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Spodek Law Group is a top rated bankruptcy law firm with over 40 years of experience. Our goal as your law firm, is to help you understand how the law can be used to get you the financial outcome you desire. We help our clients get the financial outcome they want. Many people think bankruptcy is the only option – there are many different ways of restructuring debt, and getting the financial outcome you desire.
At Spodek Law Group, our one, and only, job is to help you gain financial freedom. We understand the law intimately, and help you get the best resolution possible. Our team of bankruptcy lawyers, and support staff members, are available to help each and every client. We listen to you explain your financial situation, and then help you understand what the implications of the law are. Our team of attorneys consist of the most qualified, and well respected, bankruptcy lawyers in New York. We have experience handling negotiations, discussions, going to trial, and all types of bankruptcies. Our attorneys place a strong emphasis on providing out of the box legal representation. We have over 40 years of experience handling bankruptcies.
You work directly with our bankruptcy lawyers for any, and all, questions you have. For your convenience, our bankruptcy law firm has offices in New York, Brooklyn, and Long Island. Our New York bankruptcy lawyers specialize in all aspects of bankruptcy, ranging from Chapter 7 and 11, to foreclosure defense, short sales, and more. Bankruptcy, and debt, can result in extreme distress. Spodek Law Group’s team of bankruptcy lawyers make the debt relief process as simple as possible. We are very aggressive, and use the law to help you win.
Todd Spodek is a second generation attorney. At the Spodek Law Group, Todd is the managing partner, and is dedicated to improving the life of every single person he can. He uses the law, to help people improve their lives and avoid unfortunate problems that can harm their future, and their family. If you’re facing an issue – and need the best, talk to Todd.
When some people hear the term “bankruptcy,” they shirk away. On the other hand, some people prematurely announce they are going to declare bankruptcy, file the paperwork and discover that they really did not need to in the first place. Understanding the seriousness of your financial circumstances will help you to determine if you are the right candidate.
Willingness to Accept the Consequences
Filing for bankruptcy means that you are going to face certain consequences. Speaking with one of our lawyers, and thoroughly reading through paperwork will help you to understand what the specific consequences for your scenario are. For example, you may lack the ability to take out any credit cards for an extended period of time. Therefore, you must recognize what the consequences are and express willingness to accept them.
Willingness to Part with Personal Property
Depending upon the type of bankruptcy you are filing for, you may have to surrender some of your personal property in order to deal with the debt. For example, you may need to move out of the house that you own and into an apartment, or you might have to surrender your vehicle. As a result, you must be prepared to find alternative ways to get to work or another place to live. This situation does not occur every time a person files for bankruptcy. Instead, you should research the details of the specific type of bankruptcy for which you are filing.
Specific Type of Bankruptcy
If you do decide to file for bankruptcy, you will likely file for Chapter 7 or Chapter 13. Generally, Chapter 7 bankruptcy is for people who have little to no income and who need to have all of their debts obliterated. Chapter 13 bankruptcy is for people who do have an income and who will need to pay their bankruptcy bank over time. To decide if you should file, you should know about the specific requirements for each time. For example, it is possible that you will make too much money to qualify for Chapter 7 and, therefore, be eligible only for Chapter 13 bankruptcy.
Legal Troubles with Your Bills
Missing a payment on a bill every so often is not an immediate reason to file for bankruptcy. However, over time, you may find yourself consistently unable to pay your bills. Debt collectors are calling your home, and you are receiving letters in the mail about the issue. After some time legal action may be taken against you. Consulting with one of our bankruptcy attorneys can help you in this process and assist you in realizing the time has come to file for bankruptcy.
Home and Money Taken Away
When you are in serious financial trouble, the entities to which you owe money may begin to garnish your wages. Instead of relying on you to make payments on a regular basis, the entity will take your income. As a result, you can begin to suffer financially in other ways because you will then unlikely be able to pay the rest of your bills. Also, you could be in a place where your home is close to foreclosure because you have not paid your mortgage in quite some time. These are two major reasons to consider filing for bankruptcy.
You also may have been unable to pay the taxes on your property, or you might have experienced trouble with paying income taxes that you owe. Remember, these issues are related to the government, and you may find yourself in a position where you are being threatened with jail time. You can be taken to jail if you do not pay your taxes. On a lesser level, your wages might be garnished for this issue as well. Instead of facing these serious penalties, you can look into bankruptcy.
