There are three main classes of bankruptcy: Chapter 7, Chapter 11, and Chapter 13.

Chapter 7 bankruptcy will discharge most types of debts for the average citizen.  It will stay on record for ten years, but the major benefit is the stay it provides which prevents creditors from hassling you. 

To determine whether or not you are eligible, you must determine how many people make an income in your household and whether or not they each pass the means test—that is, whether or not they make over the median income.

Chapter 11 bankruptcy is used by businesses, not citizens, to reorganize debts. 

The main advantage of this type of bankruptcy is that it allows the debtor to keep possession of the company.  However, the strict requirements of the bankrupty process must be followed!  Motions regarding such issues as employee payment and cash collateral should be made by the bankrupty courts. 

The debtor has 120 days in which to propose a plan or reorganization to the bankruptcy court.  Because this kind of bankruptcy is so complicated, a bankruptcy attorney should be consulted first.

Chapter 13 bankruptcy is “wage earner’s bankruptcy”, which allows you to repay your debt through a plan. 

This is the best option for people with a steady income, who happen to have fallen behind in loan payments. 

The major advantage of this kind of bankruptcy is that the creditors must agree to a confirmed plan.  This prevents lawsuits designed to order the debtor to pay the balance already owed.   Lawsuits result in frustration for all concerned, as the debtor can mistakenly think that things are going great for the first six months, only to be surprised one day out of the blue. 

Bankruptcy is a complex issue that must be studied in detail to be fully understood.  Attorneys specializing in bankruptcy are clearly the best choice, as they specialize in the specific areas of Chapter 7, Chapter 11, and Chapter 13 bankruptcy.

When you file bankruptcy in PA you need to think about choosing between a Chapter 7 and Chapter 13 type of bankruptcy. You might be wondering, what is the difference between these two chapters? Most people say that bankruptcy is just a privilege that can get you out of debt. Wrong! You need to understand that when you decide to file bankruptcy in PA it is a point of no return. Bankruptcy can erase some of your debts but not all of it. The other things you have to consider are the effects after filing bankruptcy.  It becomes a huge red mark on your credit report that can last for many years and second is getting a new line of credit.  Other reasons can bring a negative effect on your future employment. Decide first if you really need to file bankruptcy, because if not there are other ways to solve your debt.

In case you have debt that can cover threefold of your lifetime’s salary, then I guess it is time for you to consider bankruptcy. From this point on, learn what type of bankruptcy suits you, not the one that you like. Take note that the new changes in the bankruptcy law were made effect last October 17, 2005. This makes it hard for people to file bankruptcy, especially in PA. Chapter 7 is difficult to in PA. In order to become eligible for this type of bankruptcy you need to pass the means test. This test will prove if you have the means to repay your debt. One requirement is to go to a credit counseling agency for a credit counseling session. This agency will provide you a repayment plan which is in the first place not for a Chapter 7 type bankruptcy. The new law seems to encourage residents in PA to file bankruptcy the chapter 13 type of bankruptcy.

You can file Chapter 7 if only you have a below average income. This means more than likely you have no other means to pay for your debts and can easily meet the qualifications of chapter 7 eligibility. Filing Chapter 13 usually costs more because you have to pay the counseling and other requirements.

The difference between a chapter 7 and a chapter 13 is the way debt is resolved. In chapter 7, the idea is the debtor will have all of his properties liquidated and the proceeds will be distributed to the creditors in exchange that all debts will be discharged. Chapter 13 on the other hand is a repayment plan that is agreed upon by all parties involved, the debtor should have a steady sufficient disposable balance to pay the debt in a reasonable amount of time.

When you have decided which type of bankruptcy is right for you, you can file without being dismissed. You don’t need a lawyer because that would cost you more.  You can just hire a bankruptcy petition preparer to help you with the paperwork.  This is the easiest and the cheapest way you can file bankruptcy in PA.