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Chapter 7 Bankruptcy

Your goal in filing a Chapter 7 bankruptcy is to receive a discharge of debts when the case is finished. This usually means that credit card, medical bill, personal loan and other unsecured debts are wiped out forever. Some debts are not discharged such as recent income taxes, school loans and child support. Debts that are secured by your property, such as cars and furniture loans, require that you either enter into an agreement with the lender that says you agree to keep the property and continue to pay for it, or give the property back to the lender and discharge the debt. You are usually allowed to keep all of your property except if you have more equity in it than New York State law allows. The property that you are allowed to keep under New York State law is referred to as "exempt" property, and the allowed exemptions are numerous. 


You must qualify to file a Chapter 7 bankruptcy. This means that your household income must be below a certain New York State median average ("Means Test") and that you do not have significant income left after paying your reasonable and necessary living expenses. During your consultation with Mr. Fintel, he will be able to advise you whether you are eligible to file a Chapter 7 bankruptcy. Prior to filing, you must be briefed by an approved credit counseling that outlines available credit counseling options and performs a budget analysis. After the briefing, you will receive a certificate of completion. Once the bankruptcy case is filed, almost all creditors who are suing or harassing you must stop their collection efforts. A Chapter 7 Trustee will then be appointed to administer your case. You will meet with the Chapter 7 Trustee at a meeting of creditors about 30 days after your case is filed. Usually no creditors appear at this meeting and it only lasts a few minutes.


One of the Trustee's duties is to see whether you own any non-exempt property that can be sold to pay off part of your debts. The Chapter 7 Trustee also has the power to pursue and recover transfers you may have made of your property to others in certain time periods before you filed your bankruptcy.


Generally, if no creditor objects to the discharge of the debt you owe them within 60 days from the meeting of creditors, the discharge will be granted. Once a discharge is received under chapter 7, you may not file another Chapter 7 case for eight (8) years.



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Chapter 13 Bankruptcy

Is a 3 to 5 year repayment plan that is approved by the Bankruptcy Court. Chapter 13 primarily helps you if you are behind on your mortgage, car payments, real estate or income taxes. For example, if you are several months behind on your mortgage and the bank is threatening or has started a foreclosure action, you can repay the missed payments over the length of the Chapter 13 plan while continuing to make your future mortgage payments as they come due. Also, depending on your particular circumstances, a Chapter 13 plan can be used to rewrite a car loan for better terms.


With respect to income taxes, filing a Chapter 13 will prevent seizure or levy by the Internal Revenue Service and New York State Department of Taxation and Finance. Chapter 13 often enables you to stop the continuing accrual of certain interest and penalties on the taxes and allow you to repay the debt over the life of the Chapter 13 plan. Filing a Chapter 13 bankruptcy also immediately stops mortgage foreclosure and car repossession.


Some people need to file a Chapter 13 instead of a Chapter 7 because they have valuable non-exempt property they wish to retain. As long as the Chapter 13 plan pays back at least the value of the non-exempt property you wish to keep, along with any other required payments, you may retain the property and still receive a discharge upon the completion of the plan payments.

If you make too much income pursuant to the Means Test you may not qualify for a Chapter 7. Instead, you will have to file a Chapter 13 repayment plan.

You will make monthly Chapter 13 plan payments to a court appointed trustee. Your Chapter 13 plan payment is based on the amount of your income and expenses, and will be calculated before the filing of your Chapter 13 plan bankruptcy. About thirty days after the Chapter 13 bankruptcy is filed with the Court, you will be required to make one appearance in front of the court appointed trustee. The trustee need to make sure that you understand what payments will be required by you and to make sure you have enough income to make those payments.


You will receive a discharge upon completion of the payments under the Chapter 13 plan. The discharge includes some debts that are otherwise nondischargeable in a chapter 7 case.