Understanding Lack of Funds and Bankruptcy
Some people think that they should declare bankruptcy because they do not have any money saved. As tough as it is to face, many people do live paycheck-to-paycheck. However, they are still paying their bills. People should understand when the situation turns into one where bankruptcy can be a solution. If people are unable to pay their bills and have no money saved, then they could be in that place. Also, individuals who are unemployed and do not see a paycheck coming any time in the future are also often candidates for bankruptcy.
Understanding all of the details of bankruptcy without the guidance of a trusted professional is challenging and overwhelming, especially during a period of time that is likely already stressful. Speaking with one of our experts helps you to determine if bankruptcy is the right answer for you and for which type you may qualify. You will have guidance as you walk through this process.
Who Can File for bankruptcy?
Exploring the bankruptcy process can be a difficult undertaking and ought to only be considered with the assistance of competent legal counsel, and it is important for individuals who are considering filing for bankruptcy relief to look into whether they may be allowed by law to even seek protection. The process is intended to help honest individuals who have exceeded their means to pay down their debt to have a chance to get out from under those debts without those financial burdens ruining their lives. The question of who can or cannot file for bankruptcy protection also dovetails into the question of what type of bankruptcy filing they should pursue. In most cases, a Chapter 7 or 13 bankruptcy filing is what a petitioner is likely to seek.
How can file for Chapter 7 bankruptcy?
Chapter 7 bankruptcies are typically the simplest and least time-consuming of the two most common options. The Chapter 7 bankruptcy process is intended for individuals who have low incomes and have exceeded any reasonable ability to pay down their debts within their available financial means. The court system wishes to discourage individuals from filing Chapter 7 bankruptcy simply to get out from under their debts. This leads to a series of basic requirements, sometimes called a means test, that filers must satisfy before the court will consider a petition for bankruptcy relief. Those requirements include:
-Assembling previous tax returns in order to provide proof of income
-Proof of the last six months worth of income
-A certificate showing attendance of a mandatory credit counseling class
The court may also wish to see evidence that the individual seeking Chapter 7 bankruptcy relief did not intentionally run up new financial obligations in order to create the appearance of additional financial hardships. Likewise, if a person has filed for Chapter 7 bankruptcy within the last eight years, the court will not accept a new bankruptcy filing. Individuals seeking relief through a Chapter 7 bankruptcy filing should also be aware that in return for discharging most of their debts that the court expects them to give up any available assets that they may own that might be liquidated in order to satisfy any outstanding obligations to any creditors. The court’s goal throughout this process is to discourage individuals from attempting to defraud creditors through the misuse of the bankruptcy system.
The baseline that the court uses to determine whether a person’s means are sufficient to pay down existing debt obligations is based upon the median income of that individual’s state. If a debtor’s means fall below the state’s median income, the court will allow that person to pursue a Chapter 7 bankruptcy filing. If an individual’s income is greater than the median income, then court will wish to see proof of how much disposable income the person has available. Disposable income is defined as income minus basic expenses, such as shelter, basic transportation, necessary clothing and food.
Who can file for Chapter 13 bankruptcy?
A Chapter 13 filing is intended for individuals and businesses that have sources of income and wish to restructure their debts rather than seeking to have those debts discharged. The foremost requirement for individuals seeking relief through Chapter 13 bankruptcy is a reliable source of income that would be expected to be useful in paying down the debts in question as a restructuring goes forward. If an individual fails to pass the means test for filing a Chapter 7 bankruptcy case, then they must either file for relief through Chapter 13 or find an alternative route to begin paying down their debts, such as a negotiated solution through their creditors.
What types of debt may be discharged through bankruptcy?
Not all types of debt may be discharged through the use of the bankruptcy process. For example, almost all debts that are owed to or guaranteed by the federal government cannot be discharged. This includes outstanding tax bills, student loan payments and child support obligations. The court may consider discharging or reducing the amount that a debtor owes on any of the following:
-Credit card obligations
-Most types of commercial and personal loans
-Should you file for bankruptcy?
