Life After a Bucks County Bankruptcy: What is an Emergency Fund?

After people go through a Bucks County bankruptcy and have their debts discharged, they frequently ask how to get back on solid financial ground and avoid bankruptcy again.

Most financial counselors and Bucks County bankruptcy lawyers recommend that you have a fund set aside for unanticipated expenses or unanticipated events that will prevent you from making your usual salary. This goal is normally called an "Emergency Fund".

Your goal should be to have the equivalent of six months salary set aside to be used only in extreme situations. What would you do if you suddenly lost your job or your child became seriously ill and you find yourself with huge medical bills? Even more simply, what if the hot water heater in your home goes in the middle of winter?

Use some discipline and set aside a few dollars from each paycheck until you have six months worth of salary. You can arrange to have your bank direct deposit the money and you won’t even miss it. I personally use Smarty Pig to create my emergency and savings funds. It provides a nice interface and tracking tools. When asked, I always tell my internet savvy Chapter 7 and Chapter 13 Bucks County clients to set up an account with Smarty Pig.

Here is the key: Don’t even think about using that money unless it is absolutely necessary!

How Long Does a Bucks County Bankruptcy Take?

The length of time in a Bucks County bankruptcy is contingent upon whether the debtor is filing for Chapter 7 or Chapter 13.

A Chapter 7, once filed, is usually discharged within four to five months while a Chapter 13 can take anywhere from three to five years.

In a Chapter 13 there is an agreed upon repayment plan of debt whereas in a Chapter 7 debts are liquidated. Always consult with a bankruptcy attorney as deciding which type of bankruptcy to file can be confusing. It can also be extremely complicated if you attempt to file by yourself and you will definitely be entering into uncharted waters.

What Are the Debt Limits in a Chapter 7 and Chapter 13 Filing?

Can you have unlimited debt if you file a Bucks County bankruptcy? It depends on the type of bankruptcy, either Chapter 7 or Chapter 13.

In a bizarre twist, there are no debt limits in a Chapter 7 filing but there are limits for a Chapter 13. The current limits for a Chapter 13 filing are $360,475.00 for unsecured debt and $1,081,400 for secured debt. Under the current bankruptcy code these amounts are adjusted every three years and is based on the consumer price index for all urban consumers. The next scheduled adjustment is April 1, 2013.

Thus, if you are a former millionaire who has millions of dollars in debt and pass the means test, you may qualify for a Chapter 7. If, however, you are that same millionaire and you are slightly above the median income for your household size (which would put you into a Chapter 13), you cannot file due to the debt limit, thus precluding you from the benefits of a bankruptcy in Bucks County.

Of course, whichever chapter of bankruptcy you file for in Bucks County, there are still many debts that cannot be discharged.

What is Adequate Assurance in a Chapter 7 and 13 Filing?

One of the biggest concerns of Bucks County debtors is what happens to their utility services if he/she fell behind in payment prior to filing for bankruptcy. Do not be alarmed!

Section 366 of the Federal Bankruptcy Code provides the debtor with continuance of service providing “adequate assurance” for future service is given within twenty days of filing a Bucks County Chapter 7 or a Chapter 13. The assurance can be a cash deposit, letter of credit, certificate of deposit or some other security agreed upon by debtor, utility company and trustee. Generally, the utility company requests a reasonable monetary amount.

In many communities, like in Bucks County, it often happens that there are a limited number of utility providers so it would be difficult for a debtor to find another company to serve his/her needs. The "adequate assurance" provision provides the debtor with some level of security knowing that, going forward, his electric , phone or gas, will not be turned off.

Of course, the the Bucks County debtor must continue to make regular payments in order for the assurance to remain in effect.

PA Foreclosure Abuse Settlement

After years of struggling with foreclosure abuses in Bucks County, a multi-state settlement of $25 billion has been reached. The settlement affects approximately 750,000 individuals. As ABC News Reports,

Payments of about $2,000 will be made to about three-quarters of a million households that were foreclosed on through abusive practices, distributed over three years.

