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BANKRUPTCY

Chapter 7

Chapter 7 Bankruptcy provides for a fresh financial start by eliminating most or all unsecured debts.   It is an effective tool to resolve debts like credit cards, personal loans, or medical bills.  You may even be able to keep your home with a Chapter 7 if the equity in your home is less than the state threshold for the Homestead exception ($165,500 in New York State and $22,975 in New Jersey per person on the title of the property).


Once the Chapter 7 bankruptcy is filed there is an “automatic stay” on most collection actions to stop or prevent lawsuits, wage garnishments, or even telephone calls demanding payments.  The bankruptcy trustee is then assigned to administer the case and liquidate the nonexempt assets.  If the client is current with payments, they may usually be able to reaffirm certain debts and keep personal items like vehicles or homes.


The Chapter 7 discharge releases the individual debtors from personal liability for most debts, but because there are many exceptions, a client should have competent legal counsel to advise them of the implications of filing for chapter 7.  The bankruptcy attorney should thoroughly review your individual case to ensure that there are no unexpected consequences like any property that was transferred or concealed from the bankruptcy filings, assets with large amounts of equity, or large incomes.


The Law Offices of Gus Michael Farinella have over 20 years of experiences representing clients in the NY and NJ Bankruptcy courts.  We use our experience and our intricate knowledge of the bankruptcy process to ensure that the bankruptcy is done properly without any complications.
 

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Chapter 13

Chapter 13 Bankruptcy enables individuals with regular income to develop a plan to repay all or part of their debts for three to five years, during which time creditors are barred from starting or continuing collection efforts.  It is designed for people with more substantial assets or income. 

 

Once the petition is filed, there is an “automatic stay” against most collection actions against the debtor or any co-debtors.  If your salary is being garnished, filing for chapter 13 bankruptcy will immediately stop any wage garnishment as well.  The client makes arrangements with the court to pay back all or part of the debt they owe over a three to five year period.  It allows an individual to pay back the arrears on secured debts like a home mortgage or a car loan, over time. 

 

This chapter is normally used by people with homes, who have fallen behind on the mortgage, but also can be used to repay student loans and taxes.

FREQUENTLY ASKED QUESTIONS

Is bankruptcy right for me?
 

  • Bankruptcy is a legal way for struggling Americans to find debt relief from bills they cannot afford to repay.  Whether or not a bankruptcy is a viable solution for you depends on your individual circumstances, but generally if you are facing a home foreclosure and want to save your home, are being sued for overdue bills, have debt you cannot afford to repay, then you are likely able to benefit from a bankruptcy.

Will bankruptcy stop my garnished wages?
 

  • Yes.  When either a Chapter 7 or Chapter 13 Bankruptcy petition is filed, debt collectors who are garnishing your wages will be automatically notified to stop.  You will be reimbursed for any money they take after the bankruptcy petition was filed.

How will bankruptcy affect my credit score?
 

  • Many people considering Chapter 7 or Chapter 13 bankruptcy are concerned about the negative effects on their credit score.  Often people considering bankruptcy are late on several accounts and have a very high debt to asset ratio with poor credit scores.  Filing for bankruptcy gives them an opportunity to start building good credit by eliminating debts.  Any negative impact of the bankruptcy will diminish over time as they live on a budget they can afford.  If your credit score is high, then your credit score will suffer a larger hit if you file for bankruptcy.