Five Things to Know Before Filing for Bankruptcy in Pittsburgh

Most people have never dealt with bankruptcy before, and what they think they know about the process comes from television, the internet, or well-meaning friends and family who may not have their facts straight. After handling thousands of bankruptcy cases in the Pittsburgh area, I can tell you that the gap between perception and reality is wide.

Here are five things I wish every person knew before they walked into my office for the first time.

1. You Probably Will Not Lose Your Stuff

This is the biggest misconception about bankruptcy, and it keeps people up at night for no reason. The idea that filing bankruptcy means a trustee shows up at your house and starts loading your belongings onto a truck is fiction. It does not work that way.

Both Pennsylvania law and federal law provide exemptions that protect your property in bankruptcy. These exemptions cover your home equity up to a certain amount, your car, your retirement accounts, your household goods, your clothing, and your personal effects. In the vast majority of Chapter 7 cases we file, our clients keep everything they own. Every single thing.

The cases where someone loses property in bankruptcy are rare and almost always involve unusual circumstances, like someone who owns a vacation home or has a large amount of cash in a non-retirement investment account. For the typical working person or family in Pittsburgh, exemptions cover everything. We verify this before we ever file your case.

2. Not All Debt Goes Away

Bankruptcy is powerful, but it has limits. Certain types of debt survive a bankruptcy discharge, meaning you still owe them after the case is over. The most notable categories include:

• Most student loan debt (unless you can prove undue hardship in a separate proceeding)
• Child support and alimony
• Recent tax debts (generally, income taxes less than three years old)
• Debts caused by fraud or intentional wrongdoing
• Criminal fines and restitution
• Debts from DUI-related injuries

This does not mean bankruptcy cannot help if you have non-dischargeable debts. By wiping out the debts that are dischargeable, you free up income to address the ones that remain. A person who owes $60,000 in credit card debt and $30,000 in student loans is in a much better position to handle those student loans after the credit card debt is eliminated.

Check our Bankruptcy 101 page for a more detailed breakdown of what bankruptcy can and cannot do.

3. Timing Matters More Than You Think

When you file bankruptcy can affect your case in significant ways. A few examples:

Income timing. The means test looks at your income for the six full calendar months before you file. If you recently lost a job, had your hours cut, or experienced a drop in income, waiting a month or two to file can change the calculation in your favor. On the other hand, if you are about to start a higher-paying job, filing sooner might make more sense.

Tax refund timing. If you file bankruptcy and you are expecting a large tax refund, that refund might be considered an asset that the trustee can claim. Filing at a time when you have already received and spent your refund on legitimate expenses can avoid this issue.

Lawsuit timing. If a creditor has filed a lawsuit against you, the urgency increases. Once a judgment is entered, the creditor can garnish your wages or freeze your bank account. Filing bankruptcy before that happens gives you more control over the situation.

This is one of the reasons working with an experienced attorney matters. We look at your entire financial picture, including the timing factors, and recommend the filing date that gives you the best outcome.

4. The Process Is Not as Scary as You Think

Many people put off calling a bankruptcy attorney because they are nervous about the process. They imagine courtroom dramas, invasive questioning, and public humiliation. The actual experience is nothing like that.

Most of the work happens in our office. We gather your financial information, prepare the paperwork, and handle the filing. About a month after filing, you attend a meeting of creditors, which sounds intimidating but is usually a brief, informal proceeding that takes about five to ten minutes. A trustee asks you some routine questions under oath to verify the information in your petition. Your creditors are invited but rarely show up.

That is typically the only time you need to appear in person. In Chapter 7, your discharge is usually entered about 60 days after that meeting, and the case is closed. You do not go before a judge. There is no trial. It is a straightforward administrative process.

For a full overview of what to expect, see our frequently asked questions page. And if you want to be prepared for your first appointment with us, check our guide on what to bring to your first meeting.

5. Waiting Usually Makes Things Worse

This is the one I wish more people understood before they came in. By the time most clients call our office, they have been struggling for months or even years. They have been raiding their retirement accounts to make minimum payments on credit cards. They have borrowed from family. They have taken out payday loans to cover bills. They have let their health insurance lapse to free up cash for creditors.

Every one of those things makes the situation harder to fix. Retirement accounts are fully protected in bankruptcy, so draining them to pay unsecured debt that could have been discharged is one of the most costly mistakes we see. Payday loans add fees that pile up fast. And going without health insurance is a risk that can create a whole new financial crisis.

The earlier you get professional advice, the more options you have and the less damage you are likely to do to yourself financially. A consultation at our office does not commit you to anything. It just gives you information so you can make a smart decision.

The Bottom Line

Bankruptcy is a legal tool designed to give honest people a fresh start. It is not something to be ashamed of, and it is not the end of your financial life. For many people, it is the beginning of getting things back on track.

If you have questions about whether bankruptcy is right for you, call our office at 412-923-4941 or reach out online. The consultation is free, confidential, and comes with zero pressure. You will walk out with a clear understanding of your options, whether or not bankruptcy is one of them.