Rochester, New York
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Rochester, NY 14623
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4 FAQ About Chapter 7 and Chapter 13 Bankruptcy December 3, 2018

Rochester, Monroe
4 FAQ About Chapter 7 and Chapter 13 Bankruptcy, Rochester, New York

If you’re looking for options to eliminate debt, bankruptcy protection can provide valuable relief and the chance to get your finances back in order. However, the process can often be confusing, leaving many borrowers uncertain about the benefits this option can bring, or if they even qualify. Below are answers to some common questions about Chapter 7 and Chapter 13 bankruptcy.

Your Guide to Chapter 7 & Chapter 13 Bankruptcy

What kind of debt do I have?

People often carry three types of debt. Secured debt is backed by collateral, or property the lender can repossess, such as the mortgage on your home or a car loan. Unsecured debt is not backed by collateral, so there is nothing for lenders to claim. This includes credit card debt, outstanding medical bills, past due utility bills, and personal  loans. Priority debt, includes income taxes, court fines, and child support, all of which are non dischargeable in Bankruptcy except for older income taxes which can be discharged under certain circumstances.

Should I file for Chapter 7 or Chapter 13 bankruptcy?

There is an income qualification for Chapter 7.  If your household income is above certain levels you may be required to file Chapter 13.  Chapter 7 involves liquidating non exempt assets , if any, and using that cash to repay financial obligations. Chapter 13, on the other hand, allows borrowers to establish a repayment plan based on the amount of money they have left after necessary expenses like housing, utilities, food, clothing, transportation, and health care.

Will I lose all my belongings in a Chapter 7 bankruptcy?

bankruptcyChapter 7 bankruptcy means your unsecured debt will be eliminated.  In exchange, the bankruptcy trustee may elect to seize some of your non exempt assets to satisfy creditors. However, both New York State and the Federal government allow debtors to exempt a wide range of personal property as well as real property used as a homestead so that in many cases all property is exempt and retained by the  debtor free of claims by the Trustee.

What are the requirements for a Chapter 13 payment plan?

Chapter 13 bankruptcy allows you to pay back all mortgage arrears, income or property taxes, and a percentage of your unsecured debt through a court-managed repayment plan. This will stop foreclosure proceedings so that you can keep your home.  Qualifying applicants must show that they have sufficient resources to pay the required amounts in a plan covering no more than five years. The court will require priority debts be paid off first and in full. If any of your property is deemed non-exempt, you must also pay at least the current value of that property. Any remaining disposable income will go towards other unsecured debts.

Do I need an attorney?

Filing for bankruptcy is a complex process, and even minor mistakes can have serious long-term consequences. Hiring a bankruptcy attorney is the best way to ensure your paperwork is submitted correctly and all your eligible debts and assets are properly scheduled so the debt can be discharges and so you get every exemption you’re entitled to.


 

For over 30 years, Robert A. Schwartz has helped clients throughout Monroe County, NY, get back on the right financial path and get relief from unmanageable debt. If you’re considering filing for bankruptcy, you can rely on his expertise to get the second chance everyone deserves. Visit him online to for a closer look at his legal services, or call (585) 334-4270 to find out if bankruptcy is right for you.

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