Many Americans struggle with overwhelming debt, especially in the wake of the global pandemic. Financial anxiety can lead to stress and feelings of hopelessness about the future. However, it’s essential to understand that you still have options for moving forward and obtaining the fresh financial start you need to start feeling hopeful again. Let’s look at how the bankruptcy process works in Central New York and the North Country and what steps you can take to regain control of your financial situation.
How Bankruptcy Works in New York
If you are struggling with significant financial debt, you may wish to consider filing for bankruptcy. A Chapter 7 bankruptcy lasts about 3 months and you wipe away your unsecured debt (credit cards, loans, medical bills, social security and unemployment overpayment, etc.). You continue to pay on secured debt you want to keep (house, car, etc.). You would also continue to pay any taxes or student loans. In a Chapter 13 bankruptcy, you pay back a percent of your debt over a three to five year period. You would also be able to pay back any mortgage arrears, tax arrears, or car arrears inside the chapter 13 bankruptcy. The percent of your debt you pay back in a chapter 13 bankruptcy is based on your income and what property you own. When a chapter 13 bankruptcy is over, the remaining dischargeable unsecured debt is wiped away.
Advantages of Chapter 7 or Chapter 13 Bankruptcy
One benefit of filing for bankruptcy is that there is an automatic stay. The automatic stay protects you from creditors. Creditors are prohibited from contacting you as soon as the bankruptcy is filed. They can’t call you, sue you or continue to charge interest and fees on your unsecured debt. In a Chapter 7 bankruptcy, you would need to continue to make certain types of payments, including court-ordered alimony, child support, taxes, and student loans. In a Chapter 13 bankruptcy, you would continue to make any ongoing child support or alimony payments, but any arrears would be paid inside the bankruptcy. However, you would not pay on your student loans directly in a chapter 13 bankruptcy.
Moving Toward a Brighter Financial Future
Struggling with debt can feel isolating, but you are far from alone. Many Americans are overwhelmed by debt, and many feel too ashamed to take action. However, bankruptcy may offer you the lifeline you need to regain control of your financial situation and move forward into a more stable future. Enlisting the support of a compassionate New York bankruptcy attorney is a great way to understand and assess your options. Together, you can get and stay motivated to move through each step of the bankruptcy process and towards your fresh start.