Derek Cordier, Esquire
                           LAW OFFICE
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319 South Front Street
Harrisburg, PA 17104

 Phone: 717 919-4002 
 Fax: (717) 230-1931

Most people, at certain times in their lives, have financial problems. Reasons such as sickness and unemployment may cause someone, who would ordinarily pay their bills, to fall behind. Considering bankruptcy?

First you should determine if bankruptcy is appropriate. There are many non-bankruptcy debt reducing options that may be considered. Reputable debt consolidation programs and credit card settlements are such options.

For most consumers there are two types of bankruptcy filings. Essentially a Chapter 7 filing is for those with no substantial assets and whose expenses outweigh their income. A Chapter 13 filing is for those with some assets and income that is greater than their expenses.

Most Chapter 7 filings are no-asset cases. This means that no assets are sold to pay the creditors. Usually homes and cars are kept by the debtor assuming the debtor is willing to continue to make payments on them. A Chapter 7 is usually complete (discharged) in four to six months. Chapter 7 court filing fees are approximately $200.00 and attorney fees range from $500.00 to over $1,000.00.

A Chapter 13 filing is for those with substantial assets and/or income that is greater than their expenses. Seventy-five percent of the debtor’s disposable (after expenses) income is paid monthly into a payment “plan.” That amount is then paid, in a pro rata percentage to the creditors, the attorney, and the trustee. The payment “plan” runs a minimum of three years.

One common reason to use a Chapter 13 is to cure a mortgage default. The debtor simply pays the arrearages over the term of the plan. The Chapter 13 court filing fees approximate those in Chapter 7 filings. However, the attorney fees are considerably higher as they are included in the payment “plan”.

Most attorney’s in this area offer free consultations. However, you should also consult with other professionals such as CPAs and/or financial advisors and attempt to resolve the financial problem. Remember, resorting to bankruptcy will adversely impact your credit for years to come.