Filing for chapter 7 bankruptcy is a way to a fresh start for debtors so they can get relief from their financial woes. Creditors also get paid some of the money owed to them through the liquidation of the debtors’ assets. However many people choose to avoid filing bankruptcy because it stays on your credit report for up to a decade, and has many complicated rules that can lead to losing important assets such as your car and other property. In addition to this you could be barred from working at some employers, face limited choices in housing, and have trouble buying a new car, among other things. A Westchester chapter 7 lawyer will know the laws that relate to your current situation to help you understand which financial plan will work best for you.
Avoiding Chapter 7 Bankruptcy
Here are some practical ways to avoid filing chapter 7:
- Set up a budget, starting with your total income minus your debts and have a limit on additional spending
- Pay with available cash or debit attached to your bank account if possible
- Avoid making payments for one creditor with another credit card
- Sell valuable belongings you do not use anymore on sites like eBay to pay back debts
- Pay more on credit cards that have higher interest rates
- Keep a calendar with due dates clearly marked for each bill
- Get help from a credit counseling agency (more on this later)
- If you still find you are overwhelmed by debt, filing chapter 13 can be a better solution
Chapter 13 Bankruptcy
Filing chapter 13 has certain risks, as it does stay on your credit record, but it will allow you to keep some of your property. In simple terms, a lawyer will work with you to propose a plan to pay off your debt in a specified amount of time. However, unlike chapter 7, filing for chapter 13 does not immediately release debts from your record. You are merely protected from garnishments and lawsuits during the specified time. In order to determine which type of bankruptcy would work better for you, a Westchester chapter 7 lawyer can review your documents and give you a clearer picture.
Credit Counseling Agencies
Getting help from a credit counseling agency can help to reduce interest rates and work out budgets within your means. It is important to be wary of a lot of credit counseling services who advertise debt settlement and make promises to reduce payments but actually sink you further into debt. Many will hide their own fees in your payments and actually cost you more than your original debt. Look for agencies who only receive payment with successful debt recovery. Nonprofit credit counseling agencies offer small fees or no fee at all for advice concerning your debt. To find a nonprofit counseling agency, contact the National Foundation for Credit Counseling.
Get Legal Advice from a Professional
Most importantly, get advice from someone who understands bankruptcy law. Some debtors will not even quality for chapter 7 and will need a westchester chapter 7 lawyer to administrate what is called a “means test” to consider whether you are a candidate for chapter 7 bankruptcy.
Nathan Woo 