Bankruptcy is a path to financial relief for many people overwhelmed with debt. If you're considering filing for bankruptcy, you might be wondering which type of bankruptcy is best for you. The type of bankruptcy you choose to file will be based on your specific situation. Our Queens bankruptcy attorneys have put together the pros and cons of Chapter 7 and Chapter 13 bankruptcy to help you determine which chapter is best for you.
If you're considering filing for bankruptcy, our team at Law Office of Seni Popat, P.C. is here to help you. Get in touch with our Queens bankruptcy lawyers today at (718) 340-3385 to schedule a consultation!
Pros & Cons of Chapter 7 Bankruptcy
Chapter 7 bankruptcy is the most common type of bankruptcy because it erases most debt in only a few short months. When a debt has been removed, it means that a creditor cannot hold you personally liable for the debt or carry out collection actions against you. It also brings an end to creditor calls and wage garnishment and prevents foreclosure actions. Chapter 7 bankruptcy may be beneficial if you want to erase your overwhelming debt as quickly as possible.
Below we have put together the pros of Chapter 7 bankruptcy:
- The process from filing to discharging takes 2 to 3 months
- You may be able to stop paying your credit card and other payments immediately when you file for bankruptcy
- Bankruptcy can stop wage garnishments
- Bankruptcy can help get rid of deficiency balance from a repossessed car
- Bankruptcy can help get rid of medical bills
- Your credit score may go up after you file for bankruptcy
- You may be able to keep the exempt property (house and car) and the salary or wages you earn after you file
- You may be able to receive a new line of credit and credit cards within a few months after filing for bankruptcy
- Chapter 7 doesn't require you to have debts of any specific amount to file for relief
Below we have put together the cons of Chapter 7 bankruptcy:
- You cannot use credit cards while the bankruptcy is pending
- Your income must be less than the median income in New York
- Chapter 7 bankruptcy can remain on your credit report for up to ten years but that doesn’t mean you cannot get new credit cards or car loans etc
- You cannot file for Chapter 7 if you previously filed within the last eight years
Pros & Cons of Chapter 13 Bankruptcy
Chapter 13 gives people the opportunity to consolidate all their debt into a single monthly payment plan. The payment is made to a court-appointed trustee who disburses the payments to your creditors. The purpose of Chapter 13 bankruptcy is to work with the court to create a repayment plan that is manageable for you.
If you make more than your state's median income, the repayment plan will be in effect for five years. If you make less than the median state income, you only need to pay for three years. At the end of your pay period, the court will wipe out any remaining unsecured debt.
Below we have put together the pros of Chapter 13 bankruptcy:
- You don't have to sell your assets when filing
- Your debts are all consolidated into a single monthly payment
- The amount of your payment is set according to your income
- All accounts listed in the bankruptcy are removed after seven years
- You are legally protected from debt collectors for three to five years
- You do not need to surrender your home or car as long as you make payments
Below we have put together the cons of Chapter 13 bankruptcy:
- You'll be making payments for three to five years
- It will appear on your credit score for ten years
- All your disposable income at the time of filing is committed to paying off debt
- You won't be able to file for Chapter 7 bankruptcy for six years
Call Our Queens Bankruptcy Attorneys Today: (718) 340-3385!
With over a decade of experience, the team at Law Office of Seni Popat, P.C. has been helping people throughout New York obtain financial freedom. We know that filing for bankruptcy is a big step that will affect your future. That is why we are always ready to guide our clients and help them obtain the best possible outcome for their case. Our team has the skills, knowledge, resources, and experience in your case to start the path toward financial freedom.
Get in touch with our Queens bankruptcy lawyers today at (718) 340-3385 to schedule a virtual consultation!