Karra L. Kingston Esq.
160H Dinsmore Street
Staten Island, NY 10314
(973)-979-9078
What Is Bankruptcy?
Bankruptcy is a legal process used to help people who fall into unfortunate circumstances get out of debt. Individuals and businesses can file bankruptcy to help them get back on their feet. For consumers and small businesses, bankruptcy can help them start over. The first type of bankruptcy protection available is Chapter 7 bankruptcy. A New York Chapter 7 bankruptcy, eliminates consumer's debt. To qualify for a Chapter 7 bankruptcy, individuals must pass a Means Test. The Means Test was created by Congress in 2008 to stop individuals with high wages from filing bankruptcy. Congress didn't think it was fair to allow these individuals to not pay their credit cards back. To qualify under the means test an individual's household income must be less than New York's median income for a family of similar size. If the individual's income is higher they must go to the second part of the test which uses their income and expenses to determine if they qualify.
Chapter 13 is another type of bankruptcy individuals can use to get out of debt. A chapter 13 bankruptcy, is for individuals with assets and high wages. When consumers file a chapter 13 bankruptcy they can pay their debts back over a three to five-year plan. Allowing the interest and late fees to stop. In some cases, consumers may not have to pay back the full amount of debt they owe to their creditors.
Lastly, Chapter 11 is the third type of bankruptcy that can be useful for failing businesses. Chapter 11 bankruptcy allows businesses to continue running their daily affairs while implementing a plan to restructure their business.
Theoretically, filing for bankruptcy can help the economy in some ways. Bankruptcy can be a vital tool in helping individuals while also allowing creditors to get paid. Also, after the bankruptcy process is over individuals can begin taking out new lines of credit almost immediately.
There are a few problems that individuals may run into amidst the coronavirus and how the bankruptcy system is set up now. Student loans are not dischargeable in bankruptcy. While consumers have already been struggling to make their monthly student loan payments, the effects of student loans will continue to be an even bigger problem when this is over. Further, many high wage earners who have a property with equity and don’t qualify for a chapter 13 repayment plan may find themselves not being able to fund a Chapter 13 plan. Congress may have to step in and change some of the bankruptcy procedures to help struggling consumers.
What Can Bankruptcy Do to Help?
Bankruptcy can stop pending foreclosures, wage garnishments, repossessions, and bank levies. It
can also stop harassing debt collectors from calling and trying to collect past due debt. Struggling with finances not only causes mental stress but it can lead to physical stress as well. Filing for bankruptcy can give people peace of mind.
Karra L. Kingston Esq. is a Bankruptcy Lawyer in New York and New Jersey. Karra L. Kingston Esq. helps people get out of debt and start over. Https://bankruptcylawynynj.com
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