Written by Attorney Jamie Lee Ruiz.
Updated August 17, 2020
The bankruptcy system provides for the forgiveness of debt. So why is it that there are so many negative connotations surrounding it? Well, the problem is that we don't have all the facts surrounding the positive side of bankruptcy presented to us. Some people see bankruptcy as being on fire, while others see it as being saved from the fire by Lancaster native and star of Chicago Fire, Taylor Kinney. The truth is, most people think bankruptcy means you will never be able to rebuild your credit again. That is not what the bankruptcy system was designed to do. It was designed to do just the opposite – give those who fell behind on their financial obligations due to no fault of their own a fresh start. A Chapter 7 bankruptcy in Lancaster allows you to eliminate your debts; once your discharge has been entered, you will not have to pay any of the discharged debts and will be able to build your credit once again.
Your Lancaster Bankruptcy will remain a notation on your credit report for 10 years. However, this does not prevent you from building your credit score once your bankruptcy is done. Generally, the hardest part about filing for bankruptcy is educating yourself on what you have to do to obtain your discharge. A good place to start is checking out what forms you will need and the information you will need to fill out those forms.
If you feel as though bankruptcy is the right choice for you, the nearest courts to file your Lancaster bankruptcy are in Philadelphia or Reading. Free help is available in the event that you cannot afford an attorney.
Lancaster Bankruptcy Lawyers - Estimated Cost
Filing a Lancaster bankruptcy on your own can prove challenging at times and some people prefer to consult an expert. A Lancaster bankruptcy attorney costs on average $1,250. Some Lancaster bankruptcy attorneys will charge as little as $995 and as much as $1,450. Unlike other legal matters, bankruptcy attorneys typically charge a flat fee rather than an hourly rate. This flat fee will cover the completion of all your bankruptcy forms, attending your 341 meeting, and all communications and counseling throughout the process. Your attorney will also handle all communications with the Trustee after filing bankruptcy in Lancaster for you. Attorneys may require additional fees for any work beyond your bankruptcy including work on a foreclosure or an appeal.
A bankruptcy attorney will typically not charge you for your first meeting. Consider this as the attorney’s opportunity to interview for the position of representing you. You will determine whether the attorney is the right fit for you and have the opportunity to ask questions about what they will do for your Lancaster bankruptcy case. The attorney, in turn, will ask you questions regarding your financial situation, such as whether you are employed, how much money you make, what your estimated monthly expenses are, if there are any other legal matters you are involved in, and whether you filed for bankruptcy in the past. Use this opportunity to get to know each other and gather as much information as possible so you can make an informed decision.
How to File Bankruptcy in Lancaster, Pennsylvania for Free
If you want to give filing bankruptcy in Lancaster a go, it is completely feasible to do so for free. All the bankruptcy forms are available online in PDF format. Once you have filled out your Lancaster bankruptcy documents, you will take the credit counseling course, file your forms with the Court, pay the fee, and attend the 341 meeting. After filing your bankruptcy, you will take the financial management course to prepare for life after bankruptcy.
Collect Your Lancaster Bankruptcy Documents
Some helpful resources you can use to fill out the information requested in the Lancaster bankruptcy forms are your pay stubs, monthly bills, bank statements, and tax returns. In the online age, your pay stubs and tax returns may be available via the web. If your employer uses a payroll company such as ADP, you can contact ADP or log in with your credentials to their website to pull your pay stubs. You may also have the ability to pull your pay stubs internally at your place of work. You can request your tax returns online on the IRS website if you no longer have your copy. Mobile banking has also made it convenient, free, and simple to print or view your bank statements online.
Take Credit Counseling
Before filing bankruptcy in Lancaster, everyone must complete a credit counseling course. This one-hour course will educate you on the options to deal with your debt. You can take this course online, over the phone, or in person. The United States Trustee keeps a list of approved credit counseling agencies for each state. You can take a course from any of the providers on this list, even if they are actually located in another state. The purpose of the credit counseling course is to give you ideas of the ways that you can resolve your debt. You will be able to evaluate your options including bankruptcy. Once you have completed the course, you will receive a certificate of completion either by mail or email. Hold on to this certificate as it will be submitted to the Court with the rest of your bankruptcy forms when you file your Chapter 7 bankruptcy in Lancaster.
Complete the Bankruptcy Forms
Here, you will paint a full portrait of your financial picture for the Court and the Trustee. The Lancaster bankruptcy forms will cover everything from your income, expenses, property you own, any existing legal disputes you may have, and contracts you are party to. This will be, by far, the most time-consuming part of filing bankruptcy in Lancaster. In order to prepare for this task, it is helpful to gather all necessary financial information including your pay stubs, bank statements, monthly bills, and tax returns. You can download the bankruptcy forms for free online and print them at home or at your local library. While you are completing your forms, you can keep organized by using the checklist provided by the Court. If a question should come up regarding one of the forms, you can refer to the detailed instruction manual.
