Bankruptcy Lawyer Long Island
Bankruptcy is a complex legal process and requires detailed planning. Even a small mistake can be costly. Planning is very important when you are filing for bankruptcy. A Chapter 7 bankruptcy is a legal proceeding in which a person who cannot pay his/her bills can eliminate their debts and get a fresh financial start. A Chapter 13 reorganization is a proceeding in bankruptcy which allows a person to reorganize their debts. The right to file for bankruptcy is provided by federal law. All bankruptcy cases are handled in federal court. Filing a Chapter 7 or a Chapter 13 will immediately stop any and all creditor activity seeking to collect debts from you. The filing of a Chapter 7 or a Chapter 13 will invoke the protection of the “Automatic Stay”. The Automatic Stay is a Federal injunction that prevents all creditors from calling you at home or on the job, instituting or proceeding with lawsuits against you, garnishing your paycheck or restraining your bank accounts.
Most people can qualify for a Chapter 7 or a Chapter 13. With our 30+ years of Chapter 7 and Chapter 13 experience, the Law Offices of Howard D. Weisinger we can advise you which Chapter will provide you with the most benefit. It is important that you protect your assets from the reach of creditors. Our office will skillfully review your financial situation with a free, in person, consultation.
Chapter 7 (also known as a “Liquidation” or “Straight Bankruptcy”)
As a general rule, all debts you owe and all property you own on the day you file for Chapter 7 will be included in what is called the “bankruptcy estate”. When you file Chapter 7, the forms that are completed and filed with the Bankruptcy Court require you to list all of your debts and all of the property in your bankruptcy estate. Everything in your possession that you own, whether or not you owe money on it—for example, a car, a house, clothing, books, television, stereo system, furniture, tools, boat, artworks, or stock certificates—is included in your bankruptcy estate. You can own something even if you don’t have physical possession of it. For instance, you may own a car that someone else is using. Other examples include a deposit held by a stockbroker, a security deposit held by your landlord or a utility company, or a business in which you’ve invested money. Property that you have a legal right to receive but haven’t gotten yet when you file for bankruptcy is also included in your bankruptcy estate.
In addition to the creation of a bankruptcy estate a “trustee” will be appointed to oversee the bankruptcy estate. The trustee’s duties include examining the debtor (the person filing the Chapter 7) to determine that the petition is truthful and accurate and whether or not there are any assets that can be sold to pay creditors of the debtor. Fortunately the law allows that certain property can be exempted, or removed from the bankruptcy estate, and therefore outside the reach of the trustee. [exemptions are discussed below]. Most Chapter 7 cases that are filed are termed “no asset” cases; that means the debts are discharged and there are no assets for a trustee to sell off to satisfy debts owed creditors.
What Property Can I Keep In Chapter 7?
In New York the debtor may choose to use either the exemptions allowed under Federal law or under New York State law. Depending on what property you own it will be important to choose the correct law. The choice between Federal or State will depend on which benefits the debtor most. Examples of New York State exemptions in 2017 for the property of each debtor include:
- $165,500.00 of equity in your principal residence;
- $4,425.00 of equity in your car;
- $8,275.00 interest in a personal injury case.
Examples of exemptions under Federal law for each debtor include:
- $23,675.00 of equity in your principal residence;
- $3,775.00 of equity in your car;
- $23,675.00 interest in a personal injury case;
- $13,100.00 wild card which can be used to protect property that may otherwise be lost to a trustee.
Just a quick review of these exemptions and you will see how important it is to select an attorney who knows which set of exemptions will provide the debtor with maximum protection.
Chapter 13 (Reorganization)
In a Chapter 13 case, the debtor is reorganizing his or her debt while protected by the Automatic Stay. A debtor will file a “plan” showing how past debts will be paid over a maximum 60 month period (5 years). These monthly payments will be made to a Court appointed Chapter 13 Trustee, who is a disbursing agent for your plan payments. The most important thing about a Chapter 13 case is that it allows the debtor to keep valuable property. Chapter 13 is most commonly used when a debtor falls behind on mortgage payments. A Chapter 13 permits the debtor to pay the mortgage arrears to a Chapter 13 Trustee while making current mortgage payments to the bank. While the plan is being paid, the bank is prevented from beginning or continuing foreclosure proceedings.
In certain cases it is possible to modify a mortgage with the Bankruptcy Court oversight. A debtor may request that the bank participate in the loss mitigation program. The debtor will then submit documents to the bank so that the modification application can be assessed. The progress and fairness will monitored by the Court.
What Property Can I Keep In Chapter 13?
In a Chapter 13 you are most likely to keep all property that you own since a Chapter 13 Trustee does not liquidate non-exempt assets to pay creditors.
What Can Bankruptcy Chapter 7 or Chapter 13 Do For Me?
- Eliminate the legal obligation to pay most or all of your debts. This is called a “discharge” of debts. It is designed to give you a fresh financial start.
- Stop foreclosure on your house, condo or co-op and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment).
- Prevent repossession of a car or other property.
- Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
- Restore or prevent termination of utility service.
- Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.
- Obtain a modification of your mortgage.
What Else Should I Know?
The Means Test — The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) introduced a “means tests” to determine eligibility to file a Chapter 7. Debtors who do not pass the means tests will be eligible to file under Chapter 13. If you are considering bankruptcy, seek legal bankruptcy advice from an experienced bankruptcy attorney who can accurately calculate your eligibility to file Chapter 7.
Credit Counseling — The law requires people planning to file for bankruptcy undergo a pre-bankruptcy credit counseling from a government-approved organization within 180 days before they file.
Utility services — Public utilities, such as the electric company, cannot refuse or cut off service because you have filed for bankruptcy. However, the utility can require a deposit for future service and you do have to pay bills which arise after bankruptcy is filed.
Discrimination — An employer or government agency cannot discriminate against you because you have filed for bankruptcy.
Driver’s license – -If you lost your license solely because you couldn’t pay court-ordered damages caused in an accident, bankruptcy will allow you to get your license back.
Co-signors — If someone has co-signed a loan with you and you file bankruptcy, the co-signer may have to pay the debt. If you file a Chapter 13, you may be able to protect a co-signor if it was a consumer debt, depending upon the terms of your Chapter 13 plan.
REMEMBER: The law often changes. Each case is different. The information contained herein is meant to give you general information and not to give you specific legal advice.
WE ARE A QUALIFIED FEDERAL DEBT RELIEF AGENCY AND HELP PEOPLE FILE CHAPTER 13 AND BANKRUPTCY