WHAT TYPE OF RELIEF IS AVAILABLE TO CONSUMERS?
There are three chapters of Bankruptcy Code under which you may file a bankruptcy. The bankruptcy law is not easily explained. Always consult with a qualified and experienced attorney for advice as to the best type of bankruptcy for you. The most common types of bankruptcies are Chapter 7 and Chapter 13. Chapter 12 is available to family farmers. Chapter 11 is also available but usually involves more complex financial situations.
- Chapter 7 is designed for debtors in financial difficulty that do not have the ability to pay their existing debts and are not concerned about protecting their home.
- In Chapter 7 a Court appointed trustee examines you about your assets and liabilities to see if there is anything available for creditors. (The law provides you with numerous exemptions, which in most cases, may protect your home, personal possessions, pensions, automobile and bank accounts.)
- For those who are qualified, the law allows for the discharge of the debts. This means that certain debts do not have to be repaid.
Chapter 7, in most instances, takes approximately four to six months before you receive your discharge.
- Chapter 13 is designed for individuals with regular income, who have defaulted on their mortgage and face foreclosure upon their home and/or who are temporarily unable to pay their debts but would like to pay them in installments over a period of time. The amount to be repaid depends upon your disposable income.
- Under Chapter 13 you must file a plan with the court to repay your creditors all or part of your disposable household income. The period allowed by the court to repay your debts may be up to five years. The court must approve your plan before it can take effect.
- Under Chapter 13 you may keep all your property, both exempt and non-exempt.
EFFECT OF FILING:
Stop Creditors! Stop Foreclosures!
Stop Income Executions!
Once your papers are filed [an injunction that takes effect] and creditors are prohibited from calling, suing, or foreclosing on your property. This means that a creditor may not sue you, continue a lawsuit against you, attach your salary or call you to collect a debt.
Can I Get Credit After Bankruptcy?
Each case varies from person to person depending upon a variety of factors such as employment, earnings and payment history subsequent to the bankruptcy. However, there are ways to begin reestablishing your credit by obtaining secured credit cards, obtaining secured loans and enlisting the help of cosigners. One result of filing a bankruptcy is that afterwards, in most cases, you have been given a fresh start and are debt free.
Can Certain Debts Be Paid Back Even After Bankruptcy?
After you file your petition, you may seek to reaffirm certain debts. In some cases creditors with offer extensions of credit and allow you to maintain your accounts if you choose to reaffirm. Reaffirming a debt means that you sign and file with the court a legally enforceable agreement, which states that you will repay all or a portion of the debt that may otherwise have been discharged in your bankruptcy case. A discharge in bankruptcy has no effect upon this agreement and you are legally liable to repay that creditor.
IF YOU ARE CONTEMPLATING BANKRUPTCY:
Consult an attorney before
- transferring property for less than full consideration or you may jeopardize your discharge.
- making any payments to insiders, such close friends or family members; this may subject them to lawsuit for repayment of monies repaid within one year prior to the commencement of your bankruptcy case.
Edward Zinker is a partner of Zinker & Herzberg, LLP. Mr. Zinker has lectured and conducted seminars on the subject of bankruptcy to the Bar, is a member of the Committee to redraft the Local Bankruptcy Rules, is a member of the Suffolk County Bar Association and currently chairman of the Bankruptcy Committee of the Suffolk County Bar Association.
Jeffrey Herzberg is a partner of Zinker & Herzberg, LLP. Mr. Herzberg has lectured and conducted seminars on the subject of bankruptcy to the Bar and is a member of the Suffolk County Bar Association. Mr. Herzberg's experience is rather unique as he has extensive experience practicing bankruptcy law in the Bankruptcy Courts located in the States of New York and Texas.
Mr. Zinker and Mr. Herzberg combined have a total in excess of 60 years of combined experience, are members of the New York, Texas, Eastern and Southern District Bars and predominantly represent debtors, creditors and trustees in bankruptcy insolvency matters. The firm has appeared in numerous bankruptcy proceedings as attorneys for trustees, Chapter 11 Debtors and Debtors-in-Possession, Chapter 7 Debtors and as counsel for creditors in committee.