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Bankruptcy Attorney: How Does Bankruptcy Work In New York State
One should know every aspect of the bankruptcy process before filing for bankruptcy. Consulting a bankruptcy lawyer provides a professional opinion on the matter. This article will discuss Chapter 7 and Chapter 13 bankruptcy and foreclosure.
What is bankruptcy?
Bankruptcy is a legal state where an individual or a firm cannot pay the bills for a fresh financial start. Bankruptcy is a proceeding that helps those who are declared bankrupt by the federal law can get a new financial start. The right for bankruptcy is provided by federal law and all the cases of bankruptcy are held in federal court. The initiation of bankruptcy immediately stops the creditors of the bankrupted party to seek for debts owed to them until the debts are sorted out by the law.
What is the purpose of bankruptcy?
Bankruptcy allows one to discharge the debts and gives an individual a fresh financial start by providing funds. One may also temporarily be free from paying tax or mortgage on the property, prevent a car from being possessed by another, or stop the wages from vanishing in the form of debt. However, Midtownbankruptcy lawyers say that bankruptcy cannot solve every financial problem. It is also not the only right step for every individual. Bankruptcy may not let one release debts that happen after the bankruptcy case has been filed.
What type of bankruptcy should one file?
If one is unable to pay the bills every month, filing for bankruptcy in New York State may help one discharge the debt and get back on track. One must ascertain whether or not their income qualifies for a bankruptcy case. One should find out what would happen to the property and prepare the paperwork accordingly.
Qualifying for Bankruptcy in New York
In bankruptcy, the means test concludes whether one can meet the requirements of a particular bankruptcy chapter. Mostly, people filing for bankruptcy files under Chapter 7 or Chapter 13 New York. There are a few other types of bankruptcy that can be applied but only in rare cases such as if one owns a small business.
Chapter 7 bankruptcy
Under this chapter, the person filing for bankruptcy must meet the income requirement after passing the ‘means test’. The test will first determine whether the household income of the person filing for bankruptcy is lower than the average income of New York State. If the income is lower, the person will pass the test and will receive a discharge in the Chapter 7 case. The second portion of the test includes deducting allowed expenses from the household income. If after doing so one doesn’t have enough unrestricted income to make a payment to the creditors one will qualify for Chapter 7 bankruptcy.
Chapter 13 bankruptcy
A Chapter 13 Bankruptcy Attorney says if the household income exceeds the median income of the State and what the Chapter 7 limits, one has to repay some or all that they own in a five-year repayment plan of Chapter 13. The complicated part of this chapter is that one must have enough income in order to pay all the required debts. One has to calculate the bankruptcy payment in Chapter 13 similar to how it is done in Chapter 7. One can surf the internet by using Chapter 13 Bankruptcy Lawyers near me to find good attorneys.
What to do before filing for bankruptcy?
One has to go through an approved credit counselling session. This session has to be performed 180 days prior to filing for bankruptcy. One has to attain a certificate from an approved agency to show the counselling session has been completed. A bankruptcy attorney in New York can help one find an agency. Most people benefit from retaining counsel. The cost of hiring a bankruptcy lawyer varies depending on the area in the official State of New York.
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