Bankruptcy is a commonly used word in everyday life. Many people have a basic understanding of bankruptcy and that it is used to discharge or clear debts. The truth, however, is that there are numerous types of bankruptcy laws available, all of which help individuals or businesses manage debt obligations. Filing bankruptcy in New York is not a simple “one size fits all” approach to debt management and many law firms do not specialize in all types of bankruptcy.
There are, in fact, six different types of bankruptcies in New York. Those six types are:
If you are considering filing bankruptcy, a bankruptcy attorney in New York can help you evaluate your options. The attorneys at Moshes Law, P.C. are experts in the various types of New York bankruptcy laws. We have walked hundred of clients through the bankruptcy process, explaining each step along the way. If you are considering bankruptcy but don’t know where to start, call the attorneys at Moshes Law, P.C today.
Below is a brief description of the six types of bankruptcies available to New York residents, each named after the corresponding chapter of the bankruptcy Code:
Chapter 7 bankruptcy in New York is what can be considered the “standard” form of bankruptcy most people envision, because it gives the filer a fresh start. When you file for chapter 7 bankruptcy, the court will take an assessment of your assets and outstanding debts. The court will then facilitate the sale of your assets and use the proceeds to pay off as much as the debt as possible. There are numerous types of assets that the court will not sell, such as your car and home, but this may vary from case to case. In most Chapter 7 cases, the filing individual has little to no assets. After the eligible assets are sold, any remaining qualifying debt is discharged. Some debt, such as student loan debt, is not dischargeable.
Chapter 13 bankruptcy is different from Chapter 7 because it allows the filer to keep their assets. It is generally used to help the individual catch up on debts, such as mortgage payments and New York state taxes. If you have significant equity paid into a 30 year mortgage, Chapter 13 may be more appealing. In Chapter 13, the court will assess the income and debts of the individual. The court and the creditors will then agree to a payment plan that is anywhere from three to five years in length. The filer will pay a fixed amount on a monthly basis, and that money will be distributed among the creditors. If the filer completes the payment plan successfully, all eligible remaining debts are discharged.
Chapter 11 bankruptcy is utilized by businesses. When a company files for Chapter 11 business bankruptcy, it is usually frequently discussed in the news. For that reason, many individuals are familiar with the term. Individuals can file for Chapter 11 bankruptcy, but generally do so only if their income, assets, and debts are too high to file Chapter 13. Most individuals will not file Chapter 11, unless they have large assets such as real estate.
Chapter 12 bankruptcy is fairly uncommon, especially in New York. Chapter 12 is utilized for family fishers and family farmers. It is quite similar to Chapter 13 bankruptcy, in that it creates a payment plan over three to five years that assists the filer in catching up on past payments.
Chapter 15 bankruptcy is one of the more common “uncommon” bankruptcies in New York. Is it similar to Chapter 13, except that it is designed for foreign nationals who have assets in the United States and Abroad. Chapter 15 is usually filed after the foreign national files for bankruptcy in their home country. Because of the international aspect, these tend to be quite complicated.
Chapter 9 bankruptcy is available only to municipalities, such as local governments. Chapter 9 bankruptcies are seldom used and generally very high profile when they are.
For the vast majority of individuals in New York, Chapter 7 and Chapter 13 bankruptcies are the two available options. Nearly a million people file for bankruptcy per year in the United States. Despite that, it is a serious decision that has numerous implications. Some of the pros of filing for bankruptcy include:
While filing for bankruptcy has its positives, there are important negative implications as well. Filing for bankruptcy will cause a significant decrease in your credit score. It will also be noted on your credit report for a number of years, depending on the type of bankruptcy filed. This will make it significantly harder to borrow money again in the future, whether it be for a car, house, credit card, or new business. Also, if you file for Chapter 7 bankruptcy, you are prohibited from taking out a home mortgage for four years, generally.