A foreclosure in Bucks County can be a stressful event, where a Bucks County resident faces losing their home due to unpaid mortgage or taxes. They were faced with a decision on whether they should file for bankruptcy. Many families and individuals, as a result of the abusive practices of the mortgages companies, had to file a Chapter 13 in Bucks County. The settlement will bring $226 million to the Commonwealth of Pennsylvania.

As many know, a Bucks County bankruptcy lawyer can stop a foreclosure and a sheriff sale. Through bankruptcy, the arrears of a mortgage can be paid through a five year plan. It is sometimes the best path available for people to save their home and get a fresh start.

What is a "Statement of Financial Affairs" in a Bucks County Bankruptcy?

A Bucks County debtor filing for bankruptcy must submit a Statement of Financial Affairs (affectionately called "SOFA" to bankruptcy lawyers in Bucks County) to the trustee. This is an official form from the bankruptcy court consisting of twenty five questions concerning all aspects of the debtor’s personal and business financial background related for the previous three years. If the Bucks County resident is filing for bankruptcy, whether they are filing Chapter 7 or filing a Chapter 13, the Statement of Financial Affairs must be completed. If the debtor is married and filing a joint petition, only one statement need be filled out which will contain information on both persons.

All sources of income from employment and business must be disclosed. In addition, any other sources of income, including unemployment, disability, lottery winnings, and recoveries from lawsuits. Also, payments to creditors made within ninety days of filing must be listed with the dates of payment, amount paid, and remaining balance. All lawsuits, garnishments, repossessions, and foreclosures within one year must be listed and explained. Charitable contributions over $100 within the prior year of filing must be disclosed. All losses from fire, theft, gambling or other casualty must also be disclosed. Even safe deposit boxes must be listed along with a description of contents.

If an individual owns a business, an explanation of the business must be included on the Statement of Financial Affairs. This will include the type of Bucks County business they have, if there are assets, and the corporate structure.

As you can see, the Statement of Financial Affairs is extremely lengthy and comprehensive. As one of my Bensalem clients told me recently, "I would hire a Bucks County Bankruptcy lawyer just to help me with the Statement of Financial Affairs!" Due to its complexity, you should rely on your bankruptcy attorney before submitting the statement and, of course, consult him/her should you have any doubts as to what should be included. You want your statement to be as honest and accurate as possible.

Benefits of a Bucks County Bankruptcy

Most people will do anything to avoid filing a Bucks County bankruptcy as they feel the stigma attached to filing is very humiliating. I believe that it is in our American DNA to avoid the stigma at all costs, even if filing for bankruptcy in Bucks County may be the most cost efficient, effective, and legally supported path to handling overwhelming debt. I personally feel that, in most cases, individuals who start to get financial worries should get a free consultation with a Bucks County bankruptcy lawyer early on as it may save them thousands of dollars (i.e. by avoiding paying hundreds of dollars on minimum credit card payments that will never pay off the balance) and sleepless nights.

Once someone in Bucks County files, he /she has a unique opportunity to turn their life around for the better and achieve all the dreams they once held so dear. It won’t happen overnight, but the opportunity will be there! Of course, certain lifestyle changes will be necessary but the positive outcome will more than compensate for doing without things once deemed as necessities. There is an expression that your glass is half empty or half full; it all depends on how you perceive it!

Aside from the above psychological advantages, there are everyday improvements to your life after filing. Chief among these is that creditors are eliminated from bothering you. No more hassles with phone calls or threatening letters. Also, if you play it smart, your credit rating will be restored after a period of time. Your unsecured debts are removed enabling you to breathe more easily when paying your current bills. You have a chance to be human again and sleep worry free.

Frequently, after I attend the Trustee's hearing with my Bucks County client, my clients will review me on my AVVO profile and thank me for giving them a fresh start. It is so satisfying to hear that they can start fresh and begin their life all because of my Bucks County bankruptcy services.