Bankruptcy is a legal process that allows individuals and businesses to restructure or eliminate debts when they are unable to pay them. Two of the most common types of bankruptcy are Chapter 7 and Chapter 13.
Chapter 7 bankruptcy, also known as liquidation bankruptcy, is a type of bankruptcy that involves the liquidation of a debtor's non-exempt assets to pay off creditors. To qualify for Chapter 7 bankruptcy, a debtor must meet certain income and exemption requirements. In Pennsylvania, for example, individuals must have an annual income of $160,000 or less and own no more than $12,800 in equity on their primary residence.
Chapter 13 bankruptcy, also known as reorganization bankruptcy, is a type of bankruptcy that allows debtors to create a repayment plan to pay off a portion of their debts over time. To qualify for Chapter 13 bankruptcy, a debtor must meet certain income and exemption requirements, such as having an annual income below $396,725 or owning no more than $1,445 in equity on their primary residence. This type of bankruptcy is often used by individuals with a steady income and who are facing a debt crisis.
Bankruptcy can be an effective way to start anew by eliminating debts and rebuilding financial stability. If you're considering Chapter 7 or Chapter 13 bankruptcy, it's essential to consult with a qualified attorney in Harrisburg who can help you determine which type of bankruptcy is best for your specific situation.