In spite of all the sincere efforts, the debtor is making no headway with paying off those obligations. Every time a small amount of progress is made, something happens that makes things worse. With bills mounting and no end in sight, now is the time to talk with a Bankruptcy Attorney Long Island and determine which form of personal bankruptcy is the best choice. Here are some of the things that the debtor will learn along the way.
Qualifying for Bankruptcy Protection
As any of the long island divorce attorney will explain, personal bankruptcy is not available just for the asking. Debtors who are seeking this type of solution must meet the criteria set by current bankruptcy laws. To that end, the attorney will administer what is known as a means test. Essentially, this test involves taking a good look at the income of the debtor, any assets that are currently held, and the total and type of debt the individual currently carries. In the best case scenario, the outcome of the means test is that the debtor qualifies for one or both forms of personal bankruptcy.
How a Chapter 7 Bankruptcy Works
One of the possibilities that any of the Long Island Bankruptcy Lawyers will discuss with clients is filing for a Chapter 7 bankruptcy. This approach works well for clients who do not have any debts that are classified at priority. Priority debts include obligations like back taxes, outstanding child support payments, and student loans. While there are some priority debts that can be included in Chapter 7, meeting the current legal requirements is not easy.
For those who have mainly unsecured debt, this form of bankruptcy is a good option. A court-appointed trustee will evaluate any assets the debtor currently owns, determine if any of them are considered eligible for liquidation, and handle the process of selling them. The money from those assets is divided among the creditors according to a plan approved by the court. Any remaining debt is discharged, leaving the individual free of the debt. In many cases, the process can be completed in a few months.
What About a Chapter 13?
This bankruptcy option is one that Bankruptcy Lawyers Long Island will recommend when there is a substantial amount of priority debt involved. Essentially, the debtor is placed under the protection of the court. For the next three to five years, monthly payments are remitted to the court and the funds disbursed to the creditors. Any unsecured debt that remains at the end of the bankruptcy term is discharged.
While bankruptcy is not the right solution for everyone, it is something to consider when no other method is working. Talk with an attorney today and go over the possibilities. Doing so could lead to finally getting out of debt and having the chance to make a fresh start.
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