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Filing bankruptcy on Long Island is a decision that should not be taken lightly by anyone. The process can be intricate and confusing for most novice filers who attempt the legal task without the assistance or representation of an experienced attorney. The ramifications following a bankruptcy petition acceptance is long-term in most situations regardless of the chapter being requested. It is important to understand that filing a bankruptcy petition is the equivalent of asking the government to intervene in a private credit arrangement to block the creditors from exercising their rights to pursue legal remedies against an account discharge. The creditors can always contest the terms, and the court refuses more petitions than filers realize. It is not an automatic process by any stretch, and petitions filed without legal representation are commonly rejected by the court for a variety of reasons. Even qualifying within the scope of the means test can be complicated for a DIY bankruptcy petitioner.

Preparation is Key to a Successful Chapter 13 Case

The best method of beginning the process is doing a complete workup well before filing. All aspects of the petition should be addressed on a practice version and evaluate the best information for each step. The first step will be evaluating the information needed for the means test, which will determine if you can even file. Each chapter of bankruptcy is different as well. Those seeking to discharge overwhelming debt will typically use Chapter 7, but all clear personal assets could be marked by a judge for sale with the proceeds being applied as payments to creditors. Chapter 13 filings are different to a large degree, and they are normally used to keep from losing a home or some other type of real estate that would be vulnerable for sale or possession in a Chapter 7 petition. The means test is also used to qualify for Chapter 13 as well, and the terms of the repayment plan must be acceptable to all other parties.

Chapter 13 Repayment Plans

DIY pro se bankruptcy petitioners must develop a feasible repayment plan that is usually set at five years for all outstanding debt to be considered paid current. Chapter 13 can include some discharging of debt as in a Chapter 7 filing, but the real advantage of a Chapter 13 filing is that it can protect a home from foreclosure and protect your credit rating in the end. Sometimes creditors will renegotiate outstanding accounts to avoid inclusion in a bankruptcy petition, but these must be finalized before the petition becomes effective. This is a component of filing for bankruptcy where having a legal representative negotiating an agreement is a real advantage. The purpose of a Chapter 13 petition is effectively a debt consolidation plan that repays as many creditors as possible while protecting a dwelling and minimized the credit rating damage to the petitioner. More on how Chapter 13 can impact your credit here.
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Bankruptcy was designed to provide consumers a method of restructuring, reducing or eliminating debt, although not all types of debt can be eliminated through bankruptcy. The two most common types of bankruptcy are Chapter 7 bankruptcy, which is a debt discharge, and Chapter 13, which is a debt restructuring. Both types of bankruptcy guidance are offered by The Law Offices of Adam C. Gomerman here on Long Island.

Before you can file any forms for your discharge, you’ll need credit counseling from an agency that’s government-approved. This is mandatory and should be completed immediately before filing. Many consumers file for Chapter 7 on their own, which is called “pro se” or “pro per” representation. Although filing Chapter 7 for yourself will be arduous and tedious, if you are detail-oriented, you can do it and save some money on attorney fees. However, it’s always wise to have an attorney peruse your forms before you file them so that they aren’t returned for errors or improper filing procedures.

Learn the Bankruptcy Law in New York State

Laws have changed regarding bankruptcy, so familiarize yourself with the most recent changes, and ensure that you follow the instructions provided by the clerk’s office. Sometimes, issues can arise from matters as simple as using the wrong typeface, so be sure you’re aware of the information details about the correct process for filing. In preparation for filing Chapter 7, you’ll need a list of all your assets and liabilities. This includes your:
  • Home and other real estate
  • Furniture and appliances
  • Vehicles, tools, and equipment
  • Bank accounts, stocks, bonds, securities, cash on hand
  • Jewelry, clothing, and other personal assets
  • Animals used for commercial purposes or expensive hobbies
You’ll also need a list of all your creditors including credit cards, student loans, child support or any other entity to which you owe money or make monthly payments. You’ll need addresses and account numbers. Some types of debt, such as child support or student loans, are not dischargeable through bankruptcy, so make sure that filing Chapter 7 will accomplish your goals. Most of your assets will be liquidated in Chapter 7 so be prepared for that event. It will also become a matter of public record and will be available for friends, family, co-workers and prospective employers. Hiring a lawyer before you file may be money well spent so that you pursue the best course for your circumstances. It’s possible that a Chapter 13 or another avenue may be better for you.

