I am a bankruptcy lawyer practicing in Rochester, New York. I offer free one-on-one consultations and personal attention in every case. If you’re one of many Western New Yorkers struggling with bill problems then I may be able to help you.
Personal bankruptcy is a way of receiving protection from your creditors. Bankruptcy protection in the United States has been available since the adoption of the U.S. Constitution, and has been used as a means for people to obtain relief from burdensome debts.
The U.S. bankruptcy laws are formulated to give the “honest” debtor a “fresh” start. Bankruptcy is intended to level the playing field between people who owe money and the people they to whom they owe money.
Bankruptcy is a necessary safety valve in our economy. The relief provided by the bankruptcy laws gives people who are over their heads financially an opportunity for fresh start. There are two main types of bankruptcy: Chapter 7 and Chapter 13. The differences between the two are discussed below.
Chapter 7 Bankruptcy is called a “liquidation” bankruptcy. Chapter 7 bankruptcy is designed to help people who are unable to pay their existing debts. The purpose of filing a Chapter 7 case is to obtain a discharge of your existing debts. When you file for Chapter 7 bankruptcy you can wipe out debt from:
- Credit cards
- Store cards
- Personal loans
- Checking account overdrafts
- Certain tax debts
- Medical and dental bills
- Parking tickets
- Social Security and unemployment overpayments
Under Chapter 7, a trustee takes possession of your property that is not considered “exempt” under New York law. Common property types that you can keep when you file for Chapter 7 bankruptcy are:
- Bank accounts with a total value of up to $2,500
- Automobiles with total equity of up to $2,400
- Household furniture with a value of up to $5,000
- Clothing and jewelry with a value of up to $5,000
- Retirement accounts from a current or previous employer
- Homes with a total equity of up to $50,000
Unfortunately, not every debt can be discharged. Debts that cannot be discharged include:
- Most taxes
- Child support and alimony
- Debts obtained through fraud or deception
- Court-ordered fines and criminal restitution
- Most student loans
- Debts for personal injuries caused by driving while intoxicated or taking drugs
Chapter 13 bankruptcy, known as the “Wage Earner Bankruptcy,” is designed for those individuals who are able to repay a portion of their debts over time.
Most individuals who seek protection under Chapter 13 of the U.S. Bankruptcy Code are those who: own property that would not be considered exempt under Chapter 7; have a past due balance on a mortgage or car loan and wish to repay those past due balances over time without fear of foreclosure or repossession; have debts such as student loans that would not be discharged under a Chapter 7 bankruptcy; or have disposable income (as it is defined by the bankruptcy laws) sufficient to repay a portion of their debts over a three year period of time (this period is five years for people who do not qualify for Chapter 7).
Under Chapter 13, you are given the opportunity to catch up on past due mortgages, car loans and rent payments. In addition, if you repay your debts through Chapter 13, you are given a predictable payment plan that your creditors are required to accept. The major difference between Chapter 13 and debt consolidation or debt settlement is that Chapter 13 gives you the protection of the U.S. Bankruptcy Code to protect yourself from continued interest, late fees, and credit harassment.