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.
What Are Dischargeable Debts?
In essence, dischargeable debts involve certain types of debts that are owed by the person filing for bankruptcy. When this person files bankruptcy, a discharge will completely release the debtor from any continued liability for specific debts that are owed. However, this doesn’t apply to all debts. This isn’t merely a stop-gap or reduction of the debt that is owed. Any debts that qualify as being dischargeable will no longer have to be payed and will be erased from the record of having been owed by the debtor. The order for these discharges will be provided to all creditors for the debts that apply, which means that they no longer have the ability to take any type of collection action on the debtor.
These extend to personal letters and telephone calls, ensuring that the creditor never disturbs the debtor and tries to get them to pay even after the debt has been discharged. While the debtor will not be liable for any debts that fall under discharged debts, there is a possibility that a valid lien that has been placed on personal property of the debtor as a means of securing payment from the owed debt will still remain open even after the bankruptcy case has ended. If a lien remains, a second creditor might be able to claim the lien. However, this can be made unenforceable during bankruptcy, which is why it’s important for our NYC bankruptcy law firm to be there with you to ensure that you don’t get hit with any of these charges.
Difference Between Dischargeable and Non-Dischargeable Debts
When filing a bankruptcy, you will find there are many different types of debt that can be discharged, providing you with the means of starting over. However, there are certain debts that are considered to be non-dischargeable. While this might not be ideal, it provides you with the means of only paying off the few debts that may qualify as non-dischargeable, while erasing the other debts you were being weighed down with. When looking at dischargeable and non-dischargeable debts, some of the primary dischargeable ones include credit card debts, uninsured loans, medical bills, collections, payday loans, unpaid rent, utility bills, judgments and individual tax debts over three years ago. Mortgages and auto loan debts also fall under discharged debts. However, you will lose your car and your home if you file these under discharged debts.
As for non-dischargeable debts, this all depends on which type of bankruptcy you file. If you file for Chapter 7 bankruptcy, some of the main debts that aren’t able to be discharged include any taxes due within the last three years, alimony, child support, student loans and condominium fees. Debts obtained by fraud, unscheduled debts, debts due to embezzlement, debts for willful injury, debts for fines and debts due to personal injury or wrongful death lawsuits also fall under non-dischargeable debts with Chapter 7 bankruptcy. When it comes to Chapter 13 bankruptcy, the debts that cannot be discharged include interest owed on any non-dischargeable debts, specific taxes, student loans, alimony, child support, fines, unscheduled debts and debts caused by fraud. All debts from larceny, malicious injury, personal injury and wrongful death lawsuits, debts that built up after filing for bankruptcy and debts that aren’t dischargeable under other laws will be classified as non-dischargeable as well.
How Our Law Firm Helps With These Debts
Bankruptcy is oftentimes a lengthy and arduous process. However, this can all be avoided by seeking our NYC bankruptcy law firm to help you through this process. Once you file for bankruptcy, we will be there through every step of the way to ensure that every aspect of the bankruptcy progresses as it should and doesn’t hit any snags. When it comes to dischargeable and non-dischargeable debts, we will help you to file the necessary paperwork that will ensure you are able to erase every debt possible. Many people that attempt to do this without help tend to miss certain debts that can be listed under discharged debts. We want you to be able to start a new life after filing bankruptcy and the only way to make sure that this happens is through the help from our law firm. If you have any questions about our bankruptcy services, contact us at any time.