Chapter 7 bankruptcy, also known as a liquidation bankruptcy, is a form of debt relief by which you can eliminate most forms of unsecured debt. Types of unsecured debt include credit cards, medical bills, personal loans and personal guarantees of business debts.
Once a Chapter 7 bankruptcy petition is filed, an Automatic Stay will immediately take effect. The Automatic Stay protects you from creditors, collection agencies, and attorneys who are attempting to collect money they claim is owed to them for pre-petition debt.
After you file a Chapter 7 bankruptcy petition, you will be assigned a Trustee who will be in charge of administering your case. Your Trustee will review your file and determine if you own any non-exempt assets that can be liquidated to help pay off your creditors. PLEASE do not let this be a matter of concern for you; in most cases homes, cars, retirement accounts, tools of your trade, wedding rings, household appliances, clothing items, etc. are exempt from liquidation. In addition, New York has very liberal exemption laws which will allow you to keep most, if not all, of your assets. Once the Trustee determines whether or not any assets are to be liquidated, the rest of your unsecured debts will be discharged. Please note however, that some types of debt cannot be discharged (please visit our Bankruptcy Q & A page for further clarification of this matter). While there are income limits for Chapter 7 filing eligibility, the vast majority of clients pass the “means test” and are eligible to file Chapter 7 bankruptcy.
Although a Chapter 7 bankruptcy will stay on most credit reports between 7 and 10 years the burden of immense financial debt will be lifted and you can start rebuilding your credit. In fact, because one aspect of your credit number is dependent on your debt-to-income ratio, your credit will immediately begin to improve once your Chapter 7 bankruptcy petition is finalized. Some filers fear that filing for bankruptcy will have a negative impact on their ability to have credit extended to them in the future. Most individuals who have filed for Chapter 7 bankruptcy have received offers for credit cards, car loans and car leases within six months, and many have been able to successfully apply for mortgages within one to two years after they receive their discharge.
It is our passion to bring relief and hope to our clients. At Berger, Fischoff, Shumer, Wexler & Goodman, LLP, our attorneys will help you achieve a fresh start through which you can rebuild your credit, set your financial priorities, save money, and create a strong foundation for your financial future. Please call us today for a Free Consultation at 1-800-806-1136 and start receiving the legal help you need.