Understanding the Difference Between Chapter 7 and Chapter 13 Bankruptcy in Queens
What you need to know before you file
Mark E. Cohen, Esq. understands the stress that financial problems cause for you and your family. While you do not need one more decision to make, if you have settled on bankruptcy, you must determine whether to file for Chapter 7 or Chapter 13. If you do not qualify for Chapter 7 bankruptcy, the decision is made for you.
I guide you through the options and help create a strategy that eases your transition through difficult financial times.
Which bankruptcy option do I choose?
Chapter 7 and Chapter 13 are the most common consumer bankruptcy types. Chapter 7 involves liquidation and distribution of assets to creditors. Chapter 13 involves rehabilitation and government protection. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, many cases that once were eligible for Chapter 7 relief must now be filed as Chapter 13 bankruptcies.
Chapter 7 bankruptcy
Chapter 7 is typically referred to as liquidation bankruptcy, but it does not require the liquidation of all assets. Using the required means test, I assess whether your income qualifies you for Chapter 7. If you are qualified, I file a bankruptcy petition on your behalf in federal bankruptcy court. This petition immediately halts all creditors from contacting, billing or suing you or trying to attach your wages. Your creditors must seek repayment through a court-appointed trustee you must meet with. The trustee evaluates your income and any nonexempt assets (those that can be sold to pay your debts). I represent you at this meeting and handle all negotiations with the trustee.
Most assets, including equity in your home and car, furniture, bank accounts and pensions up to certain caps, are exempt from creditors. You may continue to pay your mortgage and car loans, if you choose, or you can give up any right to those assets, and the debt, too. Certain debts, such as child support, alimony, student loans and some taxes, cannot be discharged.
The federal judge then reviews the petition and any objections that are filed and discharges your debts. The entire process usually takes a few months. Once your debts are discharged, you can never again be asked to pay them. You start fresh, essentially with a clean slate.
Chapter 13 bankruptcy
Chapter 13 bankruptcy involves rehabilitation and government protection. It is designed for people with a regular income and those whose income exceeds that permitted under Chapter 7. I evaluate whether you qualify for Chapter 7 or Chapter 13 bankruptcy.
Chapter 13 allows you to keep valuable assets. I devise a plan to meet your financial needs and desires that structures repayment of your debts over a three- to-five-year period. This plan allows you to catch up on your overdue payments by paying a percentage of what you owe each month. Under the plan, you pay an appointed trustee who then pays your creditors. The amount of repayment is determined by the type of debt and your income. Debts subject to a Chapter 13 repayment plan can include mortgages, car payments, alimony and child support, taxes, high-interest loans and credit cards.
While the Chapter 13 plan is in effect, your creditors cannot harass or sue you or attach your wages. Chapter 13 filers must complete payments under the plan for their debts to be discharged.
Experienced in all types of bankruptcy filings
If you are in financial trouble or are contemplating bankruptcy, it is vital that you speak to an attorney who knows how bankruptcy laws impact you. I carefully review the facts of your case and formulate a plan tailored to achieving your financial goals and protecting your rights.
Bankruptcy can prevent foreclosures in Queens. I help keep creditors at bay and help you keep your home, vehicle and other property. My firm is committed to providing you with immediate debt relief and assistance in starting over.
To ease the stress of overwhelming debt, call a bankruptcy lawyer in Queens
All too often, good people find themselves in financial trouble that quickly spirals out of control. For more than 30 years, I have helped people like you understand the available options, make informed decisions and navigate through the complex process of filing for bankruptcy.
Located on Queens Boulevard in Forest Hills, I offer a wide range of services to individuals and families suffering from the weight of debt. Call Mark E. Cohen, Esq. at 718-487-9979 or contact me online to schedule a free consultation.