Confronting substantial debt can be a daunting experience, often prompting individuals to contemplate bankruptcy as a viable solution for attaining a necessary fresh start. Due to its considerable impact on credit, understanding the ideal conditions for filing is essential. Please continue reading as we explore the complexities of the bankruptcy process in New York and demonstrate how a dedicated Rockland County Bankruptcy Attorney at The Lauterbach Law Firm can help assess if this is the right option for your unique circumstances.

What Are the Different Bankruptcy Options for Consumers?

In New York, consumers are typically afforded two primary avenues for pursuing a bankruptcy case: Chapter 7 and Chapter 13. Chapter 7 involves the liquidation of non-exempt assets to pay off creditors. To qualify, you must first pass a “means test,” which compares your income to the state median to determine whether you can afford to repay your debts. If your income is too high, you will need to pursue a Chapter 13 case instead. Chapter 7 is a relatively quick process; debt discharge occurs within a few months, but it will remain on your credit report for up to 10 years.

The alternative option is Chapter 13, which allows an individual with a regular income to reorganize their debts under court supervision. Essentially, you can keep your property and repay all or a portion of your debt over a span of 3 to 5 years under an approved plan. The value of your non-exempt assets will be used to determine how much you must repay your unsecured creditors. Chapter 13 will remain on your credit report for up to seven years.

When is Filing for Bankruptcy a Good Idea in New York?

For individuals burdened by debt, bankruptcy can offer a legal avenue to discharge or restructure financial obligations under court protection. This is a momentous decision, however, and its long-term ramifications require careful consideration. The following are signs that bankruptcy might be a good idea:

  • Unmanageable Debt: Bankruptcy could provide a fresh start if you are constantly struggling to make minimum payments on debts and your financial situation has shown no signs of improvement.
  • Creditor Harassment: The relentless collection efforts from creditors can be profoundly distressing. However, initiating bankruptcy proceedings enacts an “automatic stay,” which will prohibit creditors from contacting you or pursuing collection actions.
  • Risk of Foreclosure or Repossession: Bankruptcy can also provide a reprieve, stopping the imminent loss of your home due to mortgage default or the repossession of your vehicle. This enables you to assess your options or reorganize your finances.
  • Wage Garnishment or Bank Levies: Bankruptcy can safeguard your income and assets by halting income withholding and bank account levies initiated by creditors who have obtained judgments against you.

Before you consider declaring bankruptcy, it’s in your best interest to consult with a knowledgeable attorney at The Lauterbach Law Firm to explore alternatives like debt consolidation, credit counseling, or debt management plans. Connect with us today to discuss your next steps.