Have you found yourself in financial hardship? Are you wondering how you can get out of it? Well, if you've done any research regarding how to free yourself from the shackles of a financial pickle, your searches probably led you to bankruptcy. But the matter of bankruptcy can be complex. Which type of bankruptcy should you file? If you're in New York and on the fence about which bankruptcy chapter is best for you, continue reading the article below and contact Law Office of Simon Goldenberg for a free consultation today.
Overview
Bankruptcy consists of two main chapters: 7 and 13. Before filing, it's imperative that you understand how these two chapters differ, how they'll impact your life overall, and which financial debts they do and do not affect.
Chapter 7 Bankruptcy
What Is It?
Chapter 7 bankruptcy is the more common of the bankruptcy chapters. In fact, in 2019, almost 500,000 Americans filed for Chapter 7 bankruptcy versus just over 280,000 Americans who filed for Chapter 13. In 2020, more than 370,000 Americans filed for Chapter 7 bankruptcy, whereas only 156,000 filed for Chapter 13 bankruptcy that same year.
Why do so many people prefer filing Chapter 7 instead of Chapter 13 bankruptcy? When you file for Chapter 7, most of your debts are wiped clean. If the bankruptcy court approves your request, you will no longer have to make monthly payments towards a majority of your debts. Thus, this chapter is ideal for people who do not find it possible to catch up on their bills or who have fallen so far behind that monthly payments are no longer feasible.
When you file for Chapter 7, many of your assets are liquidated, meaning they are sold to get money to pay debts. The court orders an automatic stay to prevent creditors from garnishing your wages and collecting their debt from you. Then, the money from your liquidated assets is turned over to your creditors. If any money remains after you've paid off your creditors, it goes back to you.
Why Would I File For Chapter 7?
You'd file for Chapter 7 when you don't see the light at the end of the tunnel to your financial hardship. You'd file for Chapter 7 when it's more than unlikely that you can make monthly payments to reduce your debt; it's impossible. But you'd also file for Chapter 7 when you want a fresh start. Remember that this chapter wipes away the majority of your debt, so it allows you to start over.
Generally, filing for any type of bankruptcy is often a last resort, and it's certainly not a decision you should make without a qualified, knowledgeable New York bankruptcy lawyer at your side.
When Would I File For Chapter 7?
Unlike with other legal matters, there is no statute of limitations that governs when you should file for Chapter 7 bankruptcy. There is not even a minimum amount of debt that you must have to file. You may file whenever you believe it's in your best interest.
What Does It Cover?
This chapter of bankruptcy will impact and clear away the following types of debts:
- Medical bills
- Credit card debts
- Personal loans
Do I Still Owe Child Support?
Yes, you are still responsible for monthly child support payments. Rendering financial aid to your children is your legal obligation. You cannot contract it away. However, a family court judge may reduce your monthly child support amount if you prove that your financial circumstances have changed substantially. A judge is likely to consider filing for bankruptcy substantial.
Do I Still Owe Alimony?
Yes, you are still responsible for monthly spousal support payments. You may request that a divorce court judge reduce the amount you owe based on your hardship, but you are obligated to make these payments for the duration of the court order.
Chapter 13 Bankruptcy
What Is It?
Chapter 13 bankruptcy puts you on a three-to-five-year payment plan with your creditors. Here, the court adjusts your monthly payment amount to a lower standard that falls more in line with where you are at present. Rather than liquidating your assets, you must show proof of income that will allow you to satisfy this new payment plan.
This chapter allows you to discharge certain debts that Chapter 7 does not, such as:
- Property settlement debts
- Divorce proceeding debts
- Debts arising from willful and malicious injury to property, and more
Why Would I File?
You'd file for Chapter 13 bankruptcy when you need to adjust your monthly payment plan with your creditors. You'd file when you are still financially able to make payments, just at a reduced amount. This chapter is also ideal for people who want to keep their property and other assets.
When Would I File?
If you want to file for Chapter 13 bankruptcy, your unsecured debts can't be more than $419,275, and your secured debts can't be more than $1,257,850. Unsecured debts include personal loans and credit cards. Secured debts include your mortgage and car loan.
What Does It Cover?
Chapter 13 bankruptcy covers any debt that you're making monthly payments towards. For more information regarding what to include, consult with the lawyers at Law Office of Simon Goldenberg, for a free consultation, at (888) 301-0584 or contact us online.
Do I Still Owe Child Support?
Yes, you are still responsible for monthly child support payments. Rendering financial aid to your children is your legal obligation. You cannot contract it away. However, a family court judge may reduce your monthly child support amount if you prove that your financial circumstances have changed substantially. A judge is likely to consider filing for bankruptcy substantial.
Do I Still Owe Alimony?
Yes, you are still responsible for monthly spousal support payments. You may request that a divorce court judge reduce the amount you owe based on your hardship, but you are obligated to make these payments for the duration of the court order.
New York Bankruptcy Lawyers Are Here For You
Considering bankruptcy? If so, speak with an experienced bankruptcy attorney regarding your options. Law Office of Simon Goldenberg can provide you with expert guidance and help you throughout the process. Connect with Law Office of Simon Goldenberg by calling (888) 301-0584 or contacting us online today.