When you’re facing overwhelming debt, bankruptcy can offer the lifeline you’re looking for. Even though some people are hesitant to file bankruptcy, this process is intended to help those going through financial hardship. Rather than digging yourself into a deeper hole, you can get the fresh start you need. 


That being said, the bankruptcy process can be complex and daunting without a proper understanding of the laws governing it. To help you out, let’s explore the most important things you need to know about the regulations regarding bankruptcy in Brooklyn, New York. 


Understanding the Different Bankruptcy Chapters


Bankruptcy law encompasses several chapters, each designed to address different financial situations.


  • Chapter 7 involves liquidating assets to repay creditors. It mostly focuses on unsecured debts like credit cards, personal loans, and medical bills. This is the most popular form of bankruptcy because most debts are discharged. 


  • Chapter 13 focuses on reorganizing debts through a repayment plan. It’s a good option for those who want to catch up on secured debts, such as a home or car, while also discharging unsecured debts. 


  • Chapter 11 primarily applies to businesses seeking to restructure their financial affairs. It’s often referred to as ‘reorganization bankruptcy’ so that businesses can stay afloat and pay creditors over time. 


Since you are planning to file for personal bankruptcy, you only need to be concerned with Chapter 7 and Chapter 13 bankruptcy. Speaking with an experienced bankruptcy attorney in Brooklyn, NJ can help you make the right decision. 


The Automatic Stay: Protection from Creditors


One of the most significant advantages of filing for bankruptcy is the automatic stay. This provision immediately halts all collection efforts, including lawsuits, wage garnishments and harassing phone calls from creditors. This is the whole purpose of an automatic stay – to provide a breathing space so that you can regroup and work towards resolving your financial matters. 


Bankruptcy Exemptions: Protecting Your Assets

Bankruptcy exemptions vary by state and play a crucial role in determining what assets you can keep during the bankruptcy process. For example, some of the most common bankruptcy exemptions in New York are: 


  • Homestead Exemption 
  • Vehicle Exemption
  • Wildcard Exemption
  • Personal Property Exemptions
  • Money Benefits Exemptions 


New York is also one of the states that lets you choose between using the state exemption list or the federal exemption scheme. You can work with your Brooklyn bankruptcy attorney to determine the best one to follow. 


Means Test: Qualifying for Chapter 7 Bankruptcy


The means test is an essential component for individuals seeking Chapter 7 bankruptcy. It determines if your income qualifies you for this type of bankruptcy or if a Chapter 13 repayment plan is more appropriate. 


The means test considers your income, expenses, family size and geographical location to assess your eligibility. Consulting with a bankruptcy attorney can help you navigate the means test and determine the best course of action.


Bankruptcy Trustee: Duties and Role in the Process


A bankruptcy trustee is appointed to oversee your case and ensure compliance with bankruptcy laws. The trustee’s responsibilities include reviewing financial documents, administering the bankruptcy estate and distributing assets to creditors when applicable. Understanding the trustee’s role and cooperating with their requests are crucial steps to a successful bankruptcy case. 


Rebuilding Credit After Bankruptcy

While bankruptcy has a significant impact on your credit score, it is repairable. With time and responsible financial practices, you can improve your creditworthiness. Fortunately, you’ll learn a lot about creating a budget, establishing an emergency fund and demonstrating responsible credit behavior through your credit counseling class, which is part of the bankruptcy process.  


Seeking Professional Guidance: The Importance of Legal Counsel


Navigating the complexities of bankruptcy law requires expertise and knowledge of the legal system. Consulting with a qualified bankruptcy attorney in Brooklyn is highly recommended. An experienced attorney can guide you through the process, ensure compliance with all legal requirements, protect your rights and advocate on your behalf. 


Filing without an attorney (pro se) can lead to mistakes and misunderstandings that can cause your case to be denied. While anyone can technically file for bankruptcy on their own, it’s not recommended, particularly if your case is complicated. 


Schedule Your Free Bankruptcy Consultation Today 


Navigating bankruptcy laws can be a challenging process, but things are made easier when you work with the right bankruptcy attorney. To request your free consultation, contact The Law Office of William Waldner. This is the first step to relieving yourself of excessive debt. Our consultations are free and confidential.