Do both spouses have to file for bankruptcy?

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Married couples can file together in a joint bankruptcy that combines both spouses’ debts and property into the same case. The overall goal is to discharge your debt and keep more of your property. In most cases, filing together will allow you to accomplish this.

When only one spouse files, the spouse who does not file becomes responsible for their own debts as well as any joint debts. To the contrary, if a spouse has a lot of individual debts that are not shared, filing alone may be more beneficial.

After review of your property both individual and joint, your attorney will be able to determine the most effective way for you to file. By filing a joint bankruptcy, you can save money on court and attorney fees because it usually costs the same as filing one case.

Michael A. Cibik, Esquire

Michael A. Cibik is a partner at the Philadelphia law firm of Cibik & Cataldo, P.C. He is one of the few bankruptcy attorneys in the Philadelphia area certified by the American Bankruptcy Board.

If you or someone you know is having financial problems, stop worrying and call Michael at (215) 735-1060 for a free consultation.

The post Do both spouses have to file for bankruptcy? appeared first on Philadelphia Bankruptcy Lawyers.

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Can I give a creditor preference in a bankruptcy?

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In bankruptcy, the priority that creditors receive is determined by the type of debt. The first party to be paid is the United States Bankruptcy court who charges fees for filing. Next to be paid is secured creditors, or creditors who hold a lien on property that is in possession of the debtor. Examples of this would are mortgages on homes and unpaid balances on cars.

After that, unsecured creditors are paid. There is no property involved that these creditors may repossess. Of unsecured debts, the first of these debts to be paid is domestic support, which includes alimony and child support, certain tax obligations, and injury or death caused by an intoxicated motor vehicle accident. Other examples of unsecured debts include credit card debt, medical bills, and personal loans. Student loans are also considered unsecured debts, however, they cannot be discharged unless you can prove that it would be an undue hardship to pay them – which is extremely difficult to prove.

Following that, the next group of creditors to be paid are the costs of administration in the bankruptcy case, including the trustee’s fees, clerk’s fees, and the attorney’s fees. It is important to note that creditors do not get paid automatically. They must submit a proof of claim to the court in which they indicate a claim’s priority status. The trustee or the court-appointed individual who oversees the case reviews all of the submitted claims and will distribute the funds to the creditors by priority. If money remains after that, the trustee will then pay claims that do not have priority.

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Cibik & Cataldo
1500 Walnut St Suite 900
Philadelphia, PA 19102
(215) 735-1060
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What is a Chapter 11(v) Bankruptcy?

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In the new year, businesses in debt will have new options to help keep the doors open and get debt relief. Last month, President Trump signed a bi-partisan bill into law that amends Chapter 11 of the bankruptcy code to allow businesses with less than $2.7 million in debt to file a special reorganization plan, which will be known as a Chapter 11(V). Until now, a business’s only option was to file either a regular Chapter 11, which can be costly, or file a more affordable Chapter 7, which requires them to close up shop.

A Chapter 11(V) is a more affordable solution because the bankruptcy estate is administered by a standing trustee, similar to a consumer Chapter 13 case. Additionally, there is no creditors’ committee, which makes the case less complex. The new law takes effect in February 2020.

Michael A. Cibik, Esquire

Michael A. Cibik is a partner at the Philadelphia law firm of Cibik & Cataldo, P.C. He is one of the few bankruptcy attorneys in the Philadelphia area certified by the American Bankruptcy Board.

If you or someone you know is having financial problems, stop worrying and call Michael at (215) 735-1060 for a free consultation.

The post What is a Chapter 11(v) Bankruptcy? appeared first on Philadelphia Bankruptcy Lawyers.

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Cibik & Cataldo
1500 Walnut St Suite 900
Philadelphia, PA 19102
(215) 735-1060
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Is filing for bankruptcy bad?

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Bankruptcy sounds like a bad word, but it can be the best thing for you if you can’t pay your bills. Many people wrongly believe that bankruptcy means you lose everything. In fact, bankruptcy usually helps you keep your property and gives you an opportunity to start over.

 

Many people wonder whether bankruptcy will hurt their credit score. In many cases, bankruptcy actually helps increase a credit score. If you file for bankruptcy, creditors will see that you are trying to remedy your problems rather than racking up late payments, lawsuits, and other negative marks. With bankruptcy, you can start building your credit again.

 

Because bankruptcy can wipe out credit card debt, personal loans, medical bills, past due rent, and past due utility bills, you can keep from dipping into important savings like retirement. With bankruptcy, you can start building your savings again. Bankruptcy is a word that sounds scary, but what bankruptcy can actually do for you is anything but.

Michael A. Cibik, Esquire

Michael A. Cibik is a partner at the Philadelphia law firm of Cibik & Cataldo, P.C. He is one of the few bankruptcy attorneys in the Philadelphia area certified by the American Bankruptcy Board.

If you or someone you know is having financial problems, stop worrying and call Michael at (215) 735-1060 for a free consultation.

 

The post Is filing for bankruptcy bad? appeared first on Philadelphia Bankruptcy Lawyers.

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Cibik & Cataldo
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Philadelphia, PA 19102
(215) 735-1060
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What is the difference between Chapter 7 and Chapter 13?

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Chapter 7 is a liquidation bankruptcy. You don’t pay your debts back, but you may have to give up certain property in return. To qualify for a Chapter 7 bankruptcy, you have to meet certain income requirements. If you make too much money, or if you want to keep your property, you can file a Chapter 13 bankruptcy.

