NYC Bankruptcy Frequently Asked Questions
Am I Eligible to File?
Bankruptcy laws are constantly changing! In October, 2005, Congress enacted a new bankruptcy law, entitled the “Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”). This new law contains many requirements. BAPCPA was intended to make it much more difficult for individuals and businesses to be eligible for bankruptcy relief. As a result, it is harder for individuals and businesses to file for bankruptcy relief. BAPCPA has also made bankruptcy cases far more time-consuming.
Some people have been led to believe that if their income exceeds the applicable “median income” guideline they are ineligible to file for Chapter 7 relief. This is not the case. Debtors must now demonstrate their eligibility by filing a so-called “Means Test”. The “Means Test” compares the debtor’s household gross income with the applicable “median income” guidelines to determine whether a Debtor has the ability to repay a portion of his income towards his credit obligations, instead of being able to “walk away” from all of his dischargeable credit obligations.
Another BAPCAP requirement is the need for individual debtors to complete a credit counseling course prior to a Chapter 7 or Chapter 13 bankruptcy filing. For more information about the Credit Counseling Course, please refer to our information section entitled, “Credit Counseling Course”. Individual debtors are also required to take a financial management course following the bankruptcy filing. The financial management course is needed to obtain a “Discharge Order”. Each course must be taken from an approved credit counseling agency.
As a result of the new bankruptcy laws, debtors need an experienced firm that can help them navigate this complicated bankruptcy process. We have the expertise to insure that our clients will be able to obtain Chapter 7 relief and obtain a bankruptcy discharge.
How can I stop my creditors from calling?
If you are eligible to file for bankruptcy relief, and enter into a retainer agreement with our firm, you will then be able to notify your creditors that you have retained us as your bankruptcy counsel, and provide them with our telephone number. In most instances, your creditors will then call our office to confirm that you have retained our firm, and stay in touch with us until your case is filed. A small deposit is all that is needed to initially retain our firm. If a creditor continues to call you after being notified that you are filing for bankruptcy, the creditor is in violation of the Fair Debt Collection Practices Act (15 U.S.C. Section 1692 et seq.)
When can I stop making my credit card payments and other loan payments?
After your bankruptcy case has been filed, you can stop making your credit card and other loan payments, except for mortgage and auto loan payments for homes and cars you want to keep, and non-dischargeable student loan or domestic support payments. You should also stop any post-dated checks or automatic payment plans you may have previously set up.
If I am filing for bankruptcy, how do I handle an existing debt consolidation program?
Once you decide to file for bankruptcy, you can immediately discontinue any existing debt consolidation program. If you have set up an automatic payment plan under the debt consolidation program, you need to immediately discontinue the payment arrangement. You also need to stop payment on any checks you have issued. If need be, you may need to close your bank account.
When can I use my bank accounts?
After your bankruptcy case has been filed, you can use your existing bank accounts or open a new bank account without any fear.
How long will my bankruptcy filing remain on my credit report?
How long with it take for me to get credit once again?
When will I be able to obtain a new mortgage loan?
The answer to all three of these questions is this: A bankruptcy filing will remain on your credit report for 7-10 years. However, soon after you file, you will begin getting credit card offers. It will also not be long before you will be able to qualify for an auto loan or mortgage loan at a reasonable rate of interest.
How long does the entire bankruptcy process take?
If there is an emergency, such as an imminent foreclosure sale, or a garnishment or bank levy, your case can be filed in one day!
After a Chapter 7 case has been filed, the case usually lasts 4-5 months. During this period, you will be able to use your existing bank accounts, open new accounts, and start getting your life back on track. A Chapter 13 case lasts until all plan payments have been made. It can take up to 5 years until all plan payments have been made.
At the conclusion of a Chapter 7 case, the bankruptcy court issues a Discharge Order to a debtor, who has completed a Financial Management Course. A Discharge Order confirms the cancellation of a debtor’s dischargeable obligations.
At the conclusion of a Chapter 13 case, a Discharge Order will be issued to a Debtor, who has completed his plan payments and a Financial Management course.
How much does a bankruptcy filing cost?
For individuals, we usually require a retainer deposit of at least $250. The balance of the fees and costs depends upon whether you are filing a Chapter 7 or Chapter 13 case. It also depends upon whether you own a home that you wish to keep, the extent of your debts, and your monthly income in relation to the median income for your family. Once the fee is agreed upon, we will then set up a payment plan that works for you.
Check out our Bankruptcy Guide for more information.
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