When to Declare Bankruptcy?

There are times in life when decisions go wrong, unplanned expenses occur or an unwanted event distorts one’s finances, regardless of the reasons one may have for not being able to pay even the minimum prescribed amount for certain debts, it’s a serious cause of concern. At times like these declaring bankruptcy might seem like a viable option for many but it’s a decision which must be taken only after proper evaluation of other available alternatives and one’s overall financial condition. Consulting a skilled New York Bankruptcy attorney can also help in making an informed decision.

Options

Before deciding on whether to file for bankruptcy or not, one must know that U.S. laws give an individual two types of option for declaring bankruptcy

  • Chapter 13 Bankruptcy – It’s also called ‘Wage Earners Bankruptcy’ and is meant for people who do have a source of income but they can’t afford to pay their debts by terms or as required by the creditors. Chapter 13 doesn’t get one off the hook but it helps in reorganizing the debts an individual has.
  • Chapter 7 Bankruptcy – It can be termed as the ‘real’ bankruptcy as an individual can keep assets that are encumbered by secured claims but get discharged off from most of his / her debts.

A New  York Bankruptcy attorney can explain the requirements and regulations of both type of bankruptcy in detail to individuals considering declaring bankruptcy.

Consequences

Declaring bankruptcy is not a holy grail to get creditors off your back as some people consider it to be. Social stigmas aside there are other consequences to be considered while filing bankruptcy though one can’t deny that declaring bankruptcy can significantly impact the social status of an individual.

  • Getting Credit – An individual who files for bankruptcy has negligible chances of getting any kind of credit from a financial institution be it mortgage, education loan or credit card. Banks and other financial institution check an individual’s credit report before giving credit, someone who has declared chapter 13 Bankruptcy has it mentioned in the credit report for next 7 years while those declaring chapter 7 has it mentioned for next 10 years.
  • Implications – Declaring Bankruptcy can have an implication in all major areas where credit report is evaluated like leasing property, getting a new Job etc.
  • Not Foolproof – Declaring bankruptcy doesn’t take away the liabilities of alimony payment, child support, Home loan etc.

When to?

If the answer to any of the following questions is a yes for any individual one knows, he / she can be advised to consider declaring bankruptcy –

1)     Are the wages earned by the individual being garnished?

2)     Does the individual have a property on the verge of being foreclosed?

3)     Have lawsuits been filed against the individual for nonpayment of debt?

4)     Has the individual been unemployed for a considerable time and has no source of income, whatsoever?

5)     Has the individual not paid taxes due to lack of money?

Maxwell Law Firm, PLLC assists clients with debt settlement, foreclosure defense, tax collection defense, filing for chapter 7 and chapter 13 bankruptcy and mortgage home loan modifications in New York, Brooklyn, Queens and Nassau County. Contact us and speak to our competent and experienced New York Bankruptcy Attorney at 718-701-0095 .