Chapter 7 Bankruptcy is the most common form of bankruptcy that individuals prefer to file with our office, if they qualify. In most cases, you would be entitled to keep your home, your car and your salary, while at the same time getting rid of all that credit card debt without having to pay any of it back.
You qualify as long as your income over the last six months is below the median income for the state in which you reside. Although, most people that contact our office do qualify, it is best to speak with our office about what the median income is. Most people would be surprised to find out that a married person in New York with a spouse and three children can earn $90,000 and still file Chapter 7 Bankruptcy.
Will Bankruptcy ruin my credit?
This is probably one of the most common questions. The fact remains that in an overwhelming majority of clients, filing for bankruptcy will not further damage your credit. Most people thinking about filing for bankruptcy already have a low credit score because they either have a tremendous amount of debt or because they have only been paying the minimum payments and/or have been late with their payments or not paying at all. In these cases, most people would be surprised to find out that filing for bankruptcy may actually improve their score much quicker.
Will I ever get credit again?
This is another often asked question. To begin with, this depends on what and how you conduct yourself after bankruptcy. However, what is important to know is that the simple fact that you filed for bankruptcy will not stop you from getting credit again. In fact, most people that file for bankruptcy begin getting credit card offers only months after filing for bankruptcy.
Can I keep the home I own?
Most people that contact our office are able to keep their home even though they are filing for bankruptcy and may have over $100,000 in credit card debt. Bankruptcy laws all you to keep your home if your equity (which is the difference between the amount of the mortgage balance and the value of the home) does not exceed the allowed exemption. So, in New York City and Long Island for example, if you and your spouse own a home, you and your spouse can have up to $300,000 in equity and can still be able to file for bankruptcy and keep your home.
Can I keep my car and my salary?
This is also possible but it depends on the value of the vehicle and whether you owe money on the car. As far as salary, if you qualify for Chapter 7 Bankruptcy, you get to keep all your salary.
I am being sued by a credit card company, how can bankruptcy help me?
If you file for Bankruptcy, there is an “automatic stay”, meaning that the debt collector and lawsuit cannot continue against you until your bankruptcy case is closed. Of course, when your case is approved, the pending lawsuit cannot continue.
How can I stop all these harassing phone calls?
After filing for Bankruptcy, creditors cannot attempt to collect a debt from you because of the “automatic stay” law.
How long do I need to have stopped paying my credit cards to file for Bankruptcy?
There is no time limit.
Do I have to pay the credit card companies any money back?
In a Chapter 7 Bankruptcy, you pay nothing back. Nothing! So, let’s say you live in New York, have a wife and three children, you own a home, a car, and your household income is $90,000. You also have $150,000 in credit card debt. It is very possible that you get to keep everything you have, including all your salary and pay back nothing to the credit card companies.
Do debt settlement and debt consolidation companies work?
The truth of the matter is these type of companies do not work the majority of the time. Some of my clients that come to me tell me that they have spent thousand and thousands of dollars with these companies and then just end up filing for bankruptcy anyway. What else is surprising is that your credit score often improves much quicker when you file for bankruptcy than when you are in a long term relationship with these companies.