The question of whether to file for bankruptcy should ultimately be addressed only with the assistance of a qualified legal professional. Our NYC bankruptcy law firmworks with individuals who may wish to consider what bankruptcy options are available to them, and we’ll work hard to point you in a direction that’s appropriate to your financial circumstances. We’ll assist you in learning how the process works and help you decide whether seeking bankruptcy protection is right for you.
Any number of things can lead to serious financial problems. You could incur unexpected medical bills, lose your job or sustain an injury while working. This can make just keeping up with your normal bills a real challenge. Bankruptcy is an option that can discharge or restructure your existing debts so you regain financial freedom. You should know some of the signs that indicate filing for bankruptcy probably is the right option.
You Cannot Stop Debt from Accumulating
One of the first signs that it might be time to file for bankruptcy is if you cannot stop debt from accumulating. This could be because you are simply unable to handle all the bills that are coming in. It could also be because the late fees, penalties and other charges on bills have put you into a cycle of revolving debt that there is no way to stop. The debt will just keep growing to the point where it becomes completely impossible to pay everything off. This is a time when you should seriously consider filing for bankruptcy.
You Have No Money for Daily Expenses
Another factor that might make bankruptcy a valid option for your household is if there is no money available to pay for daily expenses. You might be living paycheck to paycheck with no savings, no financial buffer and no way to handle unexpected expenses. Many people start using credit cards to pay for things like food. This starts a process where you are just accruing more debt, applying for new credit cards and pushing problems into the future. If you have no real money to pay for your daily expenses, then bankruptcy could be a solution.
Your Income Is Stagnant, Inconsistent or Declining
Look at your income and your future prospects. Any number of factor from changes within an industry to job loss can affect your household income dramatically. You might be making less now than you did in the past. This makes keeping up with your bills difficult or impossible. Inconsistent or declining income means that you are going to have very little money to make any changes to your financial situation in the coming months or years. Bankruptcy is your only option if you no longer make enough to pay down the debts you already have.
Creditors or Collection Agencies Are Seeking Legal Action against You
A clear sign that it is likely time to file for bankruptcy is if creditors or collection agencies are seeking legal action against you. This occurs after you have been unable to pay your debts for months or years. The result of legal action can be very detrimental to your life. It can lead to wage garnishment or other punitive actions. Filing for bankruptcy will potentially stop these legal actions so that you can regain your financial footing and start fresh.
You Are Facing Imminent Foreclosure
Financial problems could lead to foreclosure on your home. This can leave you without a place to live. You could lose everything you invested in the house. Filing for bankruptcy can temporarily halt the foreclosure process in many cases if your household has become financially insolvent. Bankruptcy could put you in a special position where you can renegotiate your mortgage and keep your home.
Budgeting and Financial Counseling Does Not Help
Some people go to extreme lengths in order to avoid bankruptcy. This can include creating and following harsh budgets that include the absolute minimum for food and no money for anything beyond the bare necessities. Other families go to financial counseling services in order to try to figure out what changes could solve the debt problem. If budgeting and financial counseling does not help, then there is a very good chance that bankruptcy is your only option to restore your financial stability.
Creditors Will Not Negotiate
A final sign that bankruptcy should be seriously considered is if your creditors will not negotiate. This means the creditors will not work with you to create payment plans, consolidate your debt or do any type of debt settlement. Those creditors are going to do everything possible in order to get the money that you owe. If you can no longer negotiate with creditors, then bankruptcy is your only option to resolve your debt.
Do Not File For Bankruptcy without Help
It is important to get help from professionals when you are filing for bankruptcy. It is not guaranteed that your request will be approved by the courts. This is why you need the help of a NYC bankruptcy law firm. Skilled attorneys can help you to prove your case regardless of what type of bankruptcy you are seeking. A law firm can also help to protect your assets or your spouse. A NYC bankruptcy law firm will make the process much easier so you can become financially independent.
If you unfortunately have any past debts that are overdue, your financial creditors can legally take the necessary steps to directly collect what they’re owed by freezing your checking or savings account (sometimes referred to as a bank account levy). Your account may still experience negative consequences even if you’re able to get the bank account levy removed. While your account is frozen you can’t access any money in your account. Also, any checks you wrote prior to having your funds frozen will not clear.
