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August 26th, 2009
Most people are responsible and turn to bankruptcy only as a last resort. As a result, most lay people enter the world of bankruptcy anxious and fearful about the process. They also usually have questions … lots of questions, so here are some answers to some of the more frequently asked questions.
NOTE: While these FAQ’s are just a guideline, it’s important to consult with an experienced Chapter 7 lawyer about the particulars of your case so you can obtain the best legal counsel for your situation.
What is bankruptcy?
Bankruptcy is a legal process for people who cannot pay their bills. It can reduce (and in some instances completely eliminate) the amount of debt owed.
What’s the difference between Chapter 7 and Chapter 13?
There are several different types of bankruptcy filings under the federal bankruptcy code. Chapter 7 is intended for those with few if any assets (in most instances, your income must be equal to or below the median state average income.) Chapter 7 is also known as Liquidation Bankruptcy, and a reputable Chapter 7 lawyer can help you assess whether you qualify for this option.
Will Chapter 7 eliminate all of my debts?
While Chapter 7 can eliminate most debts, certain ones are not subject to discharge. These include tax debts, child support and/or alimony, student loans, and some fines and criminal/civil judgments. Again, an experienced Chapter 7 lawyer can help decipher if a debt in question will qualify for discharge.
Will I be able to keep my personal property under Chapter 7?
Chapter 7 bankruptcy categorizes property as either exempt or non-exempt. In most cases, property declared to be exempt is protected from creditors (unless it has been pledged as collateral towards the debt.) Examples of usually-exempt property include your primary residence and part of its equity, your primary vehicle, retirement accounts, and any tools or equipment you use to earn a living. For a more comprehensive overview on what property is protected and what is considered non-exempt, contact a professional Chapter 7 lawyer.
For a glossary of terms please see our comprehensive Bankruptcy Glossary page.
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August 20th, 2009
If you’re contemplating filing bankruptcy in NYC, it’s important to take the time to educate yourself as thoroughly as possible before you actually start the process. Not only will this help you make informed decisions along the way, but it also ensures you’ll fully understand the ramifications of events as they unfold.
Some of the key steps to filing bankruptcy in NYC are set forth below, but as with any legal matter, always seek competent legal advice from a NYC bankruptcy lawyer before proceeding.
- Mandatory Credit Counseling – 180 Days Before Filing
Many people mistakenly believe that the first step in filing bankruptcy in NYC is to file the actual petition. But the new bankruptcy laws enacted in 2005 now dictate that people intent on filing bankruptcy in NYC undergo credit counseling through a government-approved program before actually filing the petition.
- Establish/Verify Residency
In order for you to qualify for filing bankruptcy in NYC, you must have been a resident of the state of New York for at least 90 days prior to filing. If you’ve lived in New York less than 90 days, you have to either wait until you meet the 90-day requirement, or else file in your previous state of residence.
- File the Petition for Bankruptcy
Your case officially starts once your attorney files the petition with the court. At that time, a trustee will be appointed to those filing for bankruptcy in NYC. The trustee will oversee your case throughout its entirety, whether it be a few months for Chapter 7, or up to five years for Chapter 13.
- Meeting with Your Creditors
In order to comply with the terms of federal bankruptcy law regarding filing for bankruptcy in NYC, your creditors will be given a chance to meet with you to review the debt you owe. This happens at what is a referred to as a 341 Meeting, or a Meeting of Creditors. This is often the most intimidating part of the process for most people, but be assured the meeting is usually short, and your attorney will prepare you for it ahead of time.
- Mandatory Financial Education
Pursuant to the new bankruptcy laws in 2005, those who engage in filing bankruptcy in NYC must undergo mandatory financial education in order to prepare them to improve their fiscal decisions and habits.
- Discharge of Debts
If there are no objections from your creditors as to the truthfulness of your bankruptcy petition, and you faithfully fulfill the terms of the bankruptcy process, your debts will be discharged and your case will conclude.
This is just a brief overview of the process for filing bankruptcy in NYC. Because bankruptcy entails many life-altering consequences, it’s imperative that you seek legal counsel from a reputable bankruptcy attorney in NYC.
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August 14th, 2009
While bankruptcy laws exist for both the protection of debtors as well as creditors, the system has been subject to abuse. Therefore, Congress chose to overhaul bankruptcy laws four years ago through the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. While a reputable bankruptcy lawyer in BRONX can advise you best, here is a partial list of some of the key changes the law addressed:
- Mandatory Credit Counseling: Before a petitioner can file for bankruptcy, the law now requires a consumer to undergo mandatory credit counseling via a government-approved program (click here < http://www.usdoj.gov/ust/eo/bapcpa/ccde/index.htm> for a list of approved providers), or your professional bankruptcy lawyer in BRONX can refer you to a qualified counseling agency.
- Requirements for Tax Returns and Proof of Income: Consumers wanting to file either Chapter 7 or Chapter 13 must now furnish proof of income via their tax returns in order to qualify for bankruptcy protection.
