What Type Of Bankruptcy Do I Qualify For?

When a client comes to Roemerman Law, we evaluate their situation and advise them as to which type of bankruptcy best protects their interests and assets.

The most common kinds of bankruptcy in New York State are Chapter 7 bankruptcy and Chapter 13 bankruptcy.

Chapter 7 Bankruptcy

Chapter 7 wipes out the debt, which may in rare cases involve the sale of some assets. Certain assets, however, may be exempt, such as some real estate assets, tools of trade, etc. The Bankruptcy Code and an experienced lawyer can help you limit the assets that can be sold, or liquidated, to distribute to your creditors.

Chapter 7 often works well for people with very little income. These people find themselves with almost no income, high debt, and very few assets. Instead of sinking further into debt, Chapter 7 bankruptcy can help them restart their lives.

Chapter 13 Bankruptcy

Chapter 13 is a legal framework for individuals to rearrange their finances if they have fallen behind with regards to specific payments. The debt is reorganized, not discharged, although some unsecured debts may be wiped out. Chapter 13 helps people with mortgage arrears, car payments left unpaid, and other types of debt that need to be “caught up.” Under Chapter 13, most people don’t have to sell assets like their properties or belongings.

Chapter 13 is usually chosen by people who have certain assets, like a house and don’t want to lose them. Chapter 13 requires people to have a steady income. This should be high enough to cover the monthly payments of the arrears and the current mortgage payments and living expenses.

Which Kind of Bankruptcy Is Right for You?

When determining which kind of bankruptcy is right for you, we examine a series of factors, including the following:

Who can file? While both individuals and business entities may file for Chapter 7, Chapter 13 is only available to individuals. Chapter 11 bankruptcy is also available to both individuals and businesses, but individual Chapter 11 filings are rare.
Debt level: Qualifying for Chapter 13 bankruptcy depends on how high your debt is. Individuals filing for Chapter 13 must have no more than $419,275 of unsecured debt or $1,257,850 of secured debt (as of 2021).
Means test: Qualifying for Chapter 7 bankruptcy requires you to have low enough disposable income as determined by the means test.
How long does it take to receive a discharge? With Chapter 13, you only receive a discharge upon completion of all plan payments. This usually takes three to five years. With Chapter 7, you may typically receive a discharge after four to six months.
What happens to your property? With Chapter 13, debtors keep all property they choose to keep. However, they must pay unsecured creditors an amount equal to the value of non-exempt assets. With Chapter 7 bankruptcy, the trustee may, in rare cases, sell their non-exempt property to pay creditors.
Lien stripping: Chapter 13 allows the removal of unsecured junior liens from your property through lien stripping, as long as certain requirements are satisfied. Chapter 7 bankruptcy does not.
Loan cramdown: Chapter 13 allows the reduction of the principal loan balance on secured debts through what is referred to as a loan “cramdown,” meaning you “cram it down your creditor’s throat,” as long as certain requirements are satisfied. The term may not be nice, but the ability to utilize it in Chapter 13, at least for our clients, is definitely nice. Chapter 7 does not allow debtors to use a cramdown, since they are not making payments on the debt.
Creditworthiness: Your credit report will state for 10 years that you completed a Chapter 7 bankruptcy. The respective amount of time for Chapter 13 is 7 years. That said, this is merely how long the report shows that you filed for bankruptcy. Many people obtain credit immediately after a bankruptcy or even while the bankruptcy proceeding is still in court. The idea that bankruptcy “ruins your credit” forever or even for the short-term, is just false. Some people’s scores even improve after the bankruptcy discharge, largely due to ridding themselves of large amounts of debt on their credit cards or in collections.
Benefits: Chapter 13 allows debtors to keep their property and catch up on missed mortgage, car, and non-dischargeable priority debt payments, such as taxes. Chapter 7 bankruptcy allows debtors to quickly discharge most debts and get a fresh start.
Drawbacks: Chapter 7 does not provide a way to catch up on missed payments to avoid foreclosure lawsuits or repossession. Also, the trustee can sell non-exempt property. With Chapter 13, you must make monthly payments to the trustee for three to five years and may have to pay back a portion of general unsecured debts, meaning the debtor filing a Chapter 13 will always pay back at least as much as they would have if they filed a Chapter 7, making Chapter 13 more expensive.