The good news is there are some steps you can take in order to avoid the possibility of getting your bank account(s) frozen and to make it much simpler to get the funds released in case it ever does happen.
Ways to Avoid Getting Your Bank Accounts Frozen
1. Talk to Your Debt Collectors
It’s not a wise decision to ignore a debt collector or your debts since it can result in a bank account levy. If you don’t have enough money to pay your debts due to job loss or some other life-altering situation, talk to your creditors about setting up a repayment plan that will allow you to get your financial obligations repaid. Most creditors as well as federal and state taxing authorities are willing to work with you.
Although nearly all creditors require a judgment against you prior to getting your bank accounts frozen, some do not. Some of these include government-based institutions that collect state and federal taxes along with student loans and child support.
2. Direct Deposit Your Government Aid Funds
If a garnishment or attachment order is received by a certain bank, it has to review the said account in order to determine if any direct deposits being made into the account involve any government assistance funding, including unemployment compensation, veteran’s benefits, and social security. The bank itself is prohibited from freezing the prior two months regarding the government aid deposits if they are made by direct deposit. However, this rule doesn’t apply to any funds that were deposited by a check. Therefore, if you get the same aid in the form of a check and deposit it into your account, ultimately the account could be frozen and will remain so until you can prove your right and get the funds released.
NOTE: Change all your government aid funding to direct deposit rather than sent by check.
3. Keep Your Social Security Money Coming to the Frozen Account
Social security income is protected, especially if it’s direct deposited into the account. Even if it’s not direct deposited, it’s still protected. Social security money retains its protection once it’s received. But, it’s your job to prove where funds came from. If you decide to move your social security funds into a different account once you receive it or mingle it with other funds, it’s going to be even harder to prove that the money came from social security. Leave it set up the way it is right now.
4. Exempt Funds: Keep Them Separate and Not Mixed Up with Non-Exempt Funds
If you keep separate accounts for certain funds that you already know qualify for a particular exemption from attachment, it will likely be much quicker and easier to get the account released to you by proving that the said account only has funds that actually qualify for an exemption, if an attachment should occur. If the funds get mixed up with funds that are not exempt, the burden is on you to trace back the deposits and to prove to the authorities that the frozen balance was derived from the exempt money. This process will likely take a great deal of time since it’s so complicated.
5. Never Keep Money in an Account with a Bank You Already Owe
If you owe a certain bank money where you have your checking or savings accounts and you subsequently fall behind on making payments, they have the legal right to access the funds in your account in order to pay the debt that you owe. If you owe money to a bank that’s holding your accounts, they don’t need to obtain a court order or judgment to strip your funds.
As a general rule, it’s usually a good idea to keep your financial lenders and the bank that holds your personal checking and savings accounts separate. Even though it’s a common practice to keep your business accounts at the bank that gave you the initial lines of credit or business loans, you’re not obligated to keep your personal banking accounts there as well. Should your business ever unfortunately fail, it will be less likely for the bank to access your personal funds in order to fulfill personal agreements you may have provided regarding the business loans that were provided to you.
Use a reputable and trustworthy NYC Bankruptcy Law Firm to help you sort out all your financial difficulties and to prevent you from losing any more money.
There was a time when successful foreclosure defenses were very rare. Now we’ve seen many more foreclosures and many more creative defenses are being raised. Successful defenses aren’t so rare, but courts generally give the lenders opportunities to replead or cure deficiencies in their cases. Foreclosure lawsuits are now being approached by homeowners in a number of different ways. Here are some of the more common defenses that have arisen in the last few years. Two of the alternatives lie in bankruptcy.
Standing to sue
The lender bringing the foreclosure action must be able to show that it is the proper party for bringing the lawsuit. In many cases banks designate Mortgage Electronic Registration Systems (MERS) to bring the action. Often the paper trail going to MERS and record keeping by MERS is insufficient. If MERS doesn’t have a continuous paper trail showing its standing to sue, the foreclosure suit can be dismissed.
The authenticity of the bank’s documents has frequently been called into question. Documents and motions are often supported by affidavits and certifications of individuals purporting to have personal knowledge of the documents or facts. In fact, they may have started working for the lender in 2008, and the document was executed in 1998. It’s impossible for that individual to have personal knowledge of what they’re certifying or attesting to. They were still in high school.
