Information on the new bankruptcy law Request an Appointment For A Free Consultation Should you file bankruptcy? What are the types of bankruptcies Can you keep your credit cards or loans? Can you rebuild your credit after bankruptcy? Bankruptcy Procedure and Cost Frequently asked questions about bankruptcy Our Bankruptcy Video – Low Bandwidth I High Bandwidth

Types Of Bankruptcy

These are the four different types of bankruptcy:  Chapter 7, Chapter 11, Chapter 12 and Chapter 13. 

Chapter 7

Chapter 7 is by far the most common type. In this type of bankruptcy, many types of debts are wiped out. The most common exceptions to this rule are:  most types of taxes, parking tickets, child support, and student loans. In a Chapter 7 bankruptcy, you may be allowed to keep up to $2,500 in cash, $2,500 in personal possessions, a car with up to $2,400 in equity, a house you own with up to $50,000 in equity, and most pensions. If you are married and are filing bankruptcy together, you may double these amounts. Please note that Chapter 7 Bankruptcy may not be available to you if you earn more that the median income for your state.

Additional information on the New Bankruptcy Law

Chapter 11

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Chapter 12

Chapter 12 is used by small farmers.

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Chapter 13

Chapter 13 is appropriate for individuals who do not qualify for Chapter 7 because they either have too much income, or are in arrears in mortgage payments and want to keep their property, or have property that exceeds permitted limits regarding equity.

In a Chapter 13 bankruptcy a payment plan is made for payments over a period as long as five years. To qualify for a Chapter 13 you must have enough income to pay your living expenses and payments under the plan.

In a Chapter 13 your creditors must fair no worse than they would have if you filed a Chapter 7 bankruptcy.  For example if you are $20,000 over your allowed exemption for your home, your creditors must be paid $20,000 under the terms of the payment plan.  In addition, secured loans, for example on your home and car, must both be brought current and paid on time during the payment plan.  In addition, unsecured creditors, such as banks that issue credit cards, are either paid in full or in part during the payment plan. The amount that unsecured creditors receive depends upon your individual circumstances

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Should you file bankruptcy?

If you answered yes to any of these questions you should consider the option of filing for bankruptcy.  During our free consultation we will be able to provide you with your options, which may or may not include bankruptcy. 

Additional information on whether you should file bankruptcy.

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Can you keep your credit cards and loans?

When you file for a Chapter 7 bankruptcy, you list all creditors to whom you owe money. If you do not owe money on a credit card, you do not list it in your bankruptcy petition. On credit cards and loans where you do owe money, it is possible to keep these items by reaffirming them.  A reaffirmation is an agreement that is signed by you, your creditor,   and your attorney which is filed with the Bankruptcy Court. The reaffirmation agreement says that you may keep your credit card or loan and that you will continue to be responsible for paying it. It is not usually a good idea to reaffirm a credit card. Reaffirmations are usually reserved for car loans or mortgages.

Can you rebuild your credit after filing for bankruptcy?

If you have been late in making payments on your credit cards that fact will be reported to the credit reporting agencies and stay on your credit report for seven years. If a creditor gets a judgment against you, this may stay on your credit report for up to twenty years. If you file bankruptcy, this will stay on your credit report for ten years. 

Filing bankruptcy could be your first step in rebuilding your credit.  Once you have eliminated your debts by filing bankruptcy you need not wait ten years to reestablish your credit.  Once you are discharged in bankruptcy, you should obtain a secured credit card. This is a type of card in which you keep a savings account with a bank, and the bank issues you a MasterCard or Visa Card. You use this card as you would use any other card. The only difference is that if you do not make your payments as required, the bank that issued the card may take the money from your savings account. You may also rebuild your credit by obtaining credit with another person as a cosigner.

There is no set time in which to reestablish your credit. In large part it will depend on you. If you have enough income and use your credit wisely, the fact that you were discharged in bankruptcy should become less of an issue as time goes on. Once a year or two has passed, if you have enough income it may be possible to buy a car or house.

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Bankruptcy Procedure and Cost

During our free consultation we will review your situation and advise you of your options and of our fee.  If you wish to retain our office in regard to a Chapter 7 you will sign a retainer agreement and pay an initial payment of $200. After your first payment you pay us at least $200 per month until the balance of our fee is paid in full.  If you are retaining us for a Chapter 13, the initial fee and minimum monthly payment is both $500.  Once you have retained us you may refer your creditors to us.

When you have finished paying us you will need to complete a class on Debtor Counseling, which may be taken in person, over the telephone or on the computer.  Once you have completed the Debtor Counseling we shall prepare your petition and file it with the Court.  There will be a hearing about one month later.  We will prepare you for the hearing and be at your side during the hearing. 

Prior to your bankruptcy being finalized by the Court you will need to complete another class on Financial Management.  Again, this may be taken in person, over the telephone or on the computer.   We will provide you with a list of the companies that are approved for providing the two required classes.  Each class takes one to two hours to complete and are easy. The total cost for these two classes are approximately $100.

Usually the Chapter 7 Bankruptcy is completed about four to six months after we have filed your petition.  Upon completion you will receive a discharge.  The discharge will state that many types of debts are discharged, that is you are not legally required to pay those debts.

In the case of a Chapter 13 Bankruptcy, there is a second hearing, called a confirmation hearing.  The discharge is issued after the last payment under the payment plan.  Accordingly, it may be three to five years before you receive the discharge.

For other types of bankruptcies, please call for a free consultation. Our telephone number is (718) 625-0800.