What Happens When You Declare Bankruptcy In NY?

Regardless of the Chapter under which individuals file for bankruptcy, they are given one of the strongest protections they can get: the automatic stay.

The automatic stay stops debt collectors from calling or harassing filers. It also stops foreclosure and eviction proceedings from moving forward, thus providing individuals with a huge sense of relief. Crucially, the automatic stay is initiated as soon as the filer submits their bankruptcy petition to the court. Click here for more information.

Can I Qualify For A Mortgage After Bankruptcy?

Once you have been discharged from bankruptcy, there is no waiting-time requirement before applying for a mortgage—with the exception of a mortgage loan backed by the US Department of Agriculture (“USDA”), used in rural areas where a waiting period of 3 years must be observed.

What type of mortgage you may qualify for, and when, depends on a number of factors, including:

How long ago was your bankruptcy discharged?
What is your current credit rating?
How large is your down payment?
What is your TDS (Total Debt to Service) ratio? This is the ratio between the amount of debt you are servicing and your total income. For example, using $3,000 of your $10,000 of available credit would be a 30% ratio, as would $300/$1,000 or $30,000/$100,000. This is used to determine how likely you are to “put it on the card,” so to speak.
What is your LTV (Loan To Value) ratio? This is the ratio between the amount you are borrowing compared to the value of the property. If your ratio is greater than 80% (say $450,000 borrowed on a $500,000 property = 95%), you will also be required to take out private mortgage insurance, or “PMI.”

Based on these factors, you may qualify for a traditional or prime-insured mortgage, a subprime mortgage, or a private mortgage. The first offers you the best terms while the latter the worst.

Can I Qualify For An Auto Loan After Bankruptcy?

Certain kinds of loans require a waiting period of 4 years after you have been discharged from bankruptcy. However, there is no legal waiting-time requirement to apply for most loans. This includes personal loans and car loans.

Regardless of legal requirements, lenders will still ask for your financial information and credit reports. They will learn about your credit history and bankruptcy, as well as your current debts and assets and whether you are employed. Therefore, to maximize your chances of a successful car loan application, you may want to spend some time repairing your credit.

However, you may qualify for a loan from a private lender right after your discharge from bankruptcy, and with little or no re-established credit. Some lenders consider a person who has previously been bankrupt as a good candidate for a loan for a number of reasons:

The person applying may be in a better position to repay the loan as they have a low debt load post-bankruptcy.
People who have gone through bankruptcy are often more financially responsible when repaying their debts.
The lender can charge higher interest on the loan.
The person applying for credit is not eligible to wipe out the obligation in bankruptcy for several years, due to their recent bankruptcy filing, making them less risky than someone who is still eligible to file for bankruptcy.

Do You Have To Go To Court To File Bankruptcy?

A bankruptcy filing in New York City starts with the filing of a bankruptcy in either the Southern District or Eastern District of New York federal bankruptcy courts, depending on the borough in which the business is located. The bankruptcy forms list all of the filer’s debts, assets, and financial information. Depending on the Chapter they are filing under and other considerations, filers may also have to attend a court hearing.

Having an experienced bankruptcy attorney help you throughout the filing process will drastically increase your chances of a successful filing. Click here to learn about the costs to hire a bankruptcy attorney.

Our legal team here at Roemerman Law will help you make the most of the bankruptcy tools available to you. Contact us Today for a free consultation.

Experienced New York Bankruptcy Attorneys

When life happens and you’re looking for a top bankruptcy attorney in New York, Roemerman Law is here to help you recover from financial misfortunes. We can protect your home from foreclosure and stand up for you in court during a civil lawsuit brought against you by your lender.

If things do not go as planned, you have the security that Roemerman Law will provide sound legal advice to straighten out your financial position. We have the tools, knowledge, and expertise to challenge banks and other lenders in court.

Likewise, if you are facing foreclosure or if bills, credit card debt, and other payments are stressing your finances, we are here to reassess your options, advise you on loan modifications, and find the solution that best fits your financial standing and income.

