What is Bankruptcy?

Bankruptcy is a legal remedy afforded to individuals and business suffering from debt.  By filing for bankruptcy, you may be able to completely eliminate most your debt, if not all, or agree to a payment plan to pay all debts to your creditors over a fixed amount of months.  

How Often Can You File For Bankruptcy?

If you have previously filed for Chapter 7, then you must wait eight years before you can file for another Chapter 7.  If you have previously filed for a Chapter 13, then you must wait six year before you can file for a Chapter 7.

If you are trying to file for a Chapter 13, then you must wait four years from a prior Chapter 7 filing, or two years from a previous Chapter 13 filing.

How Long Will Bankruptcy Show Up On My Credit Report?

If you are considering filing for a Chapter 7, be prepared for your filing to stay on your credit report for up to ten years.  If you are filing for a Chapter 13 bankruptcy, then it can show up on your credit for up to seven years.   Keep in mind that this does not mean that you will not be able to obtain new credit or that your credit score will remain the same for that period of time.  Most debtors are able to obtain new credit and see an increase in their credit score shortly after their bankruptcy is finalized.

I Am Married And Filing For Bankruptcy.  Does My Spouse Also Have To File For Bankruptcy?

Although joint petitions are very common, your spouse does not also have to file for bankruptcy if you are filing for bankruptcy.  However, if you and your spouse are both obligated to repay the same debts, it is advisable that a joint petition be filed as the non-filing joint spouse remains liable  for the debt.  By filing jointly, you can save money on the filing fees and legal fees.

Is My Co-Signor Still Liable For A Debt If I File For Bankruptcy?

Yes, if someone you know has co-signed on a loan for you and now you are filing for bankruptcy, the lender can demand that the co-signing individual repay the entire loan.  Your bankruptcy filing has no bearing on the co-signer.  The co-signer is always responsible for the debt if the principal defaults.

What Is The Process If I Decide To File For Bankruptcy?

The Bankruptcy process involves several steps and takes 3-5 months to be finalized.  The first step that every individual bankruptcy requires is a Credit Counseling Course.  Each individual debtor must complete this course prior to filing.  The course is offered online, ranges from $10-$20, and takes about 1.5 hours to complete.  The second step involves the preparation and filing of documents with the Bankruptcy Court.  Approximately one month after we file your case, you must attend a “Meeting of the Creditors,” in which the trustee assigned to your case, will ask you questions regarding your filing and financial situation.  If the trustee is satisfied that you have been truthful, and you qualify for Bankruptcy, he will recommend that you be granted a discharge (if filing for Chapter 7) or that you continue with your monthly payment plan (if filing for Chapter 13).

Are There any Debts That Are NOT Discharged In Bankruptcy?

Not all debts are discharged (forgiven) in bankruptcy.  The most common debts that bankruptcy does not apply to are taxes, student loans, and child support obligations.

Can I Keep Some Credit Cards And Accounts If I File For Bankruptcy?

Even though you must include all debts in your bankruptcy petition, you may be able to keep some accounts by continuing to make monthly payments or  “reaffirming” specific debts.  A Reaffirmation refers to an agreement between you and an existing creditor, in which you waive the forgiveness of a debt that would otherwise be discharged in the your pending bankruptcy proceeding.

Am I Responsible For Notifying MY Creditors That I Filed For Bankruptcy?

No, the Bankruptcy Court notifies each creditor you listed in your petition that you have filed for bankruptcy.  If you have failed to list a creditor, the debt to that creditor will not be discharged.  You will continue to be responsible for that debt during the pendency of your filing and upon completion.

Can A Creditor Continue To Contact Me After I Have Filed For Bankruptcy?

As soon as your bankruptcy is filed, creditors are required by law to stop all collection efforts against you.  They are prohibited from calling you, sending you notices, filing lawsuits against you, or collecting on any judgments entered against you.  This fundamental relief afforded by Bankruptcy laws is called “Automatic Stay.”

I Heard That I Can Eliminate A Second Mortgage Through Bankruptcy.  Is This True?

If your first mortgage is underwater, you may be able to eliminate a junior mortgage or line of equity loan if you qualify for a Chapter 13 filing.  These type of case are fact specific and we will need to gather more facts before we can make that determination.

Can I Be Denied Bankruptcy?

If it is revealed that you have failed to disclose valuable assets, or have engaged in fraud prior or during the pendency of your petition, your case may be dismissed and you will be denied a discharge.

How Much Does Bankruptcy Cost?

Legal fees vary depending on the type of chapter you file, the total amount of debt, and the complexity of the case.  In addition to the legal fees, there are court fees associated with any bankruptcy filing.  In New York State, the following filing fee schedule applies:

Chapter 7 Filing Fee: $335.00

Chapter 13 Filing Fee: $310.00

Chapter 11 Filing Fee: $1,717.00

Are There Any Tax Consequences Associated With The Debt Discharged In My Bankruptcy?

In bankruptcy, there are no tax consequences associated with the discharge of your debts.  The thousands of dollars forgiven in your bankruptcy will not be considered income for tax purposes.  In contrary, debts settled outside of bankruptcy, such as through debt consolidation and settlements, will have to be declared as income on your federal and state tax returns.