter 13 bankruptcy. Commissions and bonuses also count as "income" for bankruptcy purposes, so if you get these annually in summer, now is the time to act in filing bankruptcy. Timing is always important in bankruptcy, and it shouldn't be dictated by the weather.
3. Filing a bankruptcy takes time- Setting up a payment plan, collecting all the documents needed to file, and completing the required courses takes some time and effort. It's normally a process that takes weeks, even months in complicated cases. The sooner you start, the sooner you can be finished, and the process won't bleed into important things (like Steelers season)
4. Stop harassing calls and letters- nothing can dampen a nice summer faster than a string of harassing phone calls and letters from a creditor. Chapter 7 and Chapter 13 bankruptcy can stop this contact through the "automatic stay", which occurs immediately upon filing. Once a bankruptcy is filed, your creditors are forbidden by the bankruptcy automatic stay from contacting you in any way. Enjoy your summer in peace and quiet.
5. The pluses of bankruptcy outweigh the negatives- While summer may not seem like the ideal time to file bankruptcy, it really not that hard to do. It's a lot easier to enjoy your summer when your mind is free and clear from concerns about debt. If you can do something affordable, that doesn't take too much effort on your part, and it removes perhaps your greatest, most pressing concern... why wait until Fall?

I am an experienced Pittsburgh bankruptcy attorney who can help you consider all your options, bankruptcy or otherwise. Summer is actually a great time to give yourself a new financial start. Contact us today to set up a free consultation.