Discharging debt in New York

When New York consumers are considering filing for Chapter 7 bankruptcy, it is important that they understand how this process works to determine if it is right for them. This type of bankruptcy can eliminate debts, but not all debts are eligible for discharge. Additionally, depending on someone’s circumstances, bankruptcy may not be granted to them or may not be the best course of action.

One reason that a person may not be qualified is if they are considered to have made fraudulent charges. Along with having presented incorrect information to a creditor to obtain credit, charges may be considered fraudulent if they were made with no intent to repay them. For example, if there were a large number of charges or cash withdrawals prior to a bankruptcy filing, this may make someone ineligible to have them discharged through bankruptcy.

Another consideration related to a Chapter 7 filing is if someone will end up losing valuable property. If a person has assets that may be sold to repay a creditor or if they have secured loans on a home or a car, they may end up having to give up this property. There are some exceptions, but if a house is worth more than the exception, an individual could lose their home.

If a Chapter 7 filing is not right for someone, the debtor may be eligible for a Chapter 13 filing. Chapter 13 allows people with a reliable income strream to file for bankruptcy, and it also helps individuals keep their property, such as vehicles or homes. A lawyer may be able to help someone understand how these types of bankruptcy work and the pros and cons of each.