Date of MERS trust
Mortgages are often assigned to a MERS in a very large trust. That’s called a securitization pool. That trust was created on a certain date though. There are times when the assignment of the mortgage doesn’t fit into the time that the trust was formed. The assignment of the mortgage could precede the actual creation of the trust. If the trust had not been created, then the mortgage could not possibly have been assigned to it.
Chapter 13 bankruptcy
This is known as a reorganization bankruptcy, and you’ll be required to bring the payments on your home current within three to five years. It brings any foreclosure actions to a halt though. In that interim, you’ll be making two payments. The first payment will be to your lender, and the second payment will be made to your bankruptcy trustee. A Chapter 7 bankruptcy won’t permit you to do this. With a Chapter 13, you might be able to remove any second mortgages or home equity lines of credit too. That trustee represents neither you nor your creditors. They represent the bankruptcy estate. The trustee is ultimately supervised by the U.S. Department of Justice, and is required to follow certain guidelines. The money paid by you to the trustee is used to pay your delinquent mortgage payments and debts of other creditors. When you file a Chapter 13 bankruptcy, the lender is not permitted to refuse your payments. So long as you make your mortgage payments and your payment to the trustee, the law permits you to keep your home.
Chapter 7 bankruptcy
Some people can’t afford the terms of a Chapter 13 bankruptcy, so they proceed in the alternative with a Chapter 7 bankruptcy which also stops the foreclosure proceedings. They’re able to extinguish significant debt with the Chapter 7, and when they’re discharged from the Chapter 7 proceeding, they’re in a far better position to seek a loan modification with their lender. You’ll obviously be a better candidate for modification, and you’re in a better position to pay a modified loan too.
Other than bankruptcy, most foreclosure defenses don’t ultimately stop the foreclosure lawyers in their tracks. Courts have generally been very forgiving to lenders, and permit them time to produce documents they lack, amend their lawsuits or otherwise cure evidentiary defects. Because the bankruptcy stay stops foreclosure proceedings, it’s the most effective means of stopping a foreclosure. It opens several different avenues of relief that might not otherwise be available. If you want to keep your home, our firm may help you keep it. By using remedies available through the bankruptcy courts like reduction of the principal mortgage amount, interest rate and loan terms, our firm has successfully helped victims of our current economy keep their homes. If you believe you’re going into foreclosure shortly, or if you’re in foreclosure now and want to continue living in your home, call us now. We may be able to keep you there.
With the state of the economy the past decade, more people than ever have found bankruptcy to be the best option to protect them from financial ruin. Although there are various types of bankruptcy, the two most often chosen are Chapter 7 and Chapter 13. Unfortunately, many troubled consumers go into the bankruptcy process uninformed and uncertain as to which bankruptcy type applies to their circumstances or even if bankruptcy is their best option.
Our bankruptcy law firm has highly-trained professionals that can help you during this stressful and painful process. Continue reading about bankruptcy, the difference between the two types and how having a bankruptcy firm like us can make all the difference.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcies are used when a consumer either cannot meet his or her financial obligations or has very little money left after paying the monthly expenses. Chapter 7 bankruptcies are also used by consumers who own very little property other than the basics such as clothing, furniture and household belongings. To be eligible to file for Chapter 7 bankruptcy, the individual must meet the New York bankruptcy income requirements. It must also be proven that a consumer cannot pay the debts either on their own or through a Chapter 13 bankruptcy.
The criteria used to determine Chapter 7 eligibility can be very complicated, which is why you need a firm like ours to help you wade through the paperwork and determine eligibility. In most Chapter 7 bankruptcies, there are no real assets and the individual gets resolved of the debts and the creditors receive nothing towards the debts. Chapter 7 bankruptcies are generally used to help consumers eliminate unsecured debts such as medical bills, utility bills, credit cards and even some personal loans. We can help you determine what type of debts you currently have, which debts are exempt and which ones are non-exempt.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcies are used when a consumer has a regular income and can meet living expenses but has difficulty making the regular payments required to pay off the debts. Chapter 13 bankruptcies are also used when the consumer owns property or significant equity and doesn’t want to lose the equity. This type of bankruptcy is generally used for homeowners who are at risk of losing their homes because they can’t keep up with the mortgage and other monthly expenses. In a Chapter 13 bankruptcy, the individual may be resolved of some small debts but will set up a payment schedule with creditors so he or she can maintain the home or other non-exempt property.
