Bankruptcy Law

[toggle Title=”What is Bankruptcy? “]The U.S. Bankruptcy code allows consumers and businesses to file for Bankruptcy in order to avoid the adverse action against them from creditors. It is a way to gain a “fresh start”. Filing bankruptcy stops creditors from contacting you in any manner, and stops foreclosure even on the brink of auction. Often times debt’s including unsecured, secured, tax debt, and other types can be discharged by filing bankruptcy, yet it often recommended to seek the advice of any attorney, as the code is much more convoluted than it seems. [/toggle]

[toggle Title=”What types of debts will go away?”]

A bankruptcy discharge will get rid of a large array of debts, including:

Credit Card Debt
Medical Bills
Mortgage Deficiencies
Certain Tax Debt*
Personal Loans

Certain debt’s are not dischargeable in bankruptcy, these debts include:

Certain Student Loans
Certain Tax Debt (within the last 3 years)
Debt’s accrued by fraud or misrepresentation
Debts for spousal or child support and penalties
Debt’s owed to certain tax-advantaged retirement plans

[toggle title=”Can I keep my house?”]

The Bankruptcy code does allow a debtor to keep their home, assuming it is being used by the debtor or their dependents, and it’s equity does not exceed a certain amount, dependent on the county that you live, you are allowed a certain amount of equity exemption. For the boroughs of the City of New York, as well as Nassau, Suffolk, Westchester and Putnam, you are allowed a $150,000.00 exemption per person on the deed. What this means is that you can keep your home, assuming the following, you have a mortgage of $200,000.00, and two people are on the deed, such as a wife and husband, the home will be exempted as a homestead exemption, assuming it is worth up to $500,000.00. In such a scenario, the debtor is allowed to keep their property, while being able to discharge all their other debts.

[toggle title=”What about my car?”]

You are allowed to own a car and file for bankruptcy, assuming the equity of the vehicle is less than $4,000.00, if you are using the New York Exemptions. If your using Federal Exemptions, in lieu of New York Exemptions, you are allowed an exemption of $3,450.00, in addition to the “wildcard” exemption of $10,825.00, assuming you are not using the homestead exemption for your real property. In essence, you can exempt your car for up to $14,275.00, if you are not planning on using the “wildcard” exemption on any other assets. If your car is secured by a creditor and has a lien, the value is calculated by it’s market value minus the lien that you owe. Car’s that are leased are not subject to this rule, and cannot be taken away, assuming the debt is reaffirmed.

[toggle title=”I’ve got a lot of assets, can I still file bankruptcy?”]

The law allows for you to keep certain exempt assets when you file bankruptcy. However, each case must be reviewed on a case by case basis. In certain instances filing a different type of bankruptcy is advisable. (Chapter 13 or Chapter 7) In situations where assets are not exempt chapter 13 allows debtors to keep their assets while paying a small fraction of their debt back to their creditors.