If you are struggling under a mountain of debt, you might be searching for a way out. If you have not yet considered filing for bankruptcy, it’s worth exploring as it could be the lifeline you need. However, you may be unfamiliar with the different bankruptcy options and how to determine the most suitable chapter for your unique needs. Please continue reading as we explore the key distinctions between the various bankruptcy chapters and how a skilled New City Bankruptcy Attorney can help you make informed decisions about your financial future.
What Are the Different Bankruptcy Options in NY?
When considering bankruptcy, it’s essential to understand the various options, each tailored to address specific financial circumstances. If you are filing as a consumer, you can typically pursue Chapter 7 or Chapter 13 bankruptcy.
Chapter 7 bankruptcy is a legal process in which a court-appointed trustee liquidates your non-exempt assets to satisfy creditors. Essentially, it discharges eligible debts and provides a fresh financial start. It’s important to note that to be eligible for Chapter 7 bankruptcy, you must pass a “means” test. This test compares your income to the average households of your size in New York. It aims to prevent an individual from using Chapter 7 if they have the financial means to repay at least some of their debt.
If you don’t pass the means test, you may pursue Chapter 13 bankruptcy. This debt-relief option allows those with regular income to develop a repayment plan to pay off their debts over some time. This will allow you to keep certain assets, rather than having them seized. When you make payments, your trustee will distribute these funds to creditors. Once the repayment plan has been satisfied, the remaining unsecured debt will be discharged. However, you should note that some debts cannot be eliminated through bankruptcy, such as certain tax debts, child support, alimony, and more.
How Do I Choose Which Bankruptcy Chapter to File?
Although New York offers a choice of bankruptcy options, you may not qualify for all of them. As mentioned above, if your income is below the minimum requirement for Chapter 7, you won’t be allowed to file and will have to pursue Chapter 13 instead.
Selecting the appropriate type of bankruptcy to file can be a difficult decision. Chapter 13 is generally better if you have substantial assets, such as cars, collectibles, or secondary homes, as it allows you to keep them while you make up missed payments. If you have minimal assets to protect, Chapter 7 could be a better fit because Chapter 13’s monthly payments could be too costly. Chapter 7 is also much faster, usually taking around six months, versus three to five years for Chapter 13.
To determine which type of bankruptcy to file under, consult with a qualified attorney from The Lauterbach Law Firm. Our legal team is prepared to assess your financial situation and goals to recommend the best course of action. Connect with our firm today for guidance and skilled representation.
