Unfortunately, debt is an incredibly taboo subject despite the fact that millions of Americans owe some sort of money. However, if you’re struggling to make ends meet and the debt continues to accumulate, you may want to consider filing for bankruptcy. While it can impact your credit score, you can obtain much-needed financial relief. If you’re ready to consider your options, you’ll want to keep reading to learn about the different bankruptcy chapters you can choose and the steps in the filing process. You’ll also discover the importance of connecting with an Orange County consumer bankruptcy lawyer to help you navigate this process.
What Are the Different Bankruptcy Chapters I Can File?
For consumers, there are generally two primary options to choose from when filing for bankruptcy – Chapter 7 and Chapter 13. Both options allow you to receive financial relief but through two different means. Chapter 7 focuses on unsecured debt while Chapter 13 helps reduce secured debts.
Chapter 7 is a liquidation process that requires you to sell nonexempt assets to pay off some unsecured debts. This process is generally short, often concluding after six months. However, you must qualify for this option. To be eligible for Chapter 7, you must first pass a means test. This compares your income and household size to others in New York. If you are below the average income for comparable households, you can proceed with this Chapter.
If you do not qualify for Chapter 7 or are worried about nonexempt property, you can choose a Chapter 13 filing, which is a repayment plan. Essentially, this plan requires you to reorganize your debts and make monthly payments over a three-to-five-year period. Because payments are made to creditors, there is generally no risk of losing property.
How Do I File for Bankruptcy?
If you want to file for bankruptcy, understanding the steps in this process is critical. First and foremost, you should know that while it is not a legal requirement to have an attorney to file for bankruptcy, it is strongly recommended to obtain legal representation for this process. This is an incredibly complex process, and making errors can result in the dismissal of your case and even potential legal issues. Having an attorney can help minimize the risk of making errors when filing.
After consulting your attorney, you must gather all financial documents to help support your case. This includes tax returns, income verification, bank statements, deeds or titles to property, a full list of creditors and debts, and even a breakdown of your monthly living expenses.
Before you can submit the forms to begin this process, you must complete an approved credit counseling course. There are in-person, online, and over-the-phone courses you can attend, and you must complete this requirement no more than 180 days before filing.
Next, you’ll fill out the forms for the Chapter you choose to file and submit them to the courts. After, you will be appointed a bankruptcy trustee who is responsible for overseeing your case. You must then attend the 341 Meeting of Creditors, which is required under the U.S. Bankruptcy Code. This meeting helps to verify the debt you owe and assets you own.
As you can see, there are many complicated steps and strict requirements to file for bankruptcy in New York, which is why it’s in your best interest to connect with an experienced bankruptcy attorney if you’re considering filing. At the Law Offices of Michael D. Pinsky, P.C., we understand that this process can be incredibly overwhelming. That is why our firm is committed to guiding you through this process, from helping you choose between bankruptcy chapters to filing the necessary paperwork. Contact us today if you’re ready to discuss this option.
