The End of January is a Popular Time for Those Filing for Bankruptcy
 January 17, 2012

(Source: Lauren Boyer York Daily Record, Pa.) – Township bankruptcy attorney Timothy Baker sees an influx of clients hoping to clean financial house.

By this time, the tree is down. The holiday splurge is over. “All of a sudden, there’s this shift. Like, ‘Oh my god. I have all these bills to pay,’” Baker said.  Somehow, those bills, wind up on his desk — a last resort for new year’s resolutions with no place else to go. When all else fails, bankruptcy, a legal elimination of debt, can provide peace of mind.

But those who owe, he said, often go through years of contemplation before taking the plunge into bankruptcy court. “People tell me they wish they had done it sooner,” Baker said. “They’re afraid somebody is going to yell at them or be judgemental.” And they often fear the worst. “People think, ‘Maybe I’ll go to jail,’” Baker said. “I have to remind them that they did away with debtors prison in the 19th century.”

Q: What is bankruptcy?
A: You’re getting an order from the bankruptcy court effectively eliminating allowable debts.

Q: What kind of debts can I eliminate through filing bankruptcy?
A: Any unsecured debts, which are not backed by assets. This includes things like credit card debt and medical bills.

Q: What kinds of debts won’t be eliminated through bankruptcy?
A: Student loans, child support or alimony, most taxes, court fines.

Q: Who typically files for bankruptcy?
A: It’s mostly middle class people. All it takes, if you’re living paycheck to paycheck, is one stroke of bad luck. Life happens.

Q: How does filing for bankruptcy affect my credit score?
A: It can stay on your credit report for up to 10 years. Most people bounce back fairly quickly in terms of credit.

Q: If I file for bankruptcy, is someone going to take back my car or my house?
A: In 98 percent of cases, you don’t give up anything. No one is going to take your car, your house, your bank account or retirement. But if you want to keep your house and your car, you need to continue making payments. Bankruptcy relieves additional debt, so you can focus on those priority items.

Q: Who can file for Chapter 7 bankruptcy?
A: Generally, people who makes below the median income. In York County, for a household of four, that’s in the high $70,000s per year.

Q: What if I make above the median income? Can I still file for bankruptcy?
A: Generally, yes. Under Chapter 13, which requires a partial repayment plan of debts over a period of three to five years.

Q: So, I’m going to eliminate my debt. Does that mean I can go crazy on my credit cards beforehand?
A: Terrible idea. You really ought to pay for what you buy. Bankruptcy is for honest people who want an honest fresh start. This is not for people who want to go on shopping sprees.

Q: How often can I file for bankruptcy?
A: Use sparingly. If there’s another way out, I don’t encourage people to file.

Q: What’s the age range for people who file bankruptcy?
A: From college aged to late 90s. A growing segment is the elderly.

Q: How do I avoid bankruptcy?
A: Have good luck. All it takes is one illness, one job loss, or one family member with a health problem. And try to manage prudently as best you can. Try to be aware of what you’re spending and what your priorities are.


SOURCE: Timothy Baker, York Pa bankruptcy attorney


-This is going to ruin my credit forever.

-I’m going to be publicly humiliated.

-This is a personal failure. It’s morally wrong.

-I’m going to go to jail.

©2012 York Daily Record (York, Pa.)

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