Whether it’s a Chapter 7, Chapter 11, or Chapter 13 bankruptcy filing, we will be your bankruptcy lawyer, guiding you throughout the process and giving you the best legal advice for your interests.

Do I Need a Personal Bankruptcy Attorney?

As bankruptcy lawyers and attorneys, we have often stood in court, looking around us and seeing homeowners losing their homes or their other property because of poor, or no, legal representation. We have felt for them. Homeowners are real people who deserve real solutions for their problems.

While banks and financial institutions have big legal teams fighting for their interests, homeowners and financially stressed individuals often try to solve their problems on their own. However, they don’t know the bankruptcy filing system, their options, and the consequences of each decision.

That’s why people need a bankruptcy lawyer who will explain all their available choices. For example, most of our clients are surprised to learn that foreclosure is a measure of last resort and is definitely not the only solution available.

We will discuss our clients’ financial situation and sources of income and come up with a detailed plan to save their homes or decrease their personal or credit card and medical debt.

With a bankruptcy law firm like Roemerman Law by your side, you know your interests are well protected. You can stand up to your lender and find a financial result that protects you and your family.

NYC Bankruptcy and David Roemerman

We have the expertise, tools, and legal experience to fight on your behalf.

David Roemerman used to be a Wall Street attorney. He founded Roemerman Law to represent small businesses but then discovered how underrepresented homeowners are in their fight against financial institutions during foreclosure procedures. David Roemerman is part of these people: they are real to him, with real-life problems. These financially stressed people deserve a fresh start rather than a push down.

By representing these people, Roemerman Law is leveling the field to help homeowners defend their rights and protect their lives.

As a law firm, we have often asked ourselves what our clients need. We have discovered that, aside from proper and sound legal advice, they need peace of mind. They need to know that their case is in good hands and they don’t have to stress over every phone call or mail coming through the post.

Our clients also want to understand what is going on with their case and what solution will best protect their assets and income. That’s why we always explain the whole process and their options in layman’s terms.

We don’t want to impress our clients; we want to help them feel secure. Our clients don’t know the process for filing for bankruptcy in New York City. They want to know what is happening, how to declare bankruptcy in NY, what the bankruptcy process entails, and what their options are. We don’t simply explain how to declare bankruptcy in NY; we give back our clients their dignity and self-respect. This is the most precious and valuable gift any law firm can offer.

Do I Qualify for Bankruptcy?

Did you know that Abraham Lincoln, Ulysses S. Grant, Walt Disney, and Mike Tyson have all utilized bankruptcy to help them right their financial ships?

Bankruptcy is nothing to feel ashamed of. Unexpected things happen. Life happens. When we take out a mortgage, we don’t anticipate a long stretch of unemployment, a costly divorce, a death in the family, or a sickness that increases medical bills. These unexpected setbacks can leave you underwater and financially off balance for decades and cause you to miss mortgage, bill, and credit card payments.

People deserve a fresh start. We believe they should be given the opportunity to rearrange their finances and restart their lives. No one wants people living in their cars or selling off their belongings. Our society is better and stronger when people feel secure and can take care of themselves.

Roemerman Law makes sure homeowners and people are given the right to a fresh start. If your interests are not properly represented in a judicial hearing, how can you restart your life?

If you have lost your home or your creditworthiness has been damaged, how can you find a job and care for your loved ones?

By getting proper and reliable legal advice, you can take the necessary steps to rebuild your life. If you are lost in a sea of paperwork and forms you don’t understand, how can you sign them and navigate the complex bankruptcy court? Don’t give away parts of your life without a fight!

How Much Does It Cost to File for Bankruptcy?

The American legal system has developed a range of tools to help people overcome unexpected calamities.

This has resulted in several kinds of bankruptcy, each with its own benefits and challenges. For example, most people are familiar with foreclosure. However, this is a measure of last resort, as you could file for Chapter 7 or Chapter 13 bankruptcy instead.

There are many ways to recoup your financial health. You don’t need to lose your home and belongings and you certainly don’t need to lose your dignity and self-respect. With Roemerman Law, you will have the proper legal advice and all options presented to you to choose the one that best suits your needs.

