Debt can accumulate quickly, and before you know it, you are beyond any ability to manage it. Debt impacts your credit history as much as it does your quality of life. Creditors and third-party collection agencies can cause serious stress. Fortunately, even when you think a solution does not exist to your debt problem, there very well may be one. Filing for Chapter 7 bankruptcy is the quickest, easiest, and most affordable way to discharge debts and get a clean slate.
At the Law Office of Thomas Denny, our Chapter 7 bankruptcy lawyer in Buffalo, NY will review your overall finances, debt, and life circumstances to help you determine if filing for bankruptcy is right for you. Then, we will guide you through the process so you never have to worry about deadlines or paperwork. Contact the Law Office of Thomas Denny today at 716-800-1234 to schedule a Free Consultation.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a type of bankruptcy that can benefit individuals, married couples, and sole proprietorships. If you or your small business have qualifying assets, they are liquidated to pay off debt. The court appoints a Trustee to review your assets and determine if any are worth liquidating. Each state allows for a certain amount of assets to be exempted, which means those assets are shielded from liquidation. You should consult with a bankruptcy attorney in Buffalo NY to make sure you know what applies in your case.
Even though Chapter 7 bankruptcies are a means to liquidate assets and pay off debts, these types of bankruptcies are often referred to as “no assets.” Most people who apply for bankruptcy under Chapter 7 do not have assets that would qualify for liquidation. Nonetheless, debts are still discharged, so you get a fresh start.
Chapter 7 bankruptcy is very common––much more common than people know. That said, there are a few caveats to keep in mind. First, not all debts are eligible for bankruptcy. Second, not all individuals, partnerships, or corporations will qualify. These caveats are reasons why you should consult with a bankruptcy lawyer to make sure Chapter 7 is right for you.
Eligibility for Chapter 7 Bankruptcy
Qualifying for Chapter 7 bankruptcy typically means being able to pass what is known as the Means Test. The Means Test determines whether you can pay off your debts. To pass the Means Test, your income must not exceed the income limits set by your state.
State income limits vary because the cost of living differs from state to state. Your state's income limit depends on the number of earners and people in the household.
In New York State, the income limit for
- One earner is $63,715
- Two people is $78,663
- Three people is $95,779
- Four people is $116,818
- Each person in excess of four is an additional $9,900
The income numbers for the Means Test are updated every six months.
Who Should File for Chapter 7 Bankruptcy?
Any person or company can file bankruptcy under Chapter 7 if they
- Own property in the United States
- Have a permanent residence in the United States
- Have not filed bankruptcy under Chapter 7 within the last eight years
- Completed credit counseling from an approved credit counseling agency
- Satisfy eligibility criteria
Although corporations, however, may file for Chapter 7 bankruptcy, they are not entitled to a discharge of their debts.
Reasons You Should File
Even though you can file for Chapter 7 bankruptcy, it does not mean you should. You should consider Chapter 7 bankruptcy if
- You want a fresh start
- Your credit score is already below 600
- You want a reasonably fast process to discharge debts
- You have a lot of debt and are either close to or meet the homestead exemption amount of equity in your home (this is the amount protected against bankruptcy)
- You have a lot of debt, but you also have income or assets creditors can take
- You cannot keep up with making ends meet at the end of the month
- You will not be able to pay off your debt within five years
- No other debt relief option applies or would provide better protection and benefits
- You do not want a debt repayment plan
Reasons Not to File
On the other hand, you may not want to file for bankruptcy in New York if
- You are not presently working
- You have no assets a creditor can garnish
- You receive protected income, like
- Aged, Blind, or Disabled (ABD) benefitsChild supportFederal student loan proceedsRetirement pensionsSocial SecuritySupplemental Security Income (SSI)Temporary Assistance for Needy Families (TANF)Unemployment benefits
- You have secured property (e.g., a car) that the creditor can repossess but you want to keep
- You are not close to the homestead exemption amount of equity in your home
- You do not want to hurt your credit score
- You can pay off your debts within the next five years
- Other debt management solutions are available and may be more beneficial
Speaking to a Chapter 7 bankruptcy attorney can provide you the insight you need to make informed decisions about how to address your debt.
What Happens When I File for Chapter 7 Bankruptcy?
After you file for Chapter 7 bankruptcy, three important and immediate things happen:
- You are given a case number;
- An automatic stay takes effect, which means creditors can no longer garnish wages or take collection action against you; and
- A bankruptcy trustee is assigned to your case––the trustee reviews all documents, verifies information, and oversees the meeting of creditors.
Once your Chapter 7 bankruptcy discharge is granted, you will see your credit score affected by it. Although Chapter 7 bankruptcy stays on your credit report for ten years, it generally raises your credit score within 12 months.
Contact a Bankruptcy Lawyer in Buffalo NY Today
At the Law Office of Thomas Denny, we know how debt can impact an individual, a family, or a business. If you have difficulty paying bills because of the debt you or your company have accumulated, speak to a bankruptcy attorney in Buffalo NY today by filling out our online form or calling us at 716-800-1234 . We will schedule a Free Consultation so that you get the answers you need to all your financial questions.