Common Financial Concerns

If you have questions about dealing with creditor harassment; stopping a foreclosure; and eliminating or restructuring credit card debt, medical debt, back taxes, or business debt, you are not alone. These are the main questions and concerns expressed by our clients. See below for some brief answers and links to more information on our site.

How Can I Stop Debt Collector Harassment?

There is more than one way to deal with creditor harassment. See below:

File for Bankruptcy: Chapter 7 and Chapter 13 bankruptcy stops belligerent debt collectors in their tracks. Once you file for bankruptcy, something called the "automatic stay" prevents creditors, debt creditors, and even collection lawyers from contacting you to try to collect a debt. If a creditor tries to collect after receiving notice of your bankruptcy, they may end up paying you.

After you receive your bankruptcy discharge, any attempt by a creditor to collect a discharged debt is a violation of the bankruptcy discharge. In many cases, the creditor or debt collector could end up paying you. >>Read More

Sue the Debt Collector: In addition to bankruptcy, consumer laws such as the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA), the Pennsylvania Fair Credit Extension Uniformity Act (PFCEUA), and the Service Members Relief Act (SMRA) help protect Consumers from abusive creditors. These laws have specific provisions that govern what a debt collector or creditor can and cannot do. Moreover, most of these laws provide for the payment of damages and your attorney's fees for violations.

Send the Creditor a Cease and Desist Letter: Note that you have the right under the FDCPA and other consumer laws to demand that a debt collector stop calling you and even stop contacting you at all. However, before taking that step, you should speak to an attorney.

How can I eliminate credit card debt and loans?

There is more than one way to deal with credit card debt and other unsecured debt. An attorney can review all of your options, but here are the basics:

Chapter 7 Bankruptcy: Chapter 7 bankruptcy eliminates credit card debt, personal loans, old utility bills, medical bills, deficiencies, and most other unsecured debts. Chapter 7 is a quick process (four to five months from filing). In over 90% of Chapter 7 cases, the debtors keep all of their personal property, including cars, retirement accounts, the contents of their house, etc. In many cases, they can keep their home. >>Read More.

Chapter 13 Bankruptcy: Chapter 13 can eliminate unsecured debt as well. Chapter 13 is a payment arrangement in which you pay back a part of your debt over time. In most Chapter 13 cases, much of the unsecured debt will be discharged as well. In many cases, debtors pay back only a small percentage of their unsecured debt. People use Chapter 13 primarily to save homes from foreclosure, save cars and other secured property from repossession, and restructure debt. It is also available when someone's income is too high for Chapter 7. >>Read More.

Debt Settlement: if a debt has been unpaid for a long time, they may be ripe for debt settlement (sometimes called debt negotiation). Often it is possible to settle debts in a lump sum or on a short-term payment plan for much less than the balance. See our debt settlement page and debt settlement FAQ for more information. Sometimes, combining debtor defense with debt negotiation may lead to a more favorable settlement. >>Read More

Long-Term Workouts: For larger debts, it may be possible to settle the account based on a long-term payment plan. Creditors may be less inclined to agree to reduce the balance for a long-term payout, particularly for small debts. However, such arrangements may reduce or eliminate interest and allow the debtor to get back on track.

How Can I Eliminate or Restructure Tax Debt?

Taxes can seem like they are forever, but there are ways to deal with income tax and other tax debt. Here are the most common means of bringing tax debt under control:

Payment Plans. For income tax, the best approach depends upon the size and age of the debt. If the debt is relatively manageable, you may want to enter into a payment plan with the IRS or other taxing agencies. The IRS will generally accept about 2% per month as payment. You will still incur penalties and interest under a payment plan, which can be significant.

Offers in Compromise. For larger income tax debts, there is the possibility of an offer-in-compromise, which is essentially an agreement for the IRS to accept less than the full balance owed. The IRS approves only about 40% of such offers.

Chapter 7 or Chapter 13 Bankruptcy. It is a myth that income taxes are not dischargeable in bankruptcy. In truth, you can eliminate federal, state, and local income taxes in Chapter 7 bankruptcy if the taxes were due at least three years ago and meet other criteria. Beware that even many bankruptcy attorneys do not understand how to discharge tax debt. We wrote the article on discharging income taxes, and you can read it here: "You Can Discharge Income Taxes in Bankruptcy."

Back property taxes and other non-income taxes. Most non-income taxes, such as property taxes, certain (but not all) business taxes, etc., are not typically dischargeable in Chapter 7 bankruptcy. However, there are ways to resolve tax issues, including Chapter 13 Bankruptcy, which may allow you to catch up on your back taxes over time. It may also be possible to negotiate a payment arrangement or a reduction of penalties and interest with the taxing agency. Feel free to call us with questions about resolving your property, business, and other tax issues.

How Can I Stop Foreclosure or Repossession?

How Can I Stop Foreclosure and Repossession? If you are facing foreclosure of your home or repossession of a car or other secured property, there may be a solution. See below for some options for saving your home and personal property using bankruptcy or non-bankruptcy solutions:

Chapter 13 Bankruptcy: Chapter 13 bankruptcy stops foreclosure immediately, even if you file the day before the sheriff's sale. (We don't recommend waiting to the last minute, and it is best to consult with a bankruptcy attorney early in the process.) Chapter 13 can allow you to catch up on back payments on your home over 36 to 60 months. It can also save you from late fees and interest on the back payments. Note that you apply for a mortgage modification while in Chapter 13, thus buying you more time to have the lender to approve your modification. >>Read More.

Chapter 7 Bankruptcy: If you are reasonably current on your house payment and do not have too much equity in your home, you can retain your home in Chapter 7. By eliminating other debts, Chapter 7 may enable you to afford your current house payments. >>Read more.

Mortgage modification. If you can obtain a mortgage modification, you may be able to keep your home without filing for bankruptcy. We can help you with the process. See our article "Mortgage Modification and Bankruptcy" for a detailed explanation.

Foreclosure Defense. Mortgage foreclosure defense means defending the foreclosure lawsuit brought by the lender. Lenders make mistakes and making them prove their case cannot only buy you time but also give you a chance to resolve the foreclosure through settlement or other means. See our article "Foreclosure Defense and Bankruptcy" for more.

Can I Discharge Medical Debt In Bankruptcy?

Can I discharge medical debt in bankruptcy? Yes, Chapter 7 and Chapter 13 bankruptcy can eliminate medical debt In bankruptcy, medical debt is treated just like any other unsecured debt. In other words, it is dischargeable just like credit card debt. There is a lot of confusion over this issue, but medical debt gets no special priority in bankruptcy.

Likewise, you can use debt settlement with medical debts. It is possible to negotiate medical debts, just like credit card balances, loans and other debts.

Can I Discharge Business Debt in Bankruptcy?

Absolutely. Business debt is dischargeable in Chapter 7 bankruptcy like any other debt. If you are a business owner and have co-signed for business debts, you can discharge your liability for those debts in bankruptcy. If your debts are primarily business debts, you do not have to take the means test, which may make it easier to qualify for Chapter 7. It is also possible to negotiate settlements of your liability for the debts. If you are a sole proprietor, Chapter 13 may help you stay in business by stretching out debts over time and eliminating fees, interest, and penalties.

Note that for incorporated businesses that wish to liquidate, Chapter 7 can sometimes be an inexpensive way to wind down the business and distribute assets. To restructure debt for an incorporated business, Chapter 11 and or possibly the new Subchapter 5 bankruptcy may be appropriate.

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