Benefits of Chapter 7 Bankruptcy
• Chapter 7 bankruptcies take place quicker than Chapter 13 bankruptcies.
• The debts may be discharged in as little as three months after filing.
• New York consumers may be able to exempt all their property and not have to give up property.
• The debts may be totally discharged and not have to be paid back.
• Consumers do not have to have a high income to file for Chapter 7.
• Consumers cannot be contacted or badgered by creditors either during the process or after the debts are discharged.
Benefits of Chapter 13 Bankruptcy
• Consumers usually work with a trustee, who makes the payments to the creditors so debtors no longer have to deal with creditors.
• Bankruptcy 13 works like a debt consolidation plan allowing the consumer to pay off most of the debts.
• Creditors cannot file legal proceedings against the consumer during a Bankruptcy 13 procedure unless they first get special permission from the court.
• Homeowners can stop foreclosure proceedings and maintain their home while catching up on the mortgage payments.
• Homeowners may have up to five years to pay past due mortgage payments.
• Consumers may be able to modify their repayment terms for certain debts, allowing lower payments and more time to pay off the debts.
• Co-signors of loans are often protected with a Chapter 13 bankruptcy.
• There is not a long waiting period for when a consumer can file a Bankruptcy 13.
• Attorney fees can be paid over time unlike Chapter 7 bankruptcies, which usually require an upfront payment.
• Some debts may be discharged in a Chapter 13 whereas they may need to be paid in a Chapter 7 bankruptcy.
Why Our Bankruptcy Law Firm Can Help
Anyone who has ever had difficulty paying their debts, whether due to unemployment, high debt-to-income ratio or some other unforeseen circumstance, knows that creditors can often be unforgiving and difficult to deal with. We can help you go through your financial situation, offer you various options and help you determine if bankruptcy is the right option. If our evaluation determines that bankruptcy is your only or best option, we’ll walk you through the entire process and make the process as easy as possible.
bankruptcy is a process that not many Americans understand. It has a lot of negative connotation because of its close association with financial distress. In reality, however, bankruptcy is a symptom of underlying financial problems, not a cause. In this article, we will explain the details of the bankruptcy process, how and why it can be beneficial, and why people need to understand it.
When anyone gets into financial distress due to a large debt load, they face a significant problem. They do not have enough income to cover their debts, which means that the debt will keep growing larger due to interest. There are many different kinds of debt that can lead to bankruptcy. A single large debt like a mortgage or car can be just as much of a problem as several smaller debts, like credit cards. In fact, credit cards can be even harder to manage because the interest rates are higher, so the debt grows faster.
When you decide that you are not capable of managing the debt load you have, then it is time to think about bankruptcy. Bankruptcy is a way to protect your assets from creditors, who might otherwise be able to repossesses them as payment of your debt. The bankruptcy process can help you discharge and restructure some of the debt.
What bankruptcy does is that it lets you go to court with a bankruptcy judge and your creditors to discuss a solution. In court, you inform the creditors that you are unable to pay off your debts in their current form. Because your creditors would rather have some money than no money at all, they are willing to work with you to reduce your debt load or extend your deadlines in order to make the debt easier for you to pay off.
In bankruptcy court, you come to an agreement with your creditors about what you can afford to pay and how you can do it. This might involve giving up some assets that are directly tied to the debt. For example, if you have a mortgage that you cannot pay, you might need to give up the house. The same is true for a car. The key is that in bankruptcy, you can manage to protect the rest of our assets from being taken away. You can also arrange for a portion of the debt to be forgiven in order for you to manage to pay the rest.
There are two main categories of bankruptcy for individuals: chapter 7 bankruptcy and chapter 13 bankruptcy. Chapter 7 bankruptcy is meant for people with credit card debt, medical debt, and other debt that does not have collateral. There is also an income requirement: you must make below a certain income to qualify for Chapter 7. Chapter 13 bankruptcy is for people with more money and assets, as well as larger debts. It generally involves working out a payment plan.
