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FRIENDLY, AFFORDABLE AND KNOWLEDGEABLE Chapter 7 Chapter 13 Loan Modifications
If you don't have the right amount of health insurance coverage, a serious health complication or injury that results in a trip to the hospital can cause you to be provided with costly health care bills that you have no way of paying. In many cases, these bills are unable to be repaid in a timely manner, which can cause the affected individual to file for Chapter 7 in an attempt have their debts discharged. If you're thinking about filing for bankruptcy because of the medical debts that you owe, it's important that you speak with a reputable attorney who can help guide you through this extensive process.

What Chapter 7 Bankruptcy Entails

Chapter 7 bankruptcy is available to certain individuals who are no longer able to make their loan payments and pay off their credit cards. When a person files for this form of bankruptcy, some of these debts will be erased and discharged. In order to repay what you owe, most of your possessions will be sold, which includes any cars that you own and even your home. You might want to consider the Chapter 13 option if you want to be able to hold on to some of your more important possessions.

While in Chapter 7 bankruptcy, you must continue to pay child support, spousal support, utilities, mortgage, rent, income tax, and insurance. If you belong to a homeowners' association, you must pay it. Chapter 7 is for individuals or business entities. Your checking account should not be in a lienholder's bank. Because you can lose your insurance by filing for Chapter 7 bankruptcy, your insurance policies should be paid a year in advance. Rental cars, leased furniture, leased business equipment, and home appliances not paid for in full are examples of items that can be returned to their owners. You can discharge the deficiency balance.

Post-Petition Payments and Chapter 7

Post-petition payments are due after you file your initial petition for Chapter 7 or those that you'll continue to pay after your debts are discharged. Medical bills incurred prior to filing your petition may be discharged. Bills from the same doctor while you're waiting for your final discharge must be paid. Examples of post-petition payments are student loans, debts for extravagant purchases, and court judgments and expenses.

Automatic Stay During Chapter 7


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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.

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