Pennsylvania Bankruptcy Lawyer

Cibik & Cataldo Law Offices are a full service firm with emphasis in debtor representation. Partners Michael A. Cibik, Esq. and Michael A. Cataldo, Esq., have practiced bankruptcy law for over 25 years. Both attorneys are certified by the American Bankruptcy Board of Certification in both consumer and business bankruptcy. Our office gives a free initial consultation and prides itself on first class, tough and aggressive representation of clients.

Types of bankruptcy

Federal bankruptcy law, codified in Title 11 of the United States Code, addresses the procedures governing filing for bankruptcy in federal court. Federal bankruptcy law is divided into several categories, and bankruptcy cases can be filed under the following categories:

Chapter 7, known as straight bankruptcy or liquidation, requires a debtor to give up property that exceeds certain limits (exemptions), so the property can be sold to pay creditors.
Chapter 11, known as reorganization, is used by businesses and some individual debtors whose debts are very large. Chapter 11 debtors are given an opportunity to reorganize and restructure their debts and are given a considerable period for doing so, instead of having to opt for one-time bankruptcy.
Chapter 12 is reserved for family farmers and fishermen.
Chapter 13 is sometimes referred to as debt consolidation or the wage-earners plan. It requires the debtor to have a steady income and devise a plan, subject to court approval, to pay back all or some of the debt.

The Pennsylvania bankruptcy attorneys at Cibik & Cataldo, P.C., will sit down with you and discuss all your options:

If Chapter 7 relief is an option for you, we can stop collection activity immediately.
If we decide that Chapter 13 is your best alternative, we will negotiate with your creditors to reduce your debt, represent you in court, and help you get on back on track with your finances.

Chapter 7 liquidation

Chapter 7 is a straight liquidating bankruptcy. All debts are discharged, with certain exceptions. Chapter 7, like Chapter 13, also stops repossessions, foreclosures, and garnishments. There is no plan or plan payments in a Chapter 7.

Since the bankruptcy laws were reformed in 2005, there has been a misconception that Chapter 7 liquidation is no longer possible. However, for many individuals, straight bankruptcy remains a viable option. Your Cibik & Cataldo Law Offices bankruptcy attorney in Pennsylvania can help determine if Chapter 7 is your best option.

For a tax to be dischargeable in Chapter 7 of the Bankruptcy code, it must meet the following criteria:

Tax must have become due at least 3 years before filing Bankruptcy.
The return must have been filed at least 2 years before filing.
The tax must have been assessed at least 240 days prior to filing.
The tax return must not have been fraudulent.

If there was a Notice of Tax Lien filed, the debt is considered secured - and even though discharged in bankruptcy, the lien still remains attached to the property. The tax agency cannot attempt to enforce the tax debt. However, the amount equal to the value of the equity in the property at the time of filing of the bankruptcy must be paid when the property is sold.

Since taxes are often not discharged, often an offer in compromise combined with a bankruptcy will provide the best relief for a taxpayer with both debt and tax problems.

Chapter 13 for debtors

There is much more flexibility in Chapter 13 than in Chapter 7. Chapter 13 allows interest, penalties to be frozen, and priority taxes (those less than three years old) to be paid through Chapter 13 without interest! Chapter 13 provides options to settle tax liability not available in Chapter 7.

Chapter 13 is also known as a wage earners bankruptcy. To file a Chapter 13, you must have a regular source of income. In Chapter 13, a plan is filed with the bankruptcy court that provides for a certain amount of money to be paid into the plan and distributed to some or all creditors.

The biggest advantages to Chapter 13 come when a debtor is behind on payments to creditors who hold security, such as house payments or car payments. The past due payments can be put in the plan. This is very important if you are behind several payments and unable to catch up.

A second advantage is that often with secured debt, like cars, the debtor only has to pay the creditor what the collateral is worth, not what is owed. This often happens in situations where a person owes more on a vehicle than it is worth. In these circumstances, the amount of interest is also reduced which results in savings.

Chapter 13 allows debtors to pay tax liability for taxes that have a lien filed during the life of the Chapter 13 plan. These taxes can be reduced to the value of the debtor's assets and the balance is dischargeable if they are over 3 years old, even though a lien has been filed.

Clearly there are many benefits to filing chapter 13, but filing is more complicated than for Chapter 7. The Pennsylvania bankruptcy lawyers at Cibik & Cataldo Law Offices can help determine if you qualify and use their financial expertise to walk you through the entire process.

Chapter 13 for businesses

Most of the same rules apply for businesses as for individuals. Taxes are often a considerable challenge to business owners who do not pay employment taxes. The trust fund portion of employment taxes is not dischargeable in bankruptcy. They may, however be paid through the Chapter 13 plan. Often filing Chapter 13 will enable a business to survive and successfully reorganize its debts and tax liabilities. The key to developing the most beneficial reorganization plan is to retain the right bankruptcy lawyers. In Pennsylvania, Cibik & Cataldo Law Offices have over 25 years of bankruptcy law experience to help your business on the road toward a bright future.

Chapter 13 for sole proprietorship businesses

When a business has financial difficulties, there may be a shortage of cash flow to make current payments. Often, businesses will survive if they are given a reasonable chance to reorganize. A Chapter 13 is for sole proprietor businesses that are unable to pay their debts, but which could become profitable if given the opportunity to delay payments on debts and to reduce the amount of the debt. When equipment or vehicles are repossessed and the business needs those items to continue to operate, Chapter 13 allows some breathing room and gives the business an opportunity to propose a plan to reorganize.

When you retain Cibik & Cataldo Law offices, you can be assured you have engaged an experienced bankruptcy attorney. Pennsylvania laws are different than those in other states, and our attorneys have the local knowledge to ensure you have chosen the best options within the state.

Bankruptcy reform misconceptions

It is a common misconception that you will not be able to file bankruptcy after bankruptcy reform. This is not true. While it may be more difficult to do so, it is certainly not impossible. Bankruptcy reform has added many new requirements. It also lengthens the period of time between bankruptcies.

Free initial consultation

If you are considering bankruptcy as an option for your debt problems, contact the experienced attorneys at Cibik & Cataldo, P.C., so that we can see that your rights are protected.