Filing bankruptcy in NY is something many New Yorkers have considered and many will continue to consider–especially given the state of the economy.
Today our Brooklyn bankruptcy lawyer discusses: What are the consequences of filing bankruptcy in New York City?
1. Filing bankruptcy in NY stops calls from creditors and collection agencies immediately. The “automatic stay” goes into effect the moment you file your case (or even better, the moment your bankruptcy attorney files your case for you electronically). And after that point, creditors may only contact you through your attorney for the duration of your case.
2. It gives you breathing room to deal with your debts and get your financial life in order. Bankruptcy is like a time-out. During your case, you do not need to make payments to your creditors (unless otherwise specified). And with the help of the bankruptcy process, during that time-out you will likely be able to discharge most, if not all, of your debt.
3. You’ll have the opportunity to get a clean slate and a fresh start. All or most of your debt is likely to be discharged, enabling you to get on with your financial life.
1. A bankruptcy filing does go into your credit history and negatively affect your credit score. However, you can rebuild your credit score after bankruptcy. And eventually the filing gets removed from your credit history.
2. If you file for Chapter 7 bankruptcy, you may not do so again for another 8 years. i.e., You get one shot at it. Then you have to wait. Though hopefully if you manage your debts properly, it won’t become a recurring problem.
3. There is a risk of losing major assets, such as your home. Any non-exempt assets may be sold off by the trustee. However, the homestead exemption is now $150,000, greatly increasing the ability for people to keep their homes. And given the range of other available exemptions for necessary assets, there is a good chance you will not lose anything. Especially if you work with a thoughtful and strategic-minded bankruptcy lawyer.
The Good Again
If you work with an experienced and trustworthy New York bankruptcy attorney, you will be able to maximize the benefits of the bankruptcy process for yourself. And that can make a big difference in your life.