25 Dec Bankruptcy Frequently Asked Questions (FAQs)
If you are falling behind on bills, you are not alone. Financial problems can cause serious distress. A bankruptcy filing offers a potential solution. The American Bankruptcy Institute (ABI) reports that approximately 33,000 people file for bankruptcy protection in New York each year. At Poltielov & Habib, LLP, we help our clients navigate all aspects of the bankruptcy process—ensuring that their rights and interests are protected. We are committed to providing knowledge. Here, our New York bankruptcy attorneys answer some of the most frequently asked questions about bankruptcy.
What is Bankruptcy?
Bankruptcy is a legal process through which people—and other entities—can seek relief. The core purpose of bankruptcy protection is to help financially distressed (insolvent) petitioners resolve their debts in an orderly and fair manner—thereby finding a path back to financial sustainability.
What Different Types of Bankruptcy Should I Consider?
There are two main types of personal bankruptcy protection. Here is what you need to know:
- Chapter 7 Bankruptcy: Also called a straight bankruptcy, Chapter 7 bankruptcy allows the petitioner to discharge (eliminate) virtually all of their unsecured debts, including credit cards, personal loans, and medical bills.
- Debts that Cannot Be Eliminated in Bankruptcy in New York Not all debts can be discharged through bankruptcy. In New York, the following debts are generally considered to be non-dischargeable in bankruptcy:
Is New York Chapter 7 Bankruptcy (Straight Bankruptcy) Right for Me?
Most personal bankruptcy petitions are for Chapter 7 bankruptcy. It may be the right option for you if you cannot repay your debts. However, there is a means-test. Your monthly income must be below the state median (adjusted for household size) to be eligible to file for Chapter 7.
Is New York Chapter 13 Bankruptcy (Reorganization) Right for Me?
Chapter 13 may or may not be the right option for you. In most (but not all) cases, Chapter 13 bankruptcy is filed by people who cannot file for Chapter 7 bankruptcy due to their income level.
What Will Happen to My Home and Car if I File Bankruptcy in New York?
It is a common worry that bankruptcy will cost you all of your assets, including your home and your car. The good news is that this is not necessarily the case. Quite the contrary, New York has broad bankruptcy exemptions in place. You may be able to keep your home and your primary vehicle.
Will Filing for Bankruptcy Protection Wipe Out All of My Debt?
It depends on your debt situation and the type of bankruptcy protection that you file for. It is important to emphasize that certain debts—most notably tax debt and child support—cannot be discharged or reduced through the bankruptcy process.
Will Bankruptcy Affect My Credit?
Yes. Although bankruptcy is absolutely the best available solution in some circumstances, it does adversely affect a person’s credit score. A Chapter 13 bankruptcy falls off a credit report in seven years. A Chapter 13 bankruptcy falls off a credit report in ten years.
Schedule a Confidential Consultation With a New York Bankruptcy Lawyer
At Poltielov & Habib, LLP, our New York bankruptcy personal bankruptcy attorneys are skilled, experienced, and future-focused advocates for people and families. If you are considering filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy, we can help. Contact us today for a free, no obligation consultation. We handle bankruptcy filings in New York City and throughout the region.