Chapter 13 is a reorganization bankruptcy. Under a Chapter 13 bankruptcy, a plan is filed with the court describing how you will repay your creditors. Under your payment plan, you will make monthly payments to the trustee for three to five years. The benefit of filing a Chapter 13 is that you get to keep your property, whereas under Chapter 7 you cannot catch up on missed payments to avoid repossession or foreclosure. Certain debts cannot be discharged in bankruptcy such as alimony, back child support, and certain tax debts. In those cases, repayment plans will be set up with the trustee to help get you caught up.

Whether you file a Chapter 7 or 13 bankruptcy depends on your objective. Chapter 7 usually means you don’t have to pay your debts, but you might not get to keep your property. Chapter 13 lets you keep your property, but you will have to repay your debts.

Michael A. Cibik, Esquire

Michael A. Cibik is a partner at the Philadelphia law firm of Cibik & Cataldo, P.C. He is one of the few bankruptcy attorneys in the Philadelphia area certified by the American Bankruptcy Board.

If you or someone you know is having financial problems, stop worrying and call Michael at (215) 735-1060 for a free consultation.

 

The post What is the difference between Chapter 7 and Chapter 13? appeared first on Philadelphia Bankruptcy Lawyers.

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Cibik & Cataldo
1500 Walnut St Suite 900
Philadelphia, PA 19102
(215) 735-1060
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What Happens When I File a Bankruptcy?

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If you are about to file bankruptcy, your finances are probably disorganized. Your creditors are calling you, charging you crazy fees, and suing you, among other things. Once you file for bankruptcy, your finances become more organized because the automatic stay goes into effect, which means that your creditors can no longer take collection activity against you without the bankruptcy court’s approval.

The court will appoint a trustee who is responsible for paying your creditors. A month or two after your case is filed, you and your attorney will appear before the trustee for a hearing usually referred to as a meeting of creditors. Usually, the trustee asks routine questions about your finances. But as the name suggests, creditors have a right to come to the meeting and express any concerns they may have.

If you are filing a chapter 13 bankruptcy, your attorney will put together a repayment plan and file it with the court. The plans usually last for either three or five years. During that time, you will pay the trustee a fixed amount each month, and the trustee will pay your creditors the money you owe them. You must pay priority and secured debts in full, but you usually only pay unsecured debts as much as your monthly income allows. A secured debt is a mortgage, car loan, or other debt where the creditor loaned you money for something that can be taken away. Most other debts, like credit cards and medical bills, are unsecured. Priority debts include taxes, utility bills, and attorney fees, which, like secured debts, must be paid in full.

If you pay your bankruptcy plan payment on time each month, you can live your life without worrying which shoe will drop next. At the end of the three or five year bankruptcy period, your debts are discharged, and you are as good as new.

Michael A. Cibik, Esquire

Michael A. Cibik is a partner at the Philadelphia law firm of Cibik & Cataldo, P.C. He is one of the few bankruptcy attorneys in the Philadelphia area certified by the American Bankruptcy Board.

If you or someone you know is having financial problems, stop worrying and call Michael at (215) 735-1060 for a free consultation.

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In a Chapter 13 Bankruptcy: Can I Pay One Debt Better Than Others?

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Everyone with debts has at least one bill they’d like to pay, even if they can’t pay them all.  So, if you are already filing Chapter 13 bankruptcy and repaying some debt, why not treat some better than others?

 

Sometimes that is allowed and sometimes not.  It’s a complicated issue because, at the heart of the Chapter 13 plan, there is a pool of money – the payments you make – which has to be divided among creditors.  If one is paid more, others get less typically.  So, favoring one means discriminating against others.

 

The law requires some discrimination.  For example, if you aren’t paying everyone in full, then you typically have to provide for special “priority” claims to be paid in full.  These are things the government has a special interest in – paying the trustee, child support, recent taxes and so on.

 

In other cases, like your home and car, the law often allows payment of these “secured” debts in preferential ways over your other debt because you need those assets to keep going (and putting the money into the pot each month!).

 

But what if the debt is one you can’t wipe out at the end of the typical case, like student loans?  Can you pay those in full and “short change” the other debts you can wipe out?  Sadly, there are only limited ways to do that because it gives you a “head start” not a “fresh start” at the end of your case, according to some.

 

In October 2012, a couple argued they should be able to pay non-priority taxes they could not wipe out in full not because it would help them out…but because the tax authorities had done nothing wrong and deserved to be paid. The 8th Circuit’s bankruptcy appellate panel did not buy that argument either. See, In re Copeland, #12-064 (8th.BAP 11/12/12).

 

Thus, arguing that your sister’s loan to you deserves special treatment because she’s been good to you probably won’t fly either. If paying the debt with special treatment is necessary to keep your case afloat or otherwise earning income, then it might be better received by the court. Some judges have allowed restitution and some business-related debts to be paid preferentially, recognizing that going to jail or having to close your business down is counterproductive to getting anyone paid.

Michael A. Cibik, Esquire

Michael A. Cibik is a partner at the Philadelphia law firm of Cibik & Cataldo, P.C. He is one of the few bankruptcy attorneys in the Philadelphia area certified by the American Bankruptcy Board.

If you or someone you know is having financial problems, stop worrying and call Michael at (215) 735-1060 for a free consultation.

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