Bankruptcy can be stressful, but it is an important part of the process of getting out of debt. Bankruptcy itself is a beneficial process that repackages your debt in a way that you can handle. It is like medicine for debt- it might not be pleasant to go through, but it is the solution to excessive debt.
However, going through bankruptcy is not an easy process. It is a legal procedure that requires the help of an expert NYC bankruptcy lawyer to help you understand what is happening at each stage and protect your assets as much as possible. Like any other legal process, bankruptcy is much easier with a better lawyer.
We are a New York NYC bankruptcy law firm with decades of experience helping people successfully negotiate bankruptcy. Our clients always feel relieved after our help, because we don’t just mechanically step through the process. We work to protect you and your interests. Our emphasis on our clients comes from our professionalism: we are not simply trying to make money from clients that we already know are in financial distress.
If you feel that you might be losing control of your debts and you do not think you can keep up, the worst thing you can do is ignore the problem. If you let the debt build up, then it will only get worse. Consider getting in touch with us and we can advise you about what you need to do next. It is an uncomfortable process, but a necessary one.
New York City residents who are considering bankruptcy should become familiar with the means test. This test is required for anyone filing Chapter 7 relief, and involves a precise formula that’s used to calculate debt and income. What is the means test and why is it important? Read on to find out more.
History of the Means Test
In 2005, the United States bankruptcy Code was amended to prevent consumers who were filing for Chapter 7 relief from abusing the system. Prior to that time, people of all income levels were eligible to file Chapter 7, which works to eliminate as much debt as possible. By passing the bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, Congress hoped to prevent bankruptcy from being used to counteract poor spending habits. It must now be taken before filing a Chapter 7 bankruptcy to determine your eligibility for it.
What does the Means Test Include?
The means test involves a series of questions concerning income, assets, and debts to determine your ability to pay off your debts. The first step involves determining whether your income is more or less than the median income in New York. If your income is less than the statewide median, you have already passed the means test.
If your income is above the median, additional calculations are needed to determine if you are able to pay off your debt. These additional calculations are needed in order to assess whether or not you have “disposable income”, or money left over after your expenses are covered to repay debt with. To do this, the cost of basic living expenses such as rent, food and health care will be figured. The allowable amount is based upon the national standards that are determined by the Internal Revenue Service (IRS).
You will also enter information about your secured and unsecured debts on form 22A. When entering this information, keep in mind that certain debts are not dischargeable in bankruptcy court, including taxes, student loans, child support and spousal support.
Presumption Does/Does Not Arise
Filling out form 22A is much like preparing a manual tax form. When finished, the numbers will reflect that you either do or do not have enough disposable income remaining to pay your debts with. If calculations determine that “the presumption does not arise”, this means you are not disqualified from filing Chapter 7 bankruptcy. If the presumption does arise, you are ineligible and must consider Chapter 13 or another form of relief.
Means Test Exceptions
Certain individuals are exempt from taking the means test. For example, disabled veterans who primarily incurred their debt while serving on active duty may automatically check the box labeled “the presumption does not arise.”
Members of the Reserve and National Guard components of the Armed Forces who were called to active duty after September 11, 2001 for at least 90 days are exempt during their period of active duty as well as for 540 days after being released. Reserve component soldiers meeting this criteria will check a box marked “the presumption is temporarily inapplicable.” Once the exclusion period ends, service members have 14 days to complete the means test or the presumption will automatically expire.
Deciding to File Chapter 7
Just because you pass the means test does not mean filing Chapter 7 bankruptcy is the right decision. While it can eliminate all or most of your debt, you must also give up any property that is not exempt. Your property will be handed over to a bankruptcy trustee, who will liquidate it in order to pay off as many of your debts as possible. It also does not eliminate student loan debts, and will not absolve you of the responsibility to pay child support or alimony.
Criteria that Makes you Ineligible
You are not eligible to file Chapter 7 bankruptcy if you have previously filed Chapter 7 or Chapter 13 proceedings within the past six years, or have had a bankruptcy case dismissed within the past 180 days because you violated a court order. If allowed to file, you will be prohibited from filing an additional bankruptcy petition for six years afterwards.
At our New York City law firm, we meet people every day who need debt relief, but are anxious about taking the means test. If you’re one of these people, we invite you to schedule a consultation so we can answer your questions and determine if a Chapter 7 proceeding is ideal in your situation.