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You are likely reading this because you live in Pennsylvania and need debt relief, but are on the fence about whether you should file bankruptcy or pursue debt settlement or debt consolidation with your creditors. This guide will explain the pros and cons of each option so that you can decide which is best for you, take action, and get free of debt. Philadelphia bankruptcy attorney David M. Offen has used both bankruptcy and debt settlement and debt consolidation to help his clients get free of debt.

What is PA Debt Relief?

You’ve probably seen the advertisements and TV commercials by Pennsylvania debt settlement agencies trying to persuade people struggling with debt to hire them to settle their debt.  How does this work? You pay the agency to negotiate with your creditors on your behalf to achieve a “settlement” – meaning, you pay something less than what you owe. This is done over time – you pay the agency every month, and the agency disburses payments to your creditors.

Are Debt Relief Programs a Good Idea?

These agencies often claim that for most people, debt settlement is a better alternative to bankruptcy, and they warn people away from bankruptcy because a bankruptcy filing can remain on one’s credit report for years. While that is true, you need to know that there are downsides to debt settlement as well.

1 week 4 days ago

car loan after bankruptcy

Wheels are essential for most of us to get to work.

And whatever you’re driving when you file bankruptcy will need to be replaced at some point.

So, how are you going to finance that next car if you’ve just filed bankruptcy and face 7-10 years with the bankruptcy on your credit report?

The credit industry tries to fan that worry;  after all, they want you to keep paying on impossible debt rather than get a fresh start.

They want you to believe that no credit is available for eons to those who have filed bankruptcy.

Hogwash.

Bankruptcy improves your credit score

Under the credit scoring system used by Fair Isaacs, your credit score improves after bankruptcy.  Upon entry of the discharge, your debt to income ratio improves dramatically.

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If you are a child support obligor (meaning, you pay child support) and you are reading this because you are wondering, does bankruptcy clear back-owed child support, the simple answer is no.  But bankruptcy might be a solution for you in other ways, by discharging and/or reorganizing other debt and making your monthly child support payment more affordable.

If you are a child support obligee (meaning, you receive child support) and you are wondering whether child support received is considered income for bankruptcy purposes, it probably is. Speak with an experienced local bankruptcy attorney about this. If you need a bankruptcy attorney in Philadelphia or the surrounding areas, contact our office today – your initial consultation is free of charge!

Bankruptcy and Child Support Arrears

For reasons of public policy, Congress provided an exemption for child support arrears (i.e., accumulated missed payments) in bankruptcy, categorizing child support as a “priority debt” that cannot be discharged. As a priority debt, child support arrears are paid before other general unsecured debts like credit card debt and medical debt. Child support arrears also are paid before most other priority debts – including back-owed taxes.

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