If you are considering a chapter 7 bankruptcy in New York, then you will need a qualified bankruptcy lawyer who will be able to examine your case, and help you determine what kind of bankruptcy is appropriate for your situation. There are two main types of bankruptcy – Chapter 7 and Chapter 13.
Debt is handled different in each type of Bankruptcy, so if maintaining your assets is your largest priority, then a chapter 7 may not be the best option for you. In a chapter seven bankruptcy, debtor assets are sold, or claimed by creditors in the forms of liens or mortgages to pay off debt. A Chapter 13 bankruptcy differs in the fact that you may maintain all your assets, but must create a payment schedule to repay debts in full.
If you are underwater on a mortgage, or own assets that act as a drain on your gross wealth, a chapter 7 may be a good option for you. Debt from boats, cars, or other large purchases can be forgiven in a chapter 7.
There is a cost associated with filing a bankruptcy. This is not relegated to the costs of the process. You will also be legally required to inform potential employers or debtors about this, if asked. The bankruptcy will remain on your credit report for seven years in some cases, and may affect your chances of getting a home, buying a new car, or even landing a job. Consider this carefully before you plan to file bankruptcy, and ensure that you can handle this high price.
In a chapter seven bankruptcy, you must also be prepared to relinquish some of your property in return for being clear of debt. There is a list of items on the federal and state level that you will be allowed to keep. It’s important that you discuss your possessions with a qualified bankruptcy attorney, so that you can get a clear understanding of what items you will be able to keep, and which will be taken. You will also need help deciding whether the federal or state laws are the best for your situation.
If you file a chapter 7, here are some items that you will not be able to keep
- Collectibles, or large collections
- Cars, above one vehicle for personal transport
- Monetary assets, like CD’s or investments
- Family items with intrinsic worth
You may be able to keep the following, depending upon your profession and personal situation:
- Professional tools required by your job
- Everyday living items, such as clothing, basic furniture, or housewares
- Benefits supplied by the government, such as social security, Medicaid, or Medicare
- IRA’s, 401(k)’s or pensions
It’s advised that you work with a bankruptcy lawyer to make the difficult decisions you are going to be facing, such as whether or not to file, which guidelines to use, and how to fill out the paperwork.