1.1. What Is Bankruptcy?
Bankruptcy is a type of relief provided by the federal government to individuals and businesses who are no longer solvent, allowing them to eliminate all or part of their debts. More simply put, if you can no longer pay your bills, the government may be able to relieve you of having to pay them by discharging these debts for you, and giving you a “fresh start”.
The concept of bankruptcy is very simple: it is a give and take process. If a person wants to file, they must give up certain non-exempt assets in exchange for being relieved of their bills (But don’t worry, the majority of people who file for bankruptcy do not actually lose any of their property, and I’ll get to that in a second).
The process of bankruptcy starts when the person filing (the “Debtor”) files a petition with the bankruptcy court in their district. A debtor must list all of their debts, assets, income information, and monthly living expenses in this petiton, along with other information. Approximately four weeks after filing this petition, the Debtor must attend a meeting presided over by a bankruptcy trustee, who will ask the Debtor questions to make sure all the information is correct, complete, and honest. If there are no assets to distribute, the trustee will file a report of no distribution relatively soon after this meeting, and in approximately 1-2 months the Debtor will receive their discharge.
1.2. What is the Big Deal about a Discharge?
Getting a discharge in bankruptcy is a HUGE DEAL. If your debt is discharged in bankruptcy, it means you never have to pay this debt again. More importantly, it means that the creditor can never ask you to pay this debt, or attempt to collect it in any way after you receive your discharge. This is a big deal because a bankruptcy discharge contains major federal protections. A creditor who commits a discharge violation (as in, asking you to pay a debt that has been discharged) can be held accountable for breaking federal laws.
Many different kinds of debts can be discharged, including medical bills, credit cards, mortgages, car loans, and other contractual obligations. Sometimes, personal income tax can be discharged if they meet the government’s eligibility criteria. However, not all debts are considered dischargeable. These include child support/domestic support obligations, student loans, debts obtained fraudulently, and personal income taxes that do not meet the discharge criteria.
1.3. How Do I Know If I Should File?
Filing for bankruptcy is a very personal, and oftentimes difficult choice to make. The first thing you should know is: it is okay to file for bankruptcy, and that doing so does not make you a bad person.
Next, take a good hard look at your monthly income and your necessary living expenses, and compare it to the total amount of debt you have. Can you actually pay off your debt in the few months while still paying for rent and groceries? Can you truly pay off your bills anytime soon? Or will you only be making minimum payments for the foreseeable future? If you can only make the minimum payments on your current income, there is a high probability that you will not really be able to catch up on your bills, and that you are just prolonging bankruptcy.
Finally, if you’ve already missed payments on bills, bill collectors are calling you daily, if your wages have already been garnished, or if you’ve received a Summons and Notice for a credit card debt or loan you owe, it’s time to speak to an attorney to find out your legal options. Simply put, if you are feeling in over your head, be proactive and give us a call so that you an protect your future.
1.4. Will I Lose Everything I Own?
Filing for bankruptcy does not mean you will lose your personal property. In fact, there are numerous exemptions under either the state or federal statutes that allow you to keep your personal property out of the reach of the bankruptcy court.
You can even protect equity in your real estate in bankruptcy. For example, in New York City, you can exempt up to $150,000 of equity in your primary residence, which is great news if the value of your property is higher than the mortgage on it.
Determining whether to apply the federal or the state exemptions in bankruptcy requires the experience of a knowledgeable bankruptcy lawyer who can successfully engage in exemption planning to maximize available exemptions to protect your property. If exemption planning is done properly, a bankruptcy attorney can help save your house and other valuable assets while still helping you obtain a bankruptcy discharge.
1.5. Will it Stop a Wage Garnishment or Unfreeze my Bank Account?
The filing of a bankruptcy petition triggers what is called the “automatic stay”, or the order for relief. The automatic stay is a direct order from the courts instructing all creditors to immediately halt and cease all collection efforts. This means that immediately after you file for bankruptcy, a creditor may not call you, send you a letter, or continue garnishing your wages or keep a freeze on your bank account. If your bank account has already been frozen, our office will contact the creditors to direct them to unfreeze your hard-earned money. If your paycheck is currently being garnished, our office will work with the Marshall’s Office to make sure the garnishment stops, and that any moneys seized after the filing date are returned to you.
1.6. Why Should I Hire You?
Only an experienced attorney like Moumita Rahman can tell you which bankruptcy will be the best for you to obtain your fresh start and discharge your debts. This can only be done after a proper consultation where you provide us with all of the information and documents we request so that we can properly assess your case.
Whichever bankruptcy you decide to file, you can rest assured that at the Law Firm of Moumita Rahman, PLLC, you will receive the best legal representation and customer service. We truly care about helping our clients and want to see you through your tough financial problems. Please call us today at (212) 248-7907 to make an appointment.
The Law Firm of Moumita Rahman, PLLC has experience in filing dozens of Chapter 7 bankruptcies, from simple to complicated, and we will be your advocate throughout the entire Chapter 7 bankruptcy proceedings.