The most common mistake in filling out the forms is forgetting to include information and/or using accurate information. Here are a few examples:
Before filling out Schedule A/B, which requires you to list your personal property, take an inventory in your home. Walk through each room and jot down the big ticket items first. Then fill in the blanks with smaller items. This will give the Trustee an idea of what you own and what it’s worth.
Prior to filling out Schedule C, you probably want to know how much your car is worth to see what exemptions (state or federal) will be most helpful. You can use Kelley Blue Book or take it to the dealer you purchased it from to get an estimate of your car’s value.
The Creditor Matrix is a detailed list of the people you owe money. A helpful hint here is to gather any bills and collection notices beforehand and group them together. This way you will not forget or duplicate a creditor entry.
Get Your Filing Fee
The filing fee of $335 covers the cost of filing your bankruptcy forms with the Court. The filing fee is the same if you file as an individual or with your spouse. $335 can be a hard pill to swallow if you are already in debt; hey, isn't not having money why I’m filing bankruptcy in Lancaster in the first place? The Court understands this. You can apply for a fee waiver when submitting the rest of your bankruptcy forms. This application will be reviewed by a judge who determines whether you are eligible to have your filing fee waived. You can also apply to pay the filing fee for your Chapter 7 bankruptcy in Lancaster in installments. The application is submitted to the Court with your bankruptcy forms. If your application to pay installments is granted, you must pay the total fee within 120 days of filing your bankruptcy in no more than 4 installments. Four installments of $335 works out to four payments of $83.75. You do have the option of proposing a different amount and payment schedule in your application.
Print Your Bankruptcy Forms
Once you have completed your Lancaster bankruptcy forms, you will need to print them and file them with the Bankruptcy Court. Since there are a large amount of forms and attachments that you need to send to the Court, it may be helpful to use a printing service such as Staples or Kinko's. But you also have the option of printing your forms at the public library. Black and white pages will run you 25 cents per page; color pages cost 50 cents per page. Lancaster County, the home of Hershey, has 22 libraries to choose from. In the city of Lancaster alone, you can choose to go to:
Lancaster Public Library, 125 N. Duke St., Lancaster (Open Monday through Saturday, hours vary daily)
Struts Environmental Library, 3 Nature’s Way, Lancaster (Open Monday through Friday 9am to 5pm & Saturdays)
Manheim Township Public Library, 595 Granite Run Drive, Lancaster (Open Monday through Saturday, hours vary daily)
It is always helpful to print at least two copies of the forms you prepared for your Chapter 7 bankruptcy in Lancaster. One copy for yourself and one to submit to the Court. Please note that the Court may require additional copies, and it is best to check with the bankruptcy clerk to confirm how many copies you need. It may be helpful to sign one set of forms and take copies of the rest. It is never okay to print double-sided.
Go to Court to File Your Forms
If you are filing bankruptcy in Lancaster the Bankruptcy Court for the Eastern District of Pennsylvania will handle your case. The Eastern District has two offices: one in Philadelphia and one in Reading.
Robert N. C. Nix, Sr. Federal Courthouse
900 Market St., Suite 400, Philadelphia
Open 8:30 AM to 5 PM
The Madison building
400 Washington St., Reading
Open 8 AM to 4:30 PM
Federal Courts are closed on government holidays and weekends. When you are ready to file your forms, keep in mind that you may need to pay for parking while visiting the courthouse. On your way into the building, you can expect to go through security, which will include a metal detector, and screening by federal marshals. Cell phones are not allowed in the courthouse. If you do need to bring your cell phone with you, you have to check it at security and will have it returned to you when you leave. Once you have gone through security, you will go to the bankruptcy clerk's office to submit the forms to file your Pennsylvania bankruptcy case. An advantage of filing your forms in person is that if you miss a signature or form, the clerk will bring that to your attention right away. This will save you a trip back to Court or unnecessary delay due to mailing if you filed by mailing everything to the Court.
Mail Documents to Your Trustee
The Trustee's responsibility is to administer the your case, which includes selling your non-exempt property and using the money from the sale to pay your creditors. The Trustee is supervised by the Office of the United States Trustee, which is a division of the Department of Justice. They will review your petition, schedules and statements, and are responsible for recovering any property that belongs to your so-called “bankruptcy estate.” The Trustee will also, if necessary, take legal action against anyone you owe or recently paid off. In addition to the bankruptcy forms you submitted to the Court, the Trustee will review your pay stubs, tax returns, and bank statements. This will enable the Trustee to get a full picture of your financial situation. If you don’t receive any other instructions from the Trustee, keep in mind that your deadline for submitting at least your most recent federal income tax return and all paycheck stubs you received in the 60 days before filing bankruptcy in Lancaster is 7 days before the date set for your 341 meeting.