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What Questions are Asked Most Often About Bankruptcy

Questions:

QUESTION: Why should I use a lawyer and not a cheaper paralegal service?
ANSWER: There are many paralegal companies offering legal services. What looks like a bargain can become a very costly mistake. Paralegals are not lawyers and thus are not legally allowed to provide you with legal advice. They will not go with you to your hearing. If you have a problem you will find yourself alone. If a bankruptcy petition is completed incorrectly you risk having your bankruptcy petition denied, loss of your property and even criminal prosecution.
Additional information on when you should use a lawyer and not a cheaper paralegal service

QUESTION: Where can I get a copy my credit report?
ANSWER: Once a year you may obtain a free credit report from the three major credit reporting agencies, Equifax, Experian, and Trans Union. When we file bankruptcy for you, we obtain a combined credit report from these agencies.

QUESTION: Do I have to give up everything I own to file bankruptcy?
ANSWER: The purpose of the bankruptcy law is to give you a fresh start, not to leave you destitute. Among the items you are allowed to keep is $2,500 of cash, $2,500 in personal property, most pensions and IRA accounts and up to $50,000 in equity in a home. If you are married and both you and your spouse are filing, the above figures are doubled.

QUESTION: Can I keep my car?
ANSWER: You may keep a car with up to $2,400 in equity. For example, if you own a car that is worth $10,000 and there is a car loan of $8,000 on it, you may keep the car because you   have only $2,000 of equity. You will enter into a reaffirmation agreement with the lender so that you may keep the car. A reaffirmation agreement is an agreement between you and your lender, that is approved by the court and states that you may keep the car if you continue making your car payments.  If you are married and you and your spouse are filing jointly, these figures are doubled.

QUESTION: Can I keep my home?
ANSWER: You may keep a house, condo, coop or mobile home, if it is your prime residence, it is located in New York, and you have no more than $50,000 equity in it. If you are married and you and your spouse are filing jointly, the figures are doubled, and you are thus allowed a total of $100,000 in equity. For example, if you own a house with your spouse that is worth $500,000 and your mortgage now totals $400,000, you may keep the house because you have only $100,000 in equity. To determine the value of your home you will need a recent appraisal.  Expect an appraisal to cost approximately $400.  If you have too much equity, you may still be able to be benefit from a Chapter 13 bankruptcy.

QUESTION: After the bankruptcy is final, may I have a bank account? What if I inherit a fortune or win lotto?
ANSWER: After you receive your discharge you may go on and live your life as if you had never filed bankruptcy. You may have a bank account, inherit property, and if you are so fortunate, win the lottery.  It will all belong to you.

QUESTION: Will the bankruptcy stop my creditors from harassing me?
ANSWER: Once you retain us, you may have your creditors contact us. Once they learn that we are representing you, they will probably let you alone. Once we file your petition with the Bankruptcy Court, creditors are not allowed to take any further action against you without getting permission from the Bankruptcy Court.

QUESTION: Will the bankruptcy stop a creditor from garnishing my salary or taking money from my bank account?
ANSWER: The moment we file your petition with the Bankruptcy Court there is an automatic stay and any garnishment must immediately cease. If any money is taken from your salary or bank account after we file your petition, it must be returned.

QUESTION: Will the bankruptcy stop a creditor, such as a credit union, from deducting money from my salary or bank account?
ANSWER: If you do not want the creditor to deduct payments from your salary or bank account, it must stop when we file your petition.

QUESTION: Will the bankruptcy save my home from foreclosure?
ANSWER: The filing of the bankruptcy petition will stop the foreclosure proceeding temporarily. In the long run, whether the bankruptcy will stop a foreclosure depends on many factors. During our free consultation we will be able to advise you regarding your individual situation. 

QUESTION: May I continue to pay any of my creditors if I wish?
ANSWER: You may reaffirm a debt with a creditor. However, unless you have a good reason, such as wanting to continue to pay a car loan or mortgage because you want to keep the car or mortgage, it is not usually a good idea to reaffirm a credit card.

QUESTION: May I keep a credit card if I do not owe money on it?
ANSWER: If you do not owe a creditor any money, you don't list it in your petition, and the creditor will most likely allow you to keep the card.  Sometimes though the creditor may learn of the bankruptcy and revoke the card.

QUESTION: Will my employer know about the bankruptcy?
ANSWER: Your employer will not be informed of the bankruptcy unless we have to stop a wage garnishment.

QUESTION: How do I go about filing bankruptcy?
ANSWER: Schedule an appointment for a free consultation in our office. If we determine that bankruptcy is right for you and you wish to proceed, you will pay us a deposit of $200 and sign a retainer agreement that says we represent

Once you retain us, you may tell your creditors that they should not call you any more and to call us instead. You may take the next few months to pay us in full. You will be required to take a credit counseling class prior to our filing your petition with the Bankruptcy Court.  When you have paid us in full and have taken your credit counseling course, we'll obtain your credit report, prepare your bankruptcy petition and file it with the Bankruptcy Court. Once the petition is filed your creditors may not take any further action against you without making an application with the Court to lift the temporary stay.

After we have filed your petition with the Bankruptcy Court you will be required to take a second class on Financial Management. Both this class and the prior Financial Management class is given by a court approved company either over the telephone or internet and cost a total of approximately $100.

About four to six weeks after we have filed your petition with the Bankruptcy Court, a hearing will be held. We will prepare you for it and go with you to the hearing. The hearing usually takes five to ten minutes. The discharge is granted about three months later. After that, if any creditor whose debt is listed and discharged in your petition ever bothers you, we will deal with them at no extra charge.

QUESTION: Can I be turned down for bankruptcy?
ANSWER: In our experience, no one who has completed a petition truthfully and accurately and shown up for the hearing has been refused a bankruptcy discharge. 

Request an appointment for a free consultation in our office.

We are a federally designated Debt Relief Agency under the United States Bankruptcy Laws. We assist people with finding solutions to their debt problems, including, where appropriate, assisting them with filing bankruptcy.

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