Filing for bankruptcy is usually a topic that people tend to stay away from when it comes to their financial situation. It is typically considered to be a last resort option that can help people gain their freedom from debt and unpaid bills while keeping creditors off their back.
There are two main forms of bankruptcy: Chapter 7 and Chapter 13. There are other types of bankruptcy, but they apply to more rare cases, or if you own a small business. They both offer ways to help get rid of debt, but they operate quite differently.
If you have become overwhelmed by your debts, our experienced attorneys might just be able to help. Contact us today through our website or give us a call at (917) 909-6166!
Chapter 7 bankruptcies are commonly referred to as “straight liquidation” bankruptcies. The goal of this chapter is to discharge your debts by exchanging it for certain property that you own. There are certain types of property that are exempt under the law that you would not be forced to give up.
Here are some examples of exempt property under Chapter 7:
Motor vehicles up to a certain value*
Reasonably necessary household goods and appliances
Jewelry up to a certain value
Once creditors have been paid back by the assets available, you will receive a discharge of any remaining debts. There are cases, however, in which all of your property can be exempt and you are still able to receive a discharge.
If you are looking to keep your car or your home, and are behind on payments, Chapter 7 may not be the best choice for you. Chapter 7 bankruptcies do not take away the creditor’s rights to seize your property in order to fulfill your debt.
A Chapter 13 bankruptcy, also known as a “debt adjustment”, provides a way to restructure your current payment plan to give you more time to fulfill your obligations. Chapter 13 bankruptcies take longer than those under Chapter 7 and require around three to five years to complete. This allows you much more time to create a payment plan that protects you from foreclosure, wage garnishment, levy, or similar consequences.
Benefits to Chapter 13 Include:
Maintaining possession of all your property
Creating a new payment plan without incurring interest
Saving your home from foreclosure
Keeping creditors from harassing you
Paying back debts in a way you can afford
To qualify for a Chapter 13 bankruptcy you must have a regular income with no more than $394,725 in unsecured debt, such as credit card bills and loans. You must also have no more than $1,184,200 in secured debts, such as your mortgage and car loans.
When Not to File For Bankruptcy
There are reasons as to why you should not file for bankruptcy, and they are worth noting. There are several types of debts that do not have the ability to be discharged by bankruptcy.
Examples of non-dischargeable debts include:
Most federal, state, and local taxes
It would also be unwise to file for bankruptcy if you have not filed all of your required income tax returns. If you are likely to get into debt again soon after discharge or have a good amount of non-exempt property, this would also make bankruptcy an ill-advised choice to make.
Contact Our New York Bankruptcy Attorneys Today!
Navigating the complexities of bankruptcy can add strain and difficulty to an already stressful situation. Our experienced attorneys use a compassionate approach to help our clients understand the intricacies of bankruptcy and do their best to help you achieve the financial freedom you deserve.
If you are looking into filing for bankruptcy and need sound guidance, get in touch with us by filling out a contact form on our website, or give us a call at (917) 909-6166!