There is a lot of negative talk about everything these days, but when it comes to filing bankruptcy it seems to get the shittiest end of that negative talk stick every time. So we, at Waters Law Group, NYC's premier bankruptcy law firm, decided to share the dirty little truths about filing bankruptcy once and for all!
It's really a list of pros and cons but we promise to keep this one juicy, so here go the CONS first........
Tax bills, owed to the federal government or any state, will NOT be wiped out by filing Ch7 bankruptcy.
Same goes for child support bills/arrears, alimony payments, parking tickets and student loans. These debts are what is called “non-dischargeable” which basically means they will not be discharged along with the rest of your bills when you file Ch7 bankruptcy.
You have to be eligible to file a Ch7 bankruptcy. A bankruptcy lawyer will not (or should not) file your case unless you meet the income eligibility requirements of your state. In NY, a single person must be making less than $63,715 (after taxes) to qualify to file Ch7 and get a fresh start. A 2-person household must make less than $78,663 (after taxes); 3-person household limit is $95,779 (after taxes); 4-person household limit is $116,818 (after taxes).
If you own a home with too much equity in it, you will not be eligible to file Ch7 to get a fresh start. NY “homestead bankruptcy exemption” is determined by county and the current limits are as follows:
$179,950: Kings County (Brooklyn), Queens County (Queens), New York County (Manhattan), Bronx County (The Bronx), Richmond County (Staten Island), Nassau, Suffolk, Westchester, Rockland & Putnam County
$149,975: Albany, Dutchess, Columbia, Saratoga, Orange & Ulster County
$89,975: All other counties
Your co-signers will NOT be protected by the filing of your Ch7 case – just you. This is self-explanatory.
You may feel shame or guilt about filing bankruptcy but these feelings are generally based on a severe lack of in-depth knowledge about such matters. If you knew that credit card companies (and all creditors) were taking credits on their corporate tax returns for every dollar wiped out by a Ch7 case, how would you feel about getting a fresh start then?
Ok, now for the good stuff........
Filing Ch7 instantaneously triggers an “Automatic Stay” on all collection activities. This means as soon as papers are filed requesting the discharge of debts, everything stops: collection calls, foreclosure auctions, repossessions, evictions, everything! The job cannot garnish your check & banks must unfreeze accounts.
You enjoy PERMANENT RELIEF from your bills just 30 days after filing Ch7 – by attending one hearing called a “341” meeting in front of a Trustee, NOT a judge.
NY Ch7 filers KEEP THEIR ASSETS. This includes their house OR up to $10,000 in cash, their 401k, their car, jewelry, life insurance, everything, except luxury items: yacht, vacation home or 8carat diamond ring :)
You WILL have access to new credit once your case closes (in about 90 days or so), including car loans.
You WILL have a 700+ credit score just 6-12 months after filing Ch7 (with Waters Law Group).
You WILL be eligible to obtain a mortgage loan to buy a house just 2 years after filing Ch7 (with FHA).
About the Author
Kiva V. Waters, a seasoned consumer protection lawyer specializing in bankruptcy law, has been dedicated to serving human needs since 2010. Founding WATERS LAW GROUP, her firm addresses bankruptcy-related concerns while also catering to elite leaders, thinkers, and creators.
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