Documentation Needed to File Chapter 7 Bankruptcy

You’ll need proof of income for the last six months as well as proof of expenses. Only consumer debt is considered, business debts aren’t included in this type of bankruptcy. This documentation is necessary in order for the court to determine your disposable income each month. If your median income is less than the median income for your area, then you’ll most likely be allowed to file for Chapter 7. If you have significantly more income than the median in your state and city, then the court may require additional proof of your need to file. Some individuals aren’t required to take the means test, including:
  • Disabled veterans
  • Some active duty personnel
  • Those with business debt rather than consumer debt
Some types of income aren’t included in the means test, such as:
  • SSI, SSDI, TANF, and Social Security Retirement
  • Payments to a victim of terrorism
  • Payments to a victim of a war crime
Income that’s included in the means test includes:
  • Wages, including bonuses and overtime, tips, commissions
  • Net business income
  • Rental income, royalties, dividends, annuities
  • Unemployment and worker’s compensation
  • Spousal support
  • State disability payments
The court will use all the financial information you provide -- income, expenses, and assets -- to conduct a means test that will determine your eligibility to file bankruptcy. The means test is only used for individuals or couples, it’s not used for businesses who file. If you urgently need to file Chapter 7 or Chapter 13 but time constraints limit your ability to amass and complete the forms, you may be able to submit an emergency filing that will provide you with the court-ordered stay that will protect your income and assets from being seized or attached. Laws governing Chapter 7 and Chapter 13 vary by state, but most don’t allow non-attorney personnel to provide legal advice or information to pro se representatives, so court clerks won’t be able to answer any legal questions. Some states allow you to initiate your case online, and you may be eligible for a fee waiver if you can’t afford the filing fees, which vary by state.

The Chapter 7 Bankruptcy Process

Once you have the information necessary to complete the forms, the following procedures will guide you through the process:
  • Get credit counseling if you haven’t already done so. Ask our office for credit help.
  • Obtain the forms, including the fee waiver if needed.
  • Complete the forms.
  • Consult with an attorney or a legal service to ensure that the forms are completed correctly.
  • File the forms. Protection from creditors is immediate upon filing your case.
  • A trustee will be assigned to your case and usually, the trustee is a lawyer.
  • A meeting of your creditors will occur and you’ll probably need to attend unless you have hired a lawyer.
  • Your eligibility to file will be determined.
  • Secured debt and property that isn’t secured are processed.
  • You’ll receive your discharge and your case will be closed within about a month..

Life After Chapter 7 Bankruptcy

After your case has been discharged, you’ll need to work on rebuilding your life and your credit. With the proliferation of Chapter 7 and Chapter 11 filings in recent years, more programs are available that will help with rebuilding credit and rebuilding your life. It was an event that was necessary, it happened. Don’t castigate yourself, use it as a learning tool and profit from the experience.
Many people face serious problems with debt. One small event or emergency has the potential to create situations where these people are unable to keep up with the payments on these debts. This can create further complications with that debt and may have devastating effects on their credit ratings. Low credit ratings cause issues in many aspects of a person’s life. It can prevent them from getting further credit. It can also have an impact on getting a job or even renting a home. Fortunately, there are methods available for gaining control of one’s debt.

