Whether you qualify for a Chapter 7, which is the most common, fastest, and easiest type ofbankruptcy, will depend on your particular financial situation, your income, and your monthly expenses. If your income for the size of your family is at or below the median income in New York, you are generally eligible to file a Chapter 7. If your income exceeds the median income in the state, you may still qualify if you pass a "means test," which will calculate your monthly disposable income which can be used to pay your debts. If you fail the means test, you may still file for aChapter 13 bankruptcy, which involves a partial or in some cases a full repayment plan of debts supervised by the court.
Bankruptcy eliminates unsecured debt, such as credit card debt, medical and dental bills, utility bills, and payday loans. Certain debts are not covered by bankruptcy, such as alimony and child support payments, most student loans, certain taxes, government fines and penalties, debts acquired from fraud or any debts you racked up from purchasing luxury goods or services or certain cash advances acquired through credit within 60 days of filing your case. You should discuss your financial scenario with Mr. Perano to determine how a bankruptcy filing will affect you.
No. Certain assets are exempt from being used to pay off your debts through a bankruptcy petition. These include a certain amount of equity in your primary residence or home, condo, or coop, equity in your car, your household goods and furniture, tools of the trade, life insurance, pension plans, IRAs, 401Ks, and more. The Law Firm of Anthony J. Perano can advise you on exempt property and assets. Many bankruptcy filers have "no-asset" cases, which means that all of their property is exempt and cannot be used by the court for liquidation purposes.
A Chapter 7 is the most common form of bankruptcy, called a "straight" bankruptcy or liquidation bankruptcy. In this type of bankruptcy, you turn over any non-exempt assets or property to the court which will liquidate them to pay off portions of the debts you owe creditors, finally eliminating your debt in a discharge. However, most if not all of your property is likely to be exempt or protected.
A Chapter 13 is a reorganization bankruptcy, in which your debt or a portion of your debts are paid off through a repayment plan supervised by the court over a 3 to 5 year period. You must have current and reliable income to be able to do this; this type of filing is called a court structured repayment plan. In a Chapter 13 plan your payment is limited to your excess income and you may pay back as little as twenty percent on the dollar of you unsecured debt. Most of the time, this offers a much better deal for you than a settlement out of court.
The automatic stay is a court order imposed against your creditors who are seeking payment through various means, whether through phone calls, letters, threats of legal action, or lawsuits. Once the stay goes into effect which occurs upon filing, creditors are prohibited from contacting you in any way to collect on a debt ; and any lawsuits, foreclosures or wage garnishments are terminated immediately.
To learn more about how the different bankruptcy processes work, your eligibility, and how bankruptcy will affect your debt situation and your future, it is highly recommended that you contact the firm to arrange to discuss the specifics of your case with Mr. Perano at your earliest convenience.