When you are overwhelmed by medical, credit card, or legal debt, bankruptcy can offer you a way to essentially press the reset button and work towards a more stable financial future. It isn't always the best route to take, however.
How Bankruptcy Can Help and Hurt You
There are two different types of bankruptcy protection to file for in New York based on your income and the amount of debt you face. Here are the differences you need to know about:
- Chapter 7. This option is taken when your monthly expenses are higher than what you bring in, such as if you are unemployed or your debt is too high to pay off with your current income. Chapter 7 wipes out your debt entirely, although some of your assets may be liquidated by the court.
- Chapter 13. When your income exceeds your expenses, even just slightly, you may have to file for Chapter 13 instead. This type of bankruptcy only cancels a portion of your debt and requires that you use the remaining amount of your excess income to pay back debts.
With Chapter 7 bankruptcy, you may end up losing the very things you are trying to protect, as your house or other assets may be sold to pay off creditors. Exemptions exist that could allow you to keep your property, but these exemptions vary by county based on the cost of living. Talk with an experienced New York bankruptcy attorney to find out if you qualify for any exemptions.
Both types of bankruptcy will significantly interfere with your ability to acquire credit, rent an apartment, and obtain employment.
Is Bankruptcy Right for Me?
The bottom line is that planning asset protection strategies in advance of a crisis is the best way to go. If you are past that point, however, we can still help. Always consult with an attorney about your unique financial and family situation before taking this drastic step to determine if bankruptcy is actually the best choice.
Are you considering bankruptcy or want to discuss other potential ways to keep assets safe for your family? Contact us to schedule a free consultation.