What is the difference between a Chapter 7 and a Chapter 13?

In short, Chapter 7 is used to wipe out credit card balances, medical bills, personal loans, and other unsecured debts. Filing a Chapter 7 will initially stop all collection actions, including repossession and foreclosure. However, secured creditors (mortgage companies, auto loan creditors) may ask the court for permission to foreclosure or repossess after notice and a hearing. Chapter 7 may be filed by any individual or legally married couple whose household income does not exceed the median income in his or her area.

Chapter 13 is generally used to prevent foreclosures or vehicle repossessions. If your home or other real property is being foreclosed on by your mortgage lender, filing a Chapter 13 will stop the foreclosure and allow you to pay your past-due mortgage payments over 3-5 years, along with any other debts you may have. It will also stop your vehicle from being repossessed and allow you to pay the balance over 3-5 years.

Chapter 13 is also used by debtors who are ineligible to file Chapter 7 because they exceed the maximum income allowance, or the value of their property exceeds exempted values permitted by state or federal law. Any individual or married couple whose unsecured debts do not exceed $419,275 may file a Chapter 13. Payments can range anywhere from 5% to 100% of your total unsecured debt. When the plan is completed, the unpaid balances can be wiped out.

Can Bankruptcy stop foreclosure?

Loss of a job, divorce, medical emergencies and predatory lending practices put many at risk of losing their homes. Every year I help rescue dozens of families from the perils of foreclosure. In my experience, I have learned that the first mistake not to make when in danger of losing your home is to rely on the bank. Although it is required by both federal and state law for lenders to make a good-faith effort to provide options to homeowners facing foreclosure, the truth is most banks and mortgage companies have neither the resources nor the incentive to help you. Despite what they may promise, banks rarely resolve or refinance loans for borrowers who are already in default on their mortgages.

Fortunately, the law provides a way to stop foreclosure. It is Chapter 13 bankruptcy. Filing for Chapter 13 bankruptcy stops the foreclosure process and allows you to repay past due mortgage payments over either a three-year or five-year period. In a Chapter 13 bankruptcy, you can catch up on your back payments while you continue to make your regular mortgage payments.

In New York State, the average foreclosure process lasts approximately 15 months from the date of the missed payment to the sale of the home at auction. Filing for bankruptcy protection stops the foreclosure at any stage up until the auction. Although you may have ample time to stop a foreclosure, the longer you wait, the more difficult it will be to catch up in a Chapter 13 plan.

For a free consultation to find out if you are eligible for Chapter 13 bankruptcy protection, call Buffalo foreclosure attorney Thomas Denny at (716)800-1234.


How long does a bankruptcy stay on your credit report?

While a Chapter 7 will remain on your credit report for ten years and a Chapter 13 for seven years, bankruptcy is not necessarily a death sentence to your credit. In fact, it usually raises your credit score.

As a bankruptcy attorney, I use a credit report that indicates a client’s current credit score, along with what that credit score will be in approximately one year after filing. In most cases, scores increase an average of 125-140 points. The rare exception is the client who has never been late on his or her payments. The majority, however, are in default on all or most of their debts when they file for bankruptcy.

The fundamental reason bankruptcy raises your credit score is that it lowers your debt-to-income ratio. To calculate your debt-to-income ratio, you divide your debt payments by your gross monthly income. The lower your debt-to-income ratio, the more willing creditors are to lend you money. Since all or most of your debts are discharged, after bankruptcy, you have more disposable income to pay new debts. The fact that bankruptcy can improve your credit may explain why bankruptcy filers often get offers for credit cards and car loans within weeks after their cases are closed.

Credit is not indicative of your character or worth. It is simply a measure of your ability to borrow money, i.e., incur new debt. Bankruptcy is intended to give debtors a fresh start by freeing them from the burdens of debt. Thus, it puts them in a better financial position – one in which they may not have to continue to borrow money to make ends meet.

To find out if the Law Office of Thomas Denny can help better your financial situation, call (716) 800-1234 to schedule a free consultation.

A Buffalo bankruptcy attorney you can trust

Occasionally I receive phone calls from disgruntled persons who filed for bankruptcy in the past using other attorneys. Almost everyone has the same complaint: “The attorney never contacted me to tell me what I needed to do.” As a result, their cases were dismissed, often for something as simple as failing to provide copies of their tax returns.