Take Bankruptcy Course 2
After you file your Lancaster bankruptcy, you will need to take a financial management course. Similar to the credit counseling course you took before filing bankruptcy in Lancaster, you will need to take this course as a condition to receiving your discharge. You can take the course online, in person, or over the telephone. So long as the provider is approved for Pennsylvania bankruptcy cases, it does not need to be located in your state. The nearest in-person course is administered by Advantage Credit Counseling Service, Inc. in Pittsburgh, though remember that you can take it online or over the phone so you don’t have to travel to Pittsburgh for this requirement unless you want to. This course will give you tools for managing your finances after your debts have been forgiven as part of your Lancaster bankruptcy.
Attend Your 341 Meeting
The 341 meeting is what is known as the meeting of creditors. This may sound confusing because you are meeting with the Trustee, however, your creditors are allowed to come to this meeting. Primarily, you will meet with the Trustee and go over any questions they may have regarding your Lancaster bankruptcy forms. They may ask you if you have filed for bankruptcy before. They may also ask you if you have anything you want to include in your bankruptcy forms that you haven’t mentioned already. The location of your 341 Meeting may vary depending on the Trustee assigned to your case. The people you owe, your creditors, are allowed to come to the meeting and ask questions, but this is a rare occurrence. You should bring your driver's license and social security card as a means to verify your identity with the Trustee. When appearing for your meeting, it is best to dress business casual. The length of your 341 meeting will vary depending on the questions the Trustee has for you, but it typically takes less than 10 minutes. This will likely be the only time you have to appear before the Trustee as part of your Chapter 7 bankruptcy in Lancaster.
Dealing with Your Car
One of the most important questions that those facing Lancaster bankruptcy will have is what happens to my car if I file for bankruptcy? Depending on whether you lease or own your car, its value, and what you want to do with it, the options available to you after filing Chapter 7 in Lancaster vary. For example, if you lease your car and you expect to go over your mileage limits, it may be in your best interest to reject the lease and turn the car in as part of your bankruptcy case to avoid all charges normally incurred at the end of a lease term. If your car has some equity, and you want to continue making payments under the loan you can do that as well. You will have to sign a reaffirmation agreement stating that you will continue to make the payments due under the loan. If payments are not made, the lender will repossess the car, and, if a reaffirmation agreement is in place, will require you to pay the balance left on the loan. There is also an option to buy the car outright for its fair market value. Say you owe $25,000 on your car loan, but the car is only worth $10,000; your Chapter 7 bankruptcy in Lancaster gives you the option to buy it for $10,000 and discharging the other $15,000. If you own your car outright, you are able to keep it as long as the available exemptions fully protect it. Exemptions protect the property you want to keep.
Pennsylvania Bankruptcy Means Test, Bankruptcy Forms, and Exemptions for Pennsylvania
Pennsylvania Means Test
The Pennsylvania Means Test exists to determine whether your income combined with your expenses will allow you to make payment on your debts. You can be denied a discharge in your Chapter 7 bankruptcy in Lancaster if it is found that you make enough money to repay your creditors. In order to pass the Means Test, your income must be at or below the state median income for your family size. You can also pass the Means Test by claiming an exemption. If an exemption applies to you, you must fill out the supplemental form. If your income is higher than the state median and no exception applies you will be required to fill out the supplemental form in its entirety.
Median Income Levels for Pennsylvania
Pennsylvania Median Income Standards for Means Test for Cases Filed On or After May 1, 2020
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Poverty Levels for Pennsylvania
Pennsylvania Fee Waiver Eligibility for Cases Filed On or After May 1, 2020
Eligible for fee waiver when under 150% the poverty level.
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Pennsylvania Bankruptcy Forms
The Pennsylvania bankruptcy forms include the Voluntary Petition, Schedules A through J, your credit counseling certificate, and any local forms required by the Court for folks filing bankruptcy in Lancaster. The Voluntary Petition includes your biographical information, your address and your social security number. The Schedules have information regarding your income, expenses, property you own, contracts you’re a party to, leases, who you owe money to, and how they can be contacted. The most helpful resources in filling out these forms are your pay stubs, bank statements, tax returns, and monthly bills.
Pennsylvania bankruptcy exemptions determine which property your Trustee can sell on behalf of your creditors as part of your Chapter 7 bankruptcy in Lancaster. Bankruptcy exemptions allow us to keep items essential to our daily lives like our house and car, clothes and household items, with certain limitations under applicable state or federal law. In Pennsylvania, including Lancaster, the one-time capital of the United States, you have the option of using the federal bankruptcy exemptions or the Pennsylvania bankruptcy exemptions as long as you have lived in the state for at least two years. Note that not every state subscribes to the federal bankruptcy exemptions. In certain circumstances, state exemptions may be more generous for real property like your home. Choosing exemptions should not be an afterthought, but part of your pre-bankruptcy planning. Exemptions allow you to plan ahead and determine what property is important to you.