Most people in Rockland County are unlikely to be familiar with IRS Form 1099C or the term "cancellation of indebtedness income." A Form 1099C is one of the many methods of reporting income that does not appear on a Form W-2 or a Form 1099MISC. The arrival of a Form 1099C can cause unexpected income tax headaches, but both bankruptcy and insolvency offer an escape.
For many people in Rockland County, bankruptcy looks like an expert ski hill - once you start down, you have almost no way to stop. In the process, creditors will seize assets that provide security for a loan that will be discharged, and valuable assets, such as a car or a house, will be lost forever. The reality is a bit different. The careful use of debt reaffirmation can prevent the loss of some assets that have special value.
Many people in Rockland County view bankruptcy as, among other things, as a sure-fire way to lose their home to the bank that holds the mortgage. The reality is exactly the opposite. If a person is seriously delinquent on mortgage payments, a bankruptcy proceeding maybe the only way to prevent the mortgage holder from foreclosing on the mortgage and reclaiming the house.
A previous post here reviewed Chapter 7 bankruptcy, which usually results in the discharge of most of a debtor's financial obligations, but does not necessarily protect a person's home from foreclosure. Also, many residents of Rockland County earn too much money to qualify for Chapter 7 relief. Chapter 13 of the Bankruptcy Code is the procedure that is most frequently used by persons who cannot pass the means test for Chapter 7 bankruptcy.
Most residents of Rockland County who have never filed a bankruptcy petition view the process as a long, dark journey during which they will be forced to sell most of their assets in exchange for having many of their debts declared uncollectible by the bankruptcy court. Individuals who are contemplating bankruptcy usually file a petition under either Chapter 7 or Chapter 13. A Chapter 7 petition is a request for the bankruptcy court to discharge and declare uncollectible most of their debts. A Chapter 13 petition asks the court for more limited relief by presenting a plan for reorganization of the debtor's finances that proposes paying those debts over five years. The two proceedings have many differences, and this post will explore Chapter 7.
Previous posts here have discussed New York's statutory exemption of an owner's equity in a homestead from creditors' claims in a bankruptcy proceeding. In order to fully understand this topic, a review of the automatic bankruptcy stay is also important.
Personal bankruptcy can be a smooth process that can provide significant relief from overburdening debt. Occasionally, however, the real world intervenes, and the bankruptcy process becomes extremely tangled. Paul Teutel, the host of the Discovery Channel's popular program "American Chopper," is embroiled in a personal bankruptcy in the Southern District of New York that involves at least two significant complications.
Many people in Rockland County have filed Chapter 7 bankruptcy petitions thinking that all of their debts will disappear at the close of the proceeding. Unfortunately, several different kinds of debts are exempt from discharge. Knowing which debts cannot be discharged may assist in making the decision about whether to file a bankruptcy petition.
Many people in Rockland County who are considering bankruptcy are deterred by the thought of adding to their financial problems by adding attorneys' fees. The answer to the question of whether an attorney is necessary in a bankruptcy filing can be complex, and it always depends upon the individual's financial situation.
Most people in Rockland County who have endured the rigors of a personal bankruptcy filing felt that the outcome justified the effort, because many debts were discharged. Sometimes, however, the debtor will fail to attend to one or more necessary details and will learn that a discharge will not be granted.