Before you can decide which kind of bankruptcy is right for you, you should understand what your options are.

Foreclosure

When you buy your home from a financial institution, you promise to pay your lender a certain sum each month until you repay them the money they lent you to buy your home, with interest. In exchange, you give them a mortgage, the right to seize and sell your house, or “foreclose,” if you fail to fully repay the loan.

If you miss your mortgage payments, the bank will start the foreclosure process. During foreclosure, you will be asked to pay your missed payments. Otherwise, your home will eventually be sold at auction, usually at a below-market price, leaving you with a deficiency judgment, meaning you owe the difference between the amount still owed on the loan and the below-market sale price.

In the state of New York, where we practice, the foreclosure process can only be done through the courts: the process is supervised by a court that issues a final judgment authorizing the sale of your home and approving any deficiency, an amount you will still owe even after losing the home. The court can also approve the foreclosure and set the day for the auction of your home.

Roemerman Law knows how the legal system works and how to protect your interests. We know that banks and financial lenders don’t like to foreclose on homes because it’s costly to them and time-consuming. They want homeowners to keep their homes and pay their mortgages.

With your bankruptcy lawyer by your side, you can establish what your other options are, besides foreclosure. These can be to modify the terms of the loan, for example by extending it. We can go to court and have the case dismissed on legal grounds. Or we can slow down the foreclosure process to give you time to re-evaluate your options and find suitable alternatives.

The only thing we ask of you is not to ignore any paperwork, letter, or email sent to you from your mortgage lender. The more time we have to devise our legal strategy, the better your chances of finding a solution that does not lead to foreclosure or the loss of your home.

Chapter 7 bankruptcy is used by individuals and companies to “wipe the slate clean” and start fresh. Any assets that are not “exempt” under the Bankruptcy Code are seized and sold, or “liquidated.” The proceeds are then distributed to the creditors. At this point, an individual usually has most of their debts discharged and starts fresh, while a company is unwound and closed.

A company filing for Chapter 7 often has assets liquidated. However, this is the exception rather than the rule, in personal Chapter 7 bankruptcies, meaning that most individual debtors keep all of their property.

Chapter 13 gives you the option to re-organize your finances by restructuring your debt. If you have fallen behind on some payments, you can ask to pay the arrears in installments in the next 3 to 5 years. The court will take into consideration your disposable income, creditworthiness, and other issues to establish a realistic repayment plan.

With Chapter 13, you get to keep your belongings and home as long as you make your monthly payments.

If you have fallen behind on your mortgage payments, you can file for Chapter 13 before your home is foreclosed. If your disposable income can safely cover your current monthly mortgage payments as well as your arrears, filing for Chapter 13 can save your home.

The Benefits of Bankruptcy

Although going bankrupt is not pleasant, choosing this option could have several benefits for you.

For example, losing your home could make financial sense if the value of your home is lower than what you owe your bank. By going bankrupt, you don’t have to pay more for something that is worth less.

A bankruptcy can also be an opportunity for a new beginning. As bills and unpaid expenses pile up, Chapter 7 or Chapter 13 can help you re-organize your finances and make a fresh start.

Carrying a heavy financial burden for years can be debilitating and drag down your family and business. You could lose your car, your home, and your sanity by trying to make payments that simply cannot be made with your disposable income.

In most cases, Chapter 7 bankruptcy can help you protect your home. You may have to sell other assets and belongings, but your home is the last to be touched. Most courts will exempt your family home and your bankruptcy lawyer will guide you through the proceedings to make sure your most precious real estate asset is safe.

With Chapter 13, you can protect both your belongings and your property: basically, you save all your personal assets.
Filing for bankruptcy is sometimes the only way to ensure a new beginning. Your creditworthiness takes a temporary hit but, in the long term, bankruptcy can be the only rational—and responsible—thing to do.

With the help of an experienced bankruptcy attorney, you will be able to navigate the legal framework and get as much as possible from what the legal system provides for you.

Instead of giving in to your bank or your financial institution, have someone who will stand up for you and make sure your interests are protected.

Contact Attorney Dave Roemerman today to help you protect your interests.

Do I Qualify for Bankruptcy in New York State?