Q. What types of bankruptcy are available?
A. Although there are various types of bankruptcies available, the two most common are Chapter 7 bankruptcy and Chapter 13 bankruptcy. Two other types of bankruptcies are Chapter 11, which is reorganization of a business that has huge debts and Chapter 12, which is for family farmers.
Q. How do I know if I want a New York Chapter 7 or Chapter 13 bankruptcy?
A. The type of bankruptcy you need depends on your financial situation. A Chapter 7 is generally for consumers who have little or no income, cannot pay their monthly bills and have no real assets or equity other than personal property such as clothing or furniture inside the home. A Chapter 13 is for consumers who have an income and own a home that they want to keep.
Q. Is it true that I don’t have to pay my debts if I file bankruptcy?
A. Like the previous question, the answer to this question depends on the type of bankruptcy you file. In a Chapter 13 bankruptcy, you’re typically required to set up a payment plan that allows you to pay off all past due amounts and get the mortgage current. Although some debts may be discharged in a Chapter 13, the mortgage typically is not. In a Chapter 7 bankruptcy, your debts are wiped out and you get a “fresh slate”. A trustee, who is assigned to your case, collects and sells off your non-exempt assets. Our bankruptcy attorneys can go over your list of assets and determine which are exempt and which are non-exempt.
Q. Is one type of bankruptcy any better than the other?
A. The type of bankruptcy you chose is based on your debts, your assets, your income and your ability to repay. If you own property and have income, Chapter 13 will work better for you whereas Chapter 7 will work better if you have debts, limited assets and limited income as well as an inability to repay the debts you currently have.
Q. Do I have to have certain amount of income to file for bankruptcy?
A. While we typically think of bankruptcy in terms of for those without income, this is definitely not the case. To file for Chapter 13, you do need to have sufficient income to be able to make the required mortgage payments and pay the arrears. Chapter 13 does allow you to spread out the arrears over time. Because Chapter 7 allows you to wipe out your debts, you must have little or limited income and this must be documented through a New York means test. Our attorneys can also help you with the means test as it may appear quite complicated at first glance.
Q. Can I file bankruptcy more than once?
A. You cannot have your debts wiped out through a Chapter if you’ve had them discharged within the past eight years or have filed a Chapter 13 within the previous six years. Additionally, if you’ve filed a Chapter 13 in the past two years or have had debts discharged through Chapter 7 in the past four years, you cannot receive a discharge with Chapter 13 bankruptcy.
Q. What does it cost to file bankruptcy?
A. Chapter and Chapter 13 bankruptcies in New York typically cost around $300 in court costs plus any attorney fees you may incur.
Q. Can bill collectors continue to call and harass me when I’m filing bankruptcy?
A. Once the bankruptcy process has begun, the creditors will be sent a notice that you are filing bankruptcy and you will be under an “automatic stay”. Collectors are not legally allowed to contact you from this point on.
Q. Will bankruptcy affect my credit scores?
A. Unfortunately, the thing that leads to bankruptcy is usually the consumer’s inability to pay their bills on time so their credit is usually affected. Bankruptcies can stay on your credit report for up to ten years.
It’s important to realize that the above questions and answers may not apply to every situation. This is why you’ll find it beneficial to meet with one of our bankruptcy attorneys for a consultation. We can answer questions based on your individual and specific financial situation and advise you as to the best way to proceed.
If bankruptcy is indeed the best solution, our attorneys will work with you to help you get through the process as quickly and stress free as possible. If we don’t feel bankruptcy is your best or the only option, we’ll go over the various options available to you.