5 Important Questions to Answer Before Filing Bankruptcy in Brooklyn
If the bills are piling up, the creditors are calling nonstop and you’re deeply in debt, bankruptcy can be an appealing option. Bankruptcy is an effective way to stop the creditors from breathing down your neck and start fresh in your life. But even though filing bankruptcy might sound tempting, it’s important that you understand everything that goes into this process.
For instance, in order to have a successful bankruptcy case in Brooklyn NY, you’ll need to be honest with the court and list all of your assets, both secured and unsecured. You’ll also need to have realistic expectations for the process (it usually takes about four to six months from filing to final discharge) and show up to all court hearings.
By cooperating with the court and working closely with your bankruptcy attorney, you can ensure a smoother process. To help you prepare for bankruptcy, here are five important questions to ask yourself.
Which type of bankruptcy is best: Chapter 7 or Chapter 13?
There are two types of bankruptcy that you can file: Chapter 7 and Chapter 13.
A Chapter 7 bankruptcy is known as a straight bankruptcy because it requires you to sell all of your assets, except exempt ones like your clothes, furnishings, work-related tools and vehicle. You must also have a low income to qualify, and you’ll need to complete a credit counseling course.
Chapter 13 bankruptcy is best for people who have a steady income and assets that they don’t want to lose, like a mortgaged house or car. With this type of bankruptcy, you’ll work with a judge to set up a repayment plan. If you successfully make all your payments during the 3-to-5 year period, the rest of your debts will be discharged.
Will I qualify for bankruptcy in Brooklyn?
In order to get your debts discharged, you must qualify for bankruptcy. This protects the system from being taken advantage of by people who live beyond their means and don’t want to pay back their debts.
To qualify for Chapter 7 bankruptcy, you must pass what’s known as a means test. This test determines what your disposal income is after paying your essential bills. If you pass the means test, you qualify for Chapter 7 bankruptcy. If you don’t pass, you don’t qualify.
That being said, Chapter 13 bankruptcy might still be an option. To qualify for Chapter 13, you must have enough income to make your monthly debt payments, and your secured and unsecured debts must be below a certain amount. Debt limits change every three years, so talk to your bankruptcy attorney in Brooklyn about the latest limits.
Will filing bankruptcy actually help my situation?
It’s important to take an objective look at your situation so that you can determine the best way to solve it. Bankruptcy is an effective way to get out of debt, but you’ll also need to be committed to changing some of your habits. While you can legally file bankruptcy as many times as needed, this isn’t something you want to do every handful of years.
Furthermore, not all debts are dischargeable through bankruptcy. For example, neither Chapter 7 or Chapter 13 bankruptcies get rid of student loan debt, unless you can prove a hardship. Bankruptcy also won’t eliminate the following:
- Child support
- Most unpaid taxes
- Criminal restitution
- Fines or debts to the government
- Debts left off the bankruptcy petition
- Debts from tax-advantaged retirement plans
- Personal injury debts
Can I afford to file bankruptcy?
It may sound counterintuitive, but filing bankruptcy is not free. You’ll be responsible for paying filing fees, attorney fees, credit counseling fees and debtor education fees. On average, bankruptcy in Brooklyn can cost anywhere from a few hundred dollars to a few thousand dollars depending on the type of bankruptcy you are filing and the complexity of your case.
Fortunately, there are ways to pay for bankruptcy even when you are strapped for cash. Since you’re going to file bankruptcy, you can stop paying your credit cards and use this money to pay your bankruptcy attorney. You can also make extra income by selling some of your personal possessions.
Additionally, you can talk to your bankruptcy lawyer about a payment plan. Some lawyers allow their clients to spread out their payments over several months. Keep in mind that you will be relieving yourself from most of your debts, so you should have some money in there to cover your attorney fees.
Are you prepared to live with the effects?
The effects of bankruptcy don’t go away after a few months. Bankruptcy stays on your credit report for up to 10 years from the date of filing and can hurt your ability to get a loan, apartment or insurance. Plus, your bankruptcy will be public record, so anyone can view it.
You’ll also need to wait several years before buying a house if you file Chapter 7 bankruptcy. Chapter 13 bankruptcy allows you to qualify for a mortgage sooner, though some people need to wait up to four years. Personal loans will also have higher interest rates. Bankruptcy will bring you relief, but you do need to be prepared for other impacts.
As you can see, there is plenty to think about when filing bankruptcy in Brooklyn. The best decision you can make today is to request a free consultation with The Law Office of William Waldner. Our experienced bankruptcy attorney will review your case and discuss your options. This way, you can make an informed decision that you feel good about!