Benefits of Filing for Bankruptcy
If you are finding yourself behind on your mortgage payments, having difficulty keeping up with past due credit card payments, or receiving endless calls from creditors, filing for bankruptcy may be able to help you. Bankruptcy was designed to help people like you find a way out of debt so that you can start rebuilding your finances.
Bankruptcy can provide relief in many ways, including:
- Eliminate most debts: Whether you are filing for Chapter 7, Chapter 11, or Chapter 13, you can wipe away most of your debt through discharging it or repaying it over time. You can eliminate debts such as medical bills, credit card payments, business debts, and more.
- Stop creditor calls: When you file for bankruptcy, creditors are forbidden from contacting you for payments. This can relieve the stress from you so you can focus on resolving your debts.
- Half foreclosure: Filing for bankruptcy will prompt the court to issue an automatic stay, which puts a stop to foreclosure proceedings and buy you time to resolve overdue mortgage payments.
- Allow you to begin rebuilding credit: After your bankruptcy is complete, you will have a clean slate to start rebuilding your credit score over time. As long as you stay out of debt and maintain control of your finances, your credit should improve.
Bankruptcy may not be the right choice for everyone, but it can provide effective relief for most consumers and businesses. We can help you determine the right type of bankruptcy that suits you, and guide you through the process.
Bankruptcy Services We Offer in Manhattan, Brooklyn & Queens
Chapter 7 Bankruptcy
Chapter 7 is one type of bankruptcy that is available for individuals. It is also called straight bankruptcy or liquidation. The bankruptcy court appoints a trustee who administers the bankruptcy. The individual filing for bankruptcy usually retains all the typical types of household goods and clothing. They may also retain their home and vehicles as long as they do not have more equity in those items than they can exempt (or protect).
If the bankruptcy trustee allows an individual in bankruptcy to keep a car secured by a car lien or a house encumbered by a mortgage, the individual filing for bankruptcy must pay all car and mortgage payments as they fall due and pay the insurance on those items. A chapter 7 bankruptcy usually lasts about four to six months. At the end of the bankruptcy, most debts are extinguished through a discharge of debts. Secured debts, however, such as a car loan or a mortgage, receive different treatment.
At the beginning of the bankruptcy process, the debtor will select to do one of the following:
- Pay the creditor for the replacement value of the property
- Return the property to the creditor
- “Reaffirm” (or agree) to new contract terms with the creditor
Chapter 13 Bankruptcy
Chapter 13 is another type of bankruptcy available for individuals. This bankruptcy lasts for the duration of a debt repayment plan, from three to five years. General, unsecured creditors are usually only repaid a small percentage of what is owed, but past-due taxes must be paid in full, as well as arrearages on secured debt, such as a mortgage or car loan.
This form of bankruptcy may allow individuals to keep a home or car even if they have become seriously delinquent on the loans. At the end of a successful bankruptcy, most debts are extinguished through a discharge of debts. To be eligible for Chapter 13, a debtor must meet debt limitation requirements. If unsecured debt exceeds $394,725 or secured debt exceeds $1,184,200, then they do not qualify for this type of bankruptcy.
Chapter 11 Bankruptcy
Chapter 11 is a type of bankruptcy that is referred to as “business reorganization” bankruptcy. It is specifically aimed at relieving the debts of businesses and corporations. Businesses that file for Chapter 11 are able to continue with almost normal operation as a debtor-in-possession. It is designed to permit a business the ability both to restructure its debt and to reorganize its business operations.