The truth is, many attorneys simply do not care. Once they are paid and the bankruptcy petition is filed, their clients are left to fend for themselves. The typical excuse is “They were informed about these things at the initial consultation” or “in writing.”

At the Law Office of Thomas Denny I make it my personal business to ensure that all the necessary documents are submitted and steps are taken to successfully complete each of my clients’ cases. I answer my phone calls and emails and never ignore my clients’ communications or concerns, no matter how seemingly trivial or unimportant.

I also make it a point to keep in mind how important is to listen. Perceived by other attorneys to be a waste of time, I have an interest in knowing how my client feels about his or her situation. Although I may spend a greater percentage of consultation time listening and responding to my clients’ personal grievances, I believe it is time well spent. Clients are people – not numbers. Although I am paid for my services, there is greater reward in knowing that what I do can make a positive difference in others’ lives.

For further information or to schedule a free consultation call (716) 800-1234.

Can bankruptcy stop a repossession?

Filing for bankruptcy creates an automatic stay under which all collection actions, including repossession of an automobile, are stopped. The lender has the option, however, to apply to the court to have the stay lifted to protect its security interest. If the creditor files such a motion, you are usually given two-three weeks before a hearing. Until the hearing, and until the motion is granted, the creditor cannot repossess your vehicle.

Nonetheless, in bankruptcy you can elect to reaffirm your car loan and keep your car if you can demonstrate  that the car is necessary and that the payment is reasonable.

Contact Buffalo bankruptcy attorney Thomas Denny at (716) 800-1234 for additional information and a free consultation.

Can I be fired for a bankruptcy?

The law strictly prohibits an employer from terminating you or denying you employment for filing bankruptcy or for not having paid a debt that is dischargeable in bankruptcy.

Furthermore, you cannot, solely because of bankruptcy or insolvency, be denied a federal student loan, a drivers license, or a professional license.

For further information regarding bankruptcy discrimination and your rights under the law contact Buffalo bankruptcy attorney Thomas Denny at (716) 800-1234.

May I file for bankruptcy individually or should my spouse file also?

If yours debts are in both your names, both you and your spouse should file. Otherwise, it is not necessary to have a bankruptcy noted on both of your credit reports.

If you choose to file alone, however, your spouse will not be relieved from his or her share of any debts discharged.

Buffalo bankruptcy attorney Thomas Denny represents both individuals and married couples filing jointly.

What is the “means test?”

The “means test” is a formula used to determine who can and cannot file for bankruptcy protection under Chapter 7. The law requiring a “means test” was enacted in 2005 to deter wealthy debtors from filing for Chapter 7 bankruptcy.

If you are filing for bankruptcy in Buffalo and your income is less than the state median for your household size, or if more than 50% of your debts are business-related, you will not be subject to the means test.

If, as a result of the means test, you cannot file under Chapter 7, you may still be entitled to file for bankruptcy protection under Chapter 13.

Can I file bankruptcy for student loans?

Student loans are generally not dischargeable in bankruptcy “unless excepting such debt from discharge . . . will impose an undue hardship.” The legal test for “undue hardship” is very strict.

Also exempt from bankruptcy protection are domestic support obligations and income taxes less than three years old.

In a Chapter 13 bankruptcy however, a debtor may benefit from a temporary partial reprieve from his student loan obligations. In Chapter 13, the debtor is required to pay a minimum of 5% of his or her unsecured debts over a period of 3-5 years. The percentage allotted is dependent on several factors, including the amount of the debtors’ income left over after deducting allowable living expenses. In a Chapter 13, student loans are treated as unsecured debts. Although, at the end of the plan, the debtor will still be liable for the unpaid balance, during the 3-5 year duration he or she will only be required to pay the percentage allotted to unsecured debts of his or her student loans, which may be as little as five cents on the dollar.

Prior to filing for bankruptcy, Buffalo bankruptcy attorney Thomas Denny will advise you precisely which of your debts are dischargeable and, if filing Chapter 13, what percentage of your disposable income will be payable to unsecured creditors..

For a free consultation, call (716) 800-1234 or fill out and submit the form below:

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Will bankruptcy affect my credit?

Although bankruptcy will remain on your credit report for ten years from the filing date, by eliminating all or most debts, it may actually help your credit.

In addition to improving your debt to income ratio, bankruptcy may allow you to qualify for an FHA or VA-insured mortgage in as little as two years.

As your counselor, Buffalo bankruptcy attorney Thomas Denny will provide guidance on how to establish new credit and improve your credit rating.