Filing for bankruptcy protection is a very serious legal step that always beckons a thorough review of a personal financial budget. Many times delinquent debts can be renegotiated between the primary party and the creditor in a manner that is acceptable for both entities. In addition, consolidation loans can be an effective method of avoiding an official bankruptcy filing, which can be important because there are limits to how often an individual may file. Qualifying for a bankruptcy petition can be complicated as well when all financial factors are evaluated. The final result is that any successful bankruptcy filing or avoidance will require the services of an experienced New York bankruptcy attorney like the legal professionals at Morgan Legal NY who understand how to navigate the system and protect all legal rights of the client.
The Means Test
All potential bankruptcy petitioners are means tested to determine which chapter they may use when filing. The means test determines if a petitioner is eligible for a total Chapter 7 discharge of unsecured debt. The filer is evaluated according to their personal income during the past six months and considered according to the median income in New York state. Those below the median income are eligible for a Chapter 7 discharge of unsecured debt, but many times clear assets outside of allowed exemptions may be ordered sold with proceeds divided among listed creditors.
All bankruptcy applicants will be required to submit an official itemized inventory of personal debt and assets. It is vital that this report be accurate and not missing any clear assets that could be seized outside of exemption allowances. This condition applies primarily to Chapter 7 filings for debt discharge, as all individuals who are seeking to stop a real estate repossession will be required to file Chapter 13 if they can qualify by personal income and outstanding debt levels.
Chapter 7 Bankruptcy
There are some specific advantages to a Chapter 7 filing. The most important aspect is the “fresh start” concept, which is normally the purpose of the filing. Secured debts can be listed as reaffirmed agreements and exempt from resale when an agreement can be reached. The bankruptcy filing immediately stops all debt collection efforts and wage garnishments, allowing the petitioner to reconstruct their personal household budget. In addition, there is no minimum debt level that must be reached before being eligible. Many times the final result can be immediate discharge of significant unsecured debt without losing any asset of value being used as collateral in other financial agreements. Some debts can actually be withheld from the discharge request.
Chapter 13 Bankruptcy
Chapter 13 is designed to help mortgaged property owners use the equity in their real estate as part of a court-ordered consolidation agreement. The order allows the petitioner to pay all delinquent debts within a five to seven-year time frame, depending on the total outstanding debt and income potential of the filer throughout the repayment period. It is vital that the income level and the repayment plan submitted to the court be feasible as long as income level remains stable. The ultimate goal of an effective Chapter 13 bankruptcy petition is repayment of all outstanding secured delinquent debt at the time the filer completes the repayment plan.
It is obvious that any personal bankruptcy filing can be a complicated and frustrating legal matter that will always take the expertise of an experienced bankruptcy attorney like the debt professionals at Morgan Legal NY. Call today or make contact through the new official company website for a complete evaluation of your bankruptcy claim potential.