Ever felt like you’re drowning in debt, with no life raft in sight? Like each bill is a wave crashing over your head?
You’re not alone. Countless folks are right there with you, fighting to keep their heads above water.
But what if I told you there’s hope yet? That despite the stormy seas of financial strain, a beacon exists to guide lost sailors back to safe shores. It’s called bankruptcy.
No, it’s not a terrifying beast lurking beneath the waves. In fact, it could be your saving grace – offering two lifelines: Chapter 7 and Chapter 13 bankruptcies.
Stick around and we’ll navigate these waters together – learning about different types of bankruptcy options for individuals like us; how assets play into this game; catching up on missed payments and more! We’re diving deep, so grab your gear and get ready to explore!
Understanding Different Types of Bankruptcy
Filing for bankruptcy can be a complex process. You’ve got Chapter 7, Chapter 13, and occasionally, even Chapter 11 to consider.
The Basics of Chapter 7 Bankruptcy
If you’re overwhelmed by debt but don’t have significant assets or income to repay it with, Chapter 7 might be your best option. This form wipes out unsecured debts like credit card balances and medical bills. Not everyone is eligible for this form of bankruptcy.
An Overview of Chapter 13 Bankruptcy
Now let’s say you’ve got regular income but are struggling to keep up with your debts – enter Chapter 13. Unlike its sibling above which liquidates non-exempt property as part of the process; here we reorganize those financial obligations into a manageable payment plan over three-to-five years.
A fun fact: Most folks file under either Chapters seven or thirteen. But there is also Chapter 11 typically used by businesses – although some high-income individuals use it too – just remember though; this one requires legal help due its complexity.
Navigating the Means Test for Chapter 7 Bankruptcy
Let’s decode the means test used to check your eligibility for Chapter 7 bankruptcy. This evaluation tool is key, as it checks if you meet certain income requirements.
The crux of this test is assessing your average monthly income over six months before filing. But remember, not all sources of money count as ‘income’. A relief for many New Yorkers has been that stimulus checks and other payments under the CARES Act aren’t considered income in this calculation.
If you’re wondering about what does get counted, here’s a quick rundown: wages from work (obviously.), but also things like unemployment compensation, state disability insurance payments, annuity payments – basically any regular incoming cash flow.
This isn’t an exhaustive list though. Each case can be unique so always consult with a trusted legal professional or even consider getting help from an experienced New York bankruptcy attorney.
Managing Assets in Bankruptcy
The world of bankruptcy is often seen as a maze. Let’s make it less daunting by understanding how your assets get treated in Chapter 7 and Chapter 13 bankruptcies.
Liquidation in Chapter 7 Bankruptcy
In the case of Chapter 7 bankruptcy, also known as ‘liquidation’, you may have to let go of some assets. It typically works best for folks with little or no valuable possessions, so they don’t lose much.
This type of bankruptcy essentially turns non-exempt property into cash, helping clear off unsecured debts. But remember, not all your belongings are up for grabs; there are exemptions that protect necessary items like clothes and household goods.
Retaining Property in Chapter 13 Bankruptcy
Moving on to Chapter 13 bankruptcy, here’s good news: You can keep all your property. However, there’s a catch – if you own non-exempt properties (like an extra car), you’ll need to pay their value over time through a repayment plan.
This approach helps individuals who’ve hit financial roadblocks but still wish to hold onto their prized possessions while sorting out their debts gradually. That’s quite practical.
Using Bankruptcy to Catch Up on Missed Payments
Falling behind on your house or car payments can be a frightening experience. You may feel like you’re drowning in debt, with no lifeboat in sight. But here’s some good news: Chapter 13 bankruptcy might just be that lifeboat.
Chapter 13 bankruptcy, often called the wage earner’s plan, lets you develop a strategy to repay all or part of your debts over time. It’s not about wiping out debt; it’s about managing it better and catching up on those missed payments.
This form of bankruptcy is ideal if you have regular income but are struggling to stay atop bills due to unforeseen circumstances – think job loss or medical emergencies. Most importantly, it allows individuals at risk of losing their homes an opportunity to save them by stopping foreclosure proceedings.
The real beauty lies in its flexibility – unlike other forms of bankruptcy, Chapter 13 gives you breathing room by extending the repayment period while allowing for changes based on financial fluctuations during this time span. In essence, it offers hope where there seems none.
Bankruptcy isn’t a monster, it’s a life raft.
Chapter 7 and Chapter 13 are bankruptcy options for individuals like us, offering paths to financial freedom.
You’ve learned about the means test for Chapter 7 eligibility – how your income plays into this decision. But remember: relief payments aren’t counted as income!
We also discussed asset management in bankruptcy – liquidation in Chapter 7 or retaining property with payment plans in Chapter 13.
If you’re sinking under missed house or car payments, don’t panic – we’ve explored how filing for Chapter 13 can help catch up on those arrears.
No more fear of the B-word; armed with knowledge and action steps, you’re ready to sail towards safer shores!
Schedule your free consultation with The Law Office of William Waldner and discover if bankruptcy can give you the fresh start you’re looking for.