Bankruptcy is an option available for people to gain control of their finances. Chapter 13 Bankruptcy provides a method for restructuring debt. A repayment plan is made that provides an affordable method for people to get their debt under control. There is also Chapter 7. This option is for those with little or no income. This type provides a process to allow debtors to discharge their debt. However, applicants must pass the Bankruptcy Means Test to be eligible for a Chapter 7.
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Chapter 7 eliminates your unsecured debts. It is commonly called liquidation bankruptcy or liquidation chapter. Chapter 13 allows you to repay your creditors over a three-to-five-year period. This chapter is called a wage earner plan. In some instances, filing Chapter 7 is better than filing the alternative bankruptcy chapter option. Below is information about the advantages of filing Chapter 7 instead of Chapter 13.

Chapter 7 Advantages for Your Financial Situation

Chapter 7 bankruptcy is the fastest way to get out of debt for most Long Island residents. For example, the Chapter 7 process takes a minimum of three months to complete. The maximum amount of time to complete the process is six months. The actual time period depends on many factors such as how many cases were filed before your case and the complexity of your case. Chapter 13 takes a minimum of three years. If you have a longer repayment time, it’s five years before you can complete the bankruptcy process.

Other advantages of Chapter 7 Bankruptcy include:

1. No monthly payment plan. Chapter 13 requires a payment plan. A payment plan takes three-to-five years. Each month, you must pay the trustee presiding over your case a set payment. The monthly payment is determined at the start of your case. These monthly payments are distributed among your creditors.
How a Loan Modification May Help Reduce Your Monthly Mortgage Payments For homeowners struggling to keep up with their mortgage payments,there are programs available to help avoid foreclosure. However, because these programs are legal agreements, it is prudent for borrowers to consult a lawyer. One viable alternative to foreclosure is a loan-modification program that is an adjustment to the terms of the existing mortgage. Loan modification is designed to provide either temporary or permanent financial relief by reducing the amount of the monthly payments via a reduction in the principle, interest rate or by extending the term of the loan.

Loan-Modification Options

There are several forms of loan modification, with some being better than others. However, the lender that holds the mortgage may not provide all the available loan-modification types.

The full list of options include:

Will Filing for Chapter Bankruptcy 13 Ruin My Credit Score?

When you decide to file bankruptcy, it will be reflected on your credit report for years to come. As such, there is really no way around the brutal truth that filing will have a negative effect on your rating. If you are able to afford a repayment plan, choosing to file under Chapter 13 bankruptcy may help you recover more quickly and save your financial reputation.

Why Creditors Prefer Chapter 13 Instead of Chapter 7

It's no secret that lenders prefer Chapter 13 filing to that of Chapter 7 bankruptcy, but why exactly is this? It basically boils down to the fact that with Chapter 13, your creditors have some hope of future payment. In contrast, when you file under Chapter 7 bankruptcy, if you qualify, their chances of receiving any payment is dim.

Your Credit Score Under Chapter 7 Bankruptcy

Under Chapter 7, unsecured debts, such as medical bills and credit card companies, don't usually receive any kind of payment. This is because Chapter 7 doesn't require you to make payments to creditors or set up any kind of payment process. Instead, any owned property that cannot be protected under your state's exemption laws must be turned over to a trustee that is assigned by the court. Your trustee then sells the property for whatever they can get for it and uses the proceeds from the sale to pay off your creditors. However, most filers are able to exempt the majority, if not all, of their assets, thus keeping them out of the reach of the court. This means there is often nothing left to pay off the creditors.
For many consumers, getting a fresh start and putting past financial obligations behind them can be achieved by filing for Chapter 7 bankruptcy. Many people get so over their heads in debt that this is the only way to get out. In order to do so, they will need to work on their credit score by taking the right steps. This includes keeping all credit card balances low and paying off bills on time or even before the due date. However, it is important to realize that filing for Chapter 7 bankruptcy won’t just magically repair a credit issue overnight. It can take ten years for a bankruptcy to disappear from a credit report, depending on the exact bankruptcy chapter that was filed by a qualified attorney. Upon successfully completing your Chapter 7 bankruptcy process, our firm is happy to provide credit repair as a service to help expedite the process.

