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General Information
What Is Bankruptcy?
Bankruptcy is a legal proceeding in which a person can get a fresh financial start. Your right to file for bankruptcy is provided by federal law.
What Can Bankruptcy Do?
Bankruptcy will cancel your obligation to pay most, if not all, of your bills. This is called a discharge of your debts. The discharge will:
Stop wage garnishments, bill collector telephone calls and all other collection actions against you.
Stop foreclosure on your house and allow you an opportunity to catch up on missed mortgage payments.
Prevent repossession of a car.
Will Bankruptcy Affect My Credit?
Unfortunately, if you are behind on your bills, your credit may already be bad. Bankruptcy will probably not make things any worse.
Since bankruptcy wipes out your debts, you are likely to be in a better position to pay your current bills, and you may be able to get new credit.
Will I Have to Go to Court?
Yes. You must attend a proceeding called the meeting of creditors supervised by the bankruptcy trustee. An attorney from our office will be with you at all times and will fully protect your legal rights.
Can I File for Bankruptcy?
Yes, almost all person may file for bankruptcy. Most persons may elect to file Chapter 7 - Straight bankruptcy if they wish to. However, a person with "above average" income, small household size and low household expenses, as determined by the "financial means" test, may not have the option of filing a Chapter 7 petition. Our service includes performing the "financial mean" test to determine your options under the law.
Bankruptcy Types
Chapter 7 - Straight Bankruptcy
In a chapter 7 bankruptcy your debts are canceled without the need to make any repayment. This is the best and least expensive type of bankruptcy. You can keep all of your exempt property. In New York almost all consumer property is exempt including furniture, TVs, VCRs, basic bank accounts, a car, IRA accounts, pension accounts, and 401-k accounts. Mr. Spodek will carefully review this important aspect of your case with you at your free consultation.
Chapter 13 - Full or partial repayment
Chapter 13 bankruptcy, requires partial or full repayment to creditor depending upon your financial circumstances. A Chapter 13 bankruptcy, can stop all creditors including the IRS, co-op and mortgage foreclosure actions. You can keep all of your property. You are given years to pay your missed secured creditor payments and often just a fraction of your other creditor debts without interest.
Will Bankruptcy Wipe Out All My Debts? Yes, with some exceptions:
money owed for child support or alimony, fines, and some taxes;
credit obtained by fraud or knowingly giving false information to a creditor;
debts resulting from willful and malicious harm and
student loans.
What Property Can I Keep?
In bankruptcy you can keep all property which the law says is exempt. New York State exemptions include:
$2,500 in savings.
$2,400 of equity in you car.
$400 per household item.
IRA; 401-k and pension plans.
$50,000 of equity in your home.
Other items.
Note: The amounts of the exemptions are doubled when a married couple files together. In determining your exempt property remember that value of property is not what you paid for it, but what it is worth today. For many items such as furniture and cars this will be considerably less than what you paid.
Equity for bankruptcy purposes is computed by taking the present value of the property less any money that you owe on mortgages or liens and less the allowed exemption. For example, if you own a $250,000 house with a $140,000 mortgage, owned by a husband and wife, the equity for bankruptcy purposes would be $10,000.