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Choosing between a Chapter 7 and a Chapter 13 bankruptcy

People in Rockland County who are considering filing a bankruptcy petition usually wonder whether they should use Chapter 7 or Chapter 13. A Chapter 7 bankruptcy usually results in the discharge of many of a person's debts, whereas a Chapter 13 bankruptcy results in a plan to pay existing obligations over time, usually five years. While Chapter 7 may seem more appealing, only individuals whose income is below a prescribed level are eligible for Chapter 7. People whose income is above the prescribed level must file under Chapter 13. Nevertheless, approximately 70 percent of all bankruptcies are filed under Chapter 7, while the other 30 percent are filed under Chapter 13.

Can I discharge all of my debts through personal bankruptcy?

When people in Rockland County consider bankruptcy, they want to reduce their debts by the greatest amount possible. A natural question is whether all debts can be discharged in either a Chapter 7 or a Chapter 13 consumer bankruptcy proceeding. The unhappy answer is "No."

Using personal bankruptcy's automatic stay to stall foreclosure

Most people in Rockland County probably view bankruptcy as a pain-filled process, second only to a trip to the dentist in that respect. However, when debts pile up and when mortgage payments are late, bankruptcy can be a significant pain-reliever. When dark financial clouds begin to gather, the beneficial effects of a consumer bankruptcy must be carefully weighed against the opprobrium that seems to automatically attach itself to any effort to use the bankruptcy laws to reduce debt and reorganize personal finances. In at least one case -- foreclosure of the mortgage on a residence -- bankruptcy provides a potential remedy for the debtor.

What happens to a retirement account in bankruptcy?

A common question asked by New Yorkers who are contemplating bankruptcy is what happens to retirement savings. Can the trustee use retirement assets to pay creditors? Can creditors garnish funds in a retirement account? The answer depends upon the type of account in which funds have been accumulated and upon the law of the state in which the debtor lives. Whether a person chooses Chapter 7 or Chapter 13 generally makes little difference in protecting assets in a retirement account.

Non-dischargeable debts in bankruptcy

Many people in Rockland County understand that a Chapter 7 bankruptcy proceeding can be used to discharge, that is, write off, many different kinds of debts. Many people choose Chapter 7 to rid themselves of excessive consumer debt, such as credit card debts. In choosing Chapter 7, however, a person should be aware that a chapter 7 discharge order may not apply to several kinds of debts.

Michael Vick pays creditors 99 cents on the dollar

People who choose a Chapter 7 bankruptcy usually intend to obtain a complete discharge of all obligations. Those who choose Chapter 11 have some intention to repay at least some of their debts. Former New York Jets quarterback Michael Vick owed slightly more than $17 million when he filed his bankruptcy petition in 2008, but he chose Chapter 11 because he was reluctant to "stiff people who never stiffed [him]."

What happens in a Chapter 13 bankruptcy?

As noted in our last post, the federal Bankruptcy Code provides two types of bankruptcy procedures that are often used by individuals to eliminate or reduce their indebtedness. We summarized the steps in a Chapter 7 bankruptcy, the procedure that is used to eliminate debt through the sale of the debtor's non-exempt property and making partial payments to creditors. At the conclusion of a chapter 7 proceeding, the unpaid portions of all non-secured debts are discharged.

What happens in an individual Chapter 7 bankruptcy?

Most people in and around Rockland County who are contemplating bankruptcy know that the federal Bankruptcy Code provides two types of bankruptcy proceedings for individuals which are commonly used: Chapter 13 and Chapter 7. Few people, however, know what happens during a Chapter 7 proceeding.

Buying or renting a home after filing a Chapter 13 petition

New Yorkers who are considering filing a Chapter 13 bankruptcy petition are frequently deterred by fear of the unknown. One of the biggest unknowns is the effect that filing a Chapter 13 petition - frequently called a wage earner or, more generally, a consumer bankruptcy - will have on a person's ability to buy or rent a home. The filing of a Chapter 13 petition does not ipso facto prevent a person from buying or renting, but the process often becomes more laborious.

What is the 'means test' in a bankruptcy proceeding?

Most New Yorkers who consider filing a bankruptcy petition must choose between filing under Chapter 7 or Chapter 13. Under Chapter 7, virtually all unpaid debts are discharged. But, under Chapter 13, the debtor must submit a plan to pay-off debts over time.

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Law Office of Ronald V. De Caprio 65 West Ramapo Road Garnerville, NY 10923 Phone: 845-406-4201 Toll Free: 866-936-8113
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