Why Declare Bankruptcy in New York?
Bankruptcy is a federal court procedure that allows individuals to eliminate their debts and repay their creditors. The decision to declare bankruptcy should not be taken lightly, as it can have long-lasting financial consequences. However, despite the negative connotations sometimes associated with the process, there are actually a number of benefits to filing for bankruptcy, including the elimination of all or most of a filer’s unsecured debts. Below is an overview of some of the reasons that debtors should consider filing for Chapter 7 and Chapter 13 bankruptcy.
Benefits of Chapter 7 Bankruptcy in New York
Chapter 7 bankruptcy offers filers a fast and efficient method of getting their finances back on track. As mentioned above, a major benefit of Chapter 7 bankruptcy is that it eliminates all or most of a filer’s unsecured debts. While credit card debt is one of the most common dischargeable debts, there are several other types of debt that Chapter 7 discharges. These debts include:
- Some charge accounts
- Overpayments to social security
- Outstanding medical bills
- Payday loans
- Some personal loans
- Collection agency accounts
- Some civil judgments
- Tax penalties
- Some back taxes
- Some attorney fees
- Outstanding utility bills
- Bad checks
- Some auto accident claims
- Business debts
Benefits of Chapter 13 Bankruptcy in New York
While Chapter 13 bankruptcy doesn’t discharge outstanding debts, it does afford debtors the opportunity to pay back outstanding debts through a repayment plan. Chapter 13 repayment plans last between 3 and 5 years, and Chapter 13 bankruptcy does not require the liquidation of assets. While Chapter 13 has no specific income requirements, debtors must earn enough income to make monthly payments in accordance with an approved repayment plan. There are a number of reasons that a debtor may choose to file for Chapter 13 bankruptcy, including:
- The debtor wants to repay all outstanding debts;
- The debtor wants to retain certain nonexempt property;
- The debtor isn’t eligible for Chapter 7 bankruptcy;
- The debtor is behind on car loan or mortgage payments, and he or she wants to make up the missed payments over a specific period of time;
- The debtor has a tax obligation, student loan, or other debt that cannot be discharged via the Chapter 7 bankruptcy process;
- The debtor wants to roll past due mortgage payments into his or her bankruptcy payment plan; and
- The debtor has a co-debtor on a personal debt.
Legal Representation in New York
If you are considering filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy in New York, please contact an experienced bankruptcy attorney to discuss your situation. An experienced New York Chapter 7 or Chapter 13 bankruptcy attorney will keep you apprised of your rights while ensuring that you understand all of your debt relief options. Please contact O’Connell and Aronowitz for a free consultation.