Frequently Asked Questions about Bankruptcy
A: In New York State people who file for bankruptcy are allowed to keep homesteads and cars if the equity in a homestead is less than $50,000.00 for a single filer or $100,000.00 for a couple and the equity in a car is less than $2,400.00. If the equity in these pieces of property exceed these amounts steps can still be taken to ensure that a person can keep them. It is exceptionally rare that a person would lose their house or car if their attorney regularly handles bankruptcy filings.
Q: Will a bankruptcy filing ruin my credit forever?
A: No. Most people don't know that each of the major credit bureaus uses a different formula to determine your credit score (credit worthiness). Each of these formulas weighs a bankrutpcy filing differently. In each of the formulas a bankruptcy will initially cause a score to drop, however, in most cases credit scores rebound quickly after discharge and usually exceed the pre-bankruptcy score within a year.
A: Yes. There are two main types of bankruptcy ordinary people file. The first is a Chapter 7. In a Chapter 7 there are income limitations that determine eligibility. These income limitations vary from state to state. Congress has set forth specific deductions that one can take from your income to determine eligibility if you exceed the amount. If you are still over the income threshold after deductions you can still file a Chapter 13 bankruptcy, which, is a repayment bankruptcy. In a Chapter 13 you pay your creditors as much as you can afford without interest or penalties, not the full balance that is owed.
Q: I heard that the law changed to make it harder to file bankruptcy, is this true?
A: The Bankruptcy Code was revised significantly in 2005. In some areas of the country it is more difficult to file. In the Central New York area the changes have had little effect on eligibility to file. Some of the major revisions relate to credit counseling. People filing for bankruptcy must now go through pre-bankruptcy and post-bankruptcy credit counseling. Providers of these services are located in the links section of this website. In addition it has become a bit more expensive to file a bankruptcy as a result of additional disclosure requirements. Fortunely our firm has been able to maintain some of the lowest prices in the area even with the changes.
A: Yes. In most cases the filing of a bankruptcy activates a Federal Court order called the automatic stay. The automatic stay tells creditors that they can not take any action to collect on a debt. This includes calling you, sending letters, or any of the actions outlined above. If a person has had a case dismissed within a year the automatic stay is limited in duration to thirty (30) days, unless the Court extends it longer. If two cases have been dismissed within a year then the stay doesn't take effect and the bankruptcy judge will need to hold a hearing on whether or not a stay should be put in place. If a creditor doesn't comply with the stay the Judge can fine them for contempt of Court.
A: If you're making an initial appointment to talk about bankruptcy we typically only need a general overview of your financial situation. This involves a fifteen (15) to twenty (20) minute conversation. Paystubs, tax returns, car titles, home deeds, ATV/BOAT/Snowmobile registrations, pay-off statements, credit card bills, are always helpful, but not necessary for the appointment. At some point you will need to go through a pre-bankrupty credit counseling session before you can file your case. We will discuss this and all of the other requirements with you at your appointment. We hope this page has been informative and that we will hear from you soon.