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Consumer Bankruptcy

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If you have suffered a financial setback and cannot keep up with your credit card, mortgage or other debt payments, filing personal bankruptcy may help you reduce or eliminate debt and offer you a fresh start. A New York bankruptcy attorney at Rosenberg, Musso & Weiner will counsel you on whether or not a bankruptcy filing is the best strategy in your individual situation.

There are several different options or chapters available under the U.S. Bankruptcy Code. Individual consumers normally file under either Chapter 7 or 13. High income filers with significant debt may sometimes file under Chapter 11, which is more often utilized by business or commercial entities.

Chapter 7, Liquidation
The most common type of consumer bankruptcy is referred to as Chapter 7 or liquidation. Before filing personal bankruptcy under Chapter 7, the debtor must pass a means test which determines their eligibility to file under this chapter. Once the petition is filed, it activates an automatic stay which prevents creditors from attempting to collect debts. A bankruptcy trustee is appointed who liquidates the debtor’s non-exempt assets and uses the proceeds to pay off part or all of their debts. The remainder of debts are dismissed, with the exception of non-dischargeable debts which include taxes, student loans, alimony and child support. Many Chapter 7 filings are referred to as “no-asset” cases, because the debtor doesn’t have any assets which can be sold and turned into cash to pay off debts. A New York bankruptcy attorney can help you determine if a Chapter 7 filing is appropriate in your individual situation.

Reorganization

If a debtor has temporarily fallen behind or defaulted on their mortgage or other debts has a steady income which exceeds their living expenses, and has assets greater than what is allowed under Chapter 7, they may decide to file a Chapter 13 proceeding, which is also known as a wage earner plan.

In this chapter, the debtor proposes a repayment plan to the court. Once approved and payments are completed, the balance of debts covered under the plan are dismissed with the exception of debts considered to be non-dischargeable under Chapter 13.

Consumer bankruptcy is complicated and requires experienced counsel who can help you determine whether it is the best strategy in your individual situation. If financial troubles have prompted you to consider filing personal bankruptcy, schedule a consultation with a New York bankruptcy attorney at Rosenberg, Musso & Weiner in our Brooklyn, New York or Melville, Long Island offices: 718-855-6840.