What is Bankruptcy?
Simply stated, it is a legal proceeding brought in the federal bankruptcy court for the purpose of eliminating one’s debt. The specifics of bankruptcy depend on the chapter filed. There are two chapters primarily pursued by individuals: Chapter 7 and Chapter 13.
What is a Chapter 7?
- A Chapter 7 bankruptcy seeks to discharge all unsecured debts.
- A possible alternative when everyday living expenses coupled with monthly credit card payments, medical bills, etc. are significantly greater than your monthly income.
- Chapter 7 allows for certain exemptions. Often one can file Chapter 7 without giving up their assets. Your equity in your home, a car, your checking or savings account, furniture, clothing and even jewelry may be protected as exempt assets. This also holds true for pensions and retirement accounts.
What is a Chapter 13?
- A Chapter 13 bankruptcy takes a different approach as it offers an opportunity to repay creditors over the course of a 3 or 5 year plan.
- Under the guidance of the bankruptcy court, you make monthly payments to your assigned trustee who is responsible for dispersing the money to your creditors. At the completion of the plan, any remaining debt is considered discharged.
- This Chapter of bankruptcy is often considered for those individuals who, while struggling with debts, maintain significant income and therefore do not qualify for a Chapter 7.
- A Chapter 13 bankruptcy also allows for exemptions to protect certain assets.
Which Chapter is right for me?
An experienced attorney at Blutter & Blutter can determine if bankruptcy is right for you and, if so, which Chapter of bankruptcy you qualify for. By reviewing your income, assets and debts we can appropriately steer you onto the right path. Depending on the circumstances of your case, one Chapter may protect your interests more than another.
Benefits of Bankruptcy:
- Discharge most or all of your debts.
- “Stay” or stall any pending lawsuits.
- Stop wage garnishment or debt collection harassment.
Types of Dischargeable debts:
- credit card debt
- certain personal loans
- car loans (if you surrender the vehicle)
- medical bills
- possible back taxes
- post foreclosure deficiency judgments
Bankruptcy and Foreclosure:
Often a pending foreclosure action ultimately leads to the filing of either a Chapter 7 or Chapter 13 bankruptcy.
- Where an individual can no longer afford their home and it is or has been foreclosed on the bank may seek a deficiency judgment from the borrower. A deficiency judgment is the difference between the proceeds from the public sale of the home and the fair market value of the property. When this occurs a borrower can find relief in a Chapter 7 filing which allows for the discharge of such a debt.
- Alternatively, where a borrower now has significant income but the bank refuses to accept payment or offer a mortgage modification one might consider filing a Chapter 13. This will allow for the mortgage arrears to be built into the 5 year plan. Upon the completion of the Chapter 13 bankruptcy your home loan will be deemed current and you will be able to continue to own your home.
Blutter & Blutter has significant experience in both bankruptcy and foreclosure. Choosing a firm well-versed in two areas which are frequently intertwined can help ensure you are getting the proper representation you need.
Blutter & Blutter are bankruptcy attorneys located here on Long Island with significant experience representing individuals in Queens County as well as Nassau County, New York and Suffolk County, New York.