If you choose to file for Chapter 7 bankruptcy in New York, the biggest advantage you're probably interested in is also the most basic one: eliminating an overwhelming amount of debt. While it's true that Chapter 7 can help to do this, you also want to know about some of the smaller advantages of this specific type of bankruptcy. Below are a few examples.
1. The process is relatively fast. In many cases, you can file for Chapter 7 and have the whole thing resolved in about three to six months. This gets you back on your feet with a clean slate.
2. You can use exemptions to protect a lot of the property that you own. You do have to sell off some assets—this is the liquidation process—but don't assume that you're going to be out on the street with nothing to your name. Bankruptcy is about eliminating extra assets to pay off debt, not taking away the fundamental things that