As we all know, life has many expenses. For those of us that are lucky, we’re able to pay off these expenses as they come. That being said, there are many obstacles that could keep you from making these payments, such as losing your job, committing to a mortgage that was too expensive, having children, or any of the other possibilities. When these things happen, we may find ourselves in debt. When a person is in debt, they can decide to file for bankruptcy, but they should do so with the help of a New York real estate lawyer. This is because the lawyer will help them choose which type of bankruptcy they should file for; Chapter 7 or Chapter 13 bankruptcy.
Chapter 7 bankruptcy is otherwise known as individual or straight bankruptcy. This option allows you to clear away many kinds of unsecured debts. When you file for Chapter 7 bankruptcy, the court places an automatic temporary stay on your debts, which stops creditors from collecting payments or taking over your possessions. Your finances will then be reviewed and some of your nonexempt property will be sold to pay your debt. Nonexempt property usually includes luxury items such as expensive vehicles, jewelry, and clothing.
The second option is Chapter 13 bankruptcy, which helps wage earners repay their debt overtime with a payment plan. The benefit of this is that you don’t need to sell your personal belongings to repay your debt, but this plan will usually take a couple of years to complete. To qualify for this plan, you must have enough income to afford the payments, while also being below the maximum total debts.
So, the benefit of the Chapter 7 Bankruptcy is that the debts are wiped away in the matter of a couple months, but you’ll lose your nonexempt items. This differs from the Chapter 13 bankruptcy, as it takes more time, but doesn’t require selling any property.
This is just a general introduction of the different bankruptcy options that are available. Since there are different rules and information to know about each option, it’s important to consult your New York real estate lawyer about which option best suits you. At Gary Wachtel, our goal is to help our clients find the best form of bankruptcy, while keeping their assets from liquidation. For more guidance during this process, call us today.