When you are in debt that you seemingly can’t shake, it’s common to feel overwhelmed and stressed. If you have not explored bankruptcy yet, this may be the best option for your circumstances. Unfortunately, many are unfamiliar with the different bankruptcy options they can choose. If this represents your circumstances, the following blog explores your options and how to determine which bankruptcy chapter is best for your needs. You’ll also learn why working with a Newburgh bankruptcy lawyer is in your best interest if you’re considering filing.
What Are the Different Bankruptcy Options?
If you are considering filing for bankruptcy, it’s imperative to understand the different options you have. When filing as a consumer, you typically can choose to file Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is a liquidation process in which the trustee assigned to your case will sell non-exempt assets to pay back creditors. Once this process is complete, the remainder of your eligible debts will be discharged. You should note that in order to file Chapter 7, you must pass a “means” test. Essentially, this compares your income to the average for households of your size in New York. If you earn less than this average, you are eligible to pursue Chapter 7.
If you do not pass the means test or are worried about your assets, you can pursue Chapter 13. This option reorganizes your debts into one monthly payment. This payment plan will last three to five years, depending on the circumstances of your case. You will make a singular payment to the trustee, who will then distribute these funds to creditors.
How Do I Choose Which Bankruptcy Chapter to File?
It’s important to understand that you can choose what bankruptcy option to file; however, the choice may be made for you. As mentioned, if you do not meet the minimum income requirement for Chapter 7, you will be unable to pursue this option. Instead, you must choose to file Chapter 13. However, if you do meet the income requirement for Chapter 7, you may still choose between the two.
Choosing what kind of bankruptcy to file can be difficult. Typically, if you have a considerable amount of assets you wish to protect, like cars, collections, or a vacation home, filing Chapter 13 is generally in your best interest. This allows you to retain the assets while catching up on payments. However, if you have very few assets you wish to protect, filing for Chapter 7 can be beneficial, as the monthly payment in Chapter 13 may be too expensive. Additionally, Chapter 7 is a much faster process, typically lasting around six months, while Chapter 13 takes three to five years.
When you are ready to file for bankruptcy, it’s imperative to discuss your legal options with an experienced attorney as soon as possible. At the Law Offices of Michael D. Pinsky, P.C., our team understands how overwhelming these matters can be. That is why we are dedicated to helping you achieve the best possible outcome for your unique circumstances. Contact us today to discuss your circumstances and learn about your options with a member of our committed legal team.