There are many other pros and cons to filing bankruptcy. Some of these may impact only a small number of people, but may impact them significantly. It is important that you evaluate all options before filing and fully understand its implications. Our attorneys thoroughly understand the bankruptcy process and have been helping clients evaluate the pros and cons of filing bankruptcy for years. If you are curious as to whether bankruptcy can help your situation, contact Moshes Law P.C. today.
Filing for bankruptcy can be complicated. Thankfully, with the help of an attorney and sound legal advice, this process can be made much easier. Generally, filing for bankruptcy in New York has the following steps:
When you file for bankruptcy, you will need an accounting of all of your items of income and assets. This generally means taking a comprehensive accounting of your financial situation. You will also need previous years’ tax returns.
Once you have your financial information in order, your attorney will draft the necessary documents to file with the bankruptcy court and begin the process. In New York, this includes paying a filing fee to the court.
If you are filing Chapter 13 bankruptcy, you are required to submit additional documents, which includes a proposed repayment plan that is used as the starting point for negotiations with your creditors. Your attorney will help you draft this document.
Once you have filed for bankruptcy, all pending matters in the courts against you will be automatically halted. This includes any foreclosures proceedings or lawsuits seeking damages, including personal injury lawsuits.
After filing, the court will appoint a trustee to take over the bankruptcy negotiations. The trustee will review all of your submitted documents and begin putting together a plan of action for you and your creditors.
After the trustee has had time to review all of the necessary documents, he or she will schedule a 341 meeting of creditors. This meeting must be attended by you, the filer. Creditors and the trustee are afforded the opportunity to ask you any questions regarding the debt. It is relatively uncommon for creditors to attend the meeting, because the amounts at issue are usually small relative to the creditors overall business. For example, if you have credit card debts, they will rarely spend the time and money to send someone to these meetings. If you filed for chapter 7, the trustee may begin selling assets and paying off creditors after this meeting.
If you filed for Chapter 13, the proposed plan you submitted with your filing must be approved by a judge. The judge will review the plan with you and the trustee present. Any creditors may also attend, but rarely do. If the judge approves the plan, the bankruptcy proceeding is finalized and the plan is entered. Any eligible debts outstanding at the end of the plan will be discharged.
This depends entirely on the individual’s situation. Those who own a large number of assets and have simply fallen behind on payments will likely utilize Chapter 13. This allows them to catch up on payments and keep their assets. However, if the individual has little to no assets, a Chapter 13 proceeding is better, because there are few or no assets to sell.
This is a complicated question that can be answered with the help or an attorney. Chapter 7 utilizes a “means test” to determine who can file. Its purpose is to prevent high-income individuals from utilizing Chapter 7. This test is based on the median income of your residence; therefore, it will vary from person to person.
When you have your first meeting with a bankruptcy attorney, you should bring all of the documents that you will need to file bankruptcy. This includes records of all outstanding debt obligations and proof of all income sources and assets. You should also bring copies of your last two years of tax returns.
Filing for bankruptcy will cost a little over $300 in New York, depending on the type of bankruptcy chosen. Attorneys fees will vary depending on the complexity of the case. Filing for bankruptcy is fairly affordable for those with will little to no assets.
Each type of bankruptcy has different filing requirements. Chapter 13 bankruptcy has an income requirement, while Chapter 7 does not. Generally, however, most people considering filing for bankruptcy will qualify for both. An attorney can help you evaluate whether you meet the filing requirements.
An attorney is not required to file for bankruptcy. It is possible to file youself if you have few or no assets. However, the process is very technical and has a steep learning curve. Many individuals enjoy letting an attorney handle the process for them, and knowing that it was done correctly.
A bankruptcy attorney in New York will not only help you file the proper paperwork and move through the court system quickly, but will help you evaluate your situation and the type of bankruptcy that is right for you.
Our attorneys have helped hundreds of individuals get out of debt and have a fresh start. We will help you understand your options, such as whether Chapter 7 or Chapter 13 is better for your needs. Our attorneys take an individualized approach, and consider themselves as part of your long-term plan to become debt free. If you would like to learn more and speak with a bankruptcy lawyer, free consultations are available with the knowledgeable attorneys at Moshes Law, P.C.