- A New “Means Test” to qualify for Chapter 7: The new means test is based upon the median income for your state. As a general rule, if you make more than the median income and have $100 leftover to put towards debts (after meeting your essential monthly expenses), then you have to file under Chapter 13. An experienced bankruptcy lawyer in BRONX can advise you further about whether this.
- Fewer Automatic Protections (“Stays) for Filers: In the past, people who filed for bankruptcy protection enjoyed an array of automatic protections (in legal terms, called ‘Stays’) from their creditors. Under the new law, however, some of these protections have been eliminated, including protection from eviction or from driver’s license suspensions. Again, a seasoned bankruptcy lawyer in BRONX can explain the parameters of this aspect of bankruptcy law in greater detail.
- New Priority for Unpaid Child Support and Alimony: Money for back payments for child support and/or alimony (or new obligations to pay for these expenses) qualify as familial debts, which are now given top priority in the hierarchy of creditors.
- Mandatory Financial Education at the Conclusion of the Bankruptcy Action: As your bankruptcy process winds down, the new law requires you to undergo a mandatory financial education program before you will be allowed to have a final discharge of your debts. A reputable bankruptcy lawyer in BRONX can refer you to a government-approved program that will help you meet this final requirement.
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August 11th, 2009
Many people think they know what bankruptcy entails, whether from hearing about a friend’s experience or from watching television commercials that tout the many benefits that bankruptcy can bring. And while there are benefits, there are also serious consequences (as well as many misconceptions that an expert bankruptcy lawyer in New York City can address and set straight for you), so it’s important to have all the facts.
Even if you’re familiar with previous bankruptcy laws, the consumer bankruptcy laws were updated and changed in 2005 to make filing for bankruptcy more restrictive. And while there are additional hurdles to be met in filing for bankruptcy, it’s still a very viable alternative for many people. A professional bankruptcy lawyer in New York City is the best person to evaluate your unique situation and see if filing for bankruptcy may be right for you.
Some of the more common myths about bankruptcy include:
1. I’ll lose my home: MYTH.
Filing bankruptcy under Chapter 13 allows you to keep your primary residence, and does not force you to sell. A reputable bankruptcy lawyer in New York City can advise you further about whether you qualify to file for Chapter 13.
2. If I file for bankruptcy, it will be impossible to ever get credit again: MYTH
While filing for bankruptcy does impair your credit, you’ll be able to begin rebuilding your credit as soon as you obtain a final discharge. And by starting fresh, many people find that their debt-to-income ratio is substantially lower, thereby giving them more disposable income to qualify for some type of credit.
3. I make too much money to qualify for bankruptcy: MYTH
While this may be true for Chapter 7 bankruptcy, it’s seldom the case for Chapter 13, which was in fact set up for people that have assets and a way to restructure their debt. An experienced bankruptcy lawyer in New York City can evaluate your situation to see if this is the case for you.
4. I filed bankruptcy before, therefore I’m not eligible to file again: MYTH
While there are limitations, generally you’ll be able to file gain for bankruptcy within a period of 6 to 8 years. Again, a qualified bankruptcy lawyer in New York City can advise you best about your personal situation.
5. Filing Bankruptcy is only for deadbeats: MYTH
The bankruptcy laws are in place because the government realizes that even good people who want to pay their debts often encounter life-changing events (such as divorce, the loss of a job, or insurmountable medical bills) that severely impact their ability to pay their debts. A qualified bankruptcy lawyer in New York City, won’t judge you, and can help you start down the road to financial recovery.
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August 1st, 2009
Many people mistakenly believe that bankruptcy is a panacea – a cure-all for their financial woes, and a way to make debt magically disappear.
While bankruptcy can potentially eliminate some or all of your debt, it’s not a situation to be entered into lightly. It’s important that you work with an experienced bankruptcy lawyer in Manhattan who will review your unique situation and evaluate if you are a good candidate for bankruptcy, or if there might be a better solution for you.
While bankruptcy is a situation of last resort, it is an effective method for many people to regain their financial footing for a fresh start. A professional bankruptcy lawyer in Manhattan can work with you and let you know if bankruptcy may be right for you if:
- You have little (if any) money left each month after meeting your monthly expenses
- You struggle to pay the minimum balance on credit cards each month, and often miss payments
- You pay for basic necessities — like gas and groceries – with credit cards, because you have no disposable income to do otherwise
- You’ve maxed out the limits on all or most of your cards
- You’ve borrowed from one credit card to make a payment on another
- You are being hounded by debt collection calls
- Your personal life and relationships are suffering because of your financial situation
- You are overwhelmed with anxiousness, and wonder how you’ll make it through each month
- You’ve contemplated filing for bankruptcy, and have already thought about finding a bankruptcy lawyer in Manhattan to work with
If most or all of these situations apply to you, bankruptcy may indeed be a viable option to put you on the road to financial recovery. By working with a reputable bankruptcy lawyer in Manhattan, you can learn if bankruptcy might be a good option for you.
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