Understanding Your Credit Report

Many people are very surprised at the types of personal data a report contains. To be specific, you can expect to see these three different kinds of information:

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Chapter 7 bankruptcy may be a way to solve your financial problems, but it is not the only way. Chapter 7 bankruptcy liquidates nonexempt property to equitably distribute your wealth to your creditors. If you own a small business or sole proprietorship, you can file under Chapter 11 to liquidate a few nonexempt assets to pay settlement amounts on your delinquent accounts, make extra payments to reduce the principal, or extend the duration of your loans, sales contracts, or leases. Under Chapter 11 or Chapter 13, you can reduce your installment payments by paying for three or five years. You may be able to increase your cash flow by removing encumbrances from your mortgage or your primary business property. If you owe primarily taxes, child support, student loans, or accounts secured by collateral, you can’t discharge or liquidate them. You can file a Chapter 13 repayment plan to repay your secure creditors over three to five years.

Pass the Bankruptcy Means Test

The means test calculates your disposable income. You must pass the test to qualify for liquidation of your nonexempt assets and discharge of your past due accounts. High income does not disqualify you. High income individuals with unusual expenses, such as, high mortgage or car loan payments, delinquent taxes, school loan payments, child support arrears, and medical bills qualify for Chapter 7 bankruptcy.

Official Chapter 7 Means Test calculation

The official Chapter 7 means test calculation form attached to the U.S. Bankruptcy Court website begins with your monthly income adjusted with your spouse's monthly income. It considers the number of exemptions on your federal income tax form, and asks for your specific costs of food, clothing, health care, monthly mortgage or rent, other loans secured by your home, ownership and operating costs of vehicles, taxes (federal, state, local, self-employment, Medicare, and social security), telephone, and other necessary expenses. Your disposable income is your combined monthly income minus the summation of all your living expenses. Lastly, if your disposable monthly income times 60 is less than $7,700, you pass the test. If your disposable monthly income times 60 is more than $12,850, you are presumed to be abusing the Chapter 7 process.
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When Long Island borrowers fall behind on bills and can no longer make their minimum monthly payments, they usually consider calling a Long Island bankruptcy attorney and filing for relief. The two bankruptcy options available are Chapter 7 or Chapter 13. Depending on your situation, either option may be the answer you need to move forward and repair your financial life.

One of the mistakes many people make is waiting too long to seek out help. You can stop aggressive collection action before you have your car repossessed or a bank account frozen. These types of disastrous events can be prevented by seeking relief by the courts.
Facing debts that you cannot afford to pay can be frightening, stressful, and overwhelming. The U.S. Bankruptcy Code offers debt relief for individuals, couples, and businesses. The bankruptcy system is designed to give a debtor the relief from debt he needs to recover from a financial crisis and rebuild his finances without the worry of debt collections. It is also designed to protect some of the equity in a person’s property so that the person has the means to recover and rebuild after completing a bankruptcy case.

There are several chapters of bankruptcy available to individuals, including filing under Chapter 7 of the Bankruptcy Code. Our Long Island bankruptcy lawyers can help you determine if filing bankruptcy under Chapter 7 is your best debt relief option.
Chapter 7 bankruptcy is the most common form of bankruptcy in the United States. It involves the discharge and or liquidation of a debtor's assets in order to settle outstanding debts. However, it can have some negative consequences. Thus, a decision to file should be taken carefully.

If you decide to proceed, hiring bankruptcy attorney to help you navigate the sometimes complicated procedures involved is typically the best forward. With our experienced bankruptcy attorneys, we strive to educate you, as well as make the Chapter 7 bankruptcy process as easy as possible. We will also determine if you are eligible to file at all. If you have had a filing in the previous 6-8 years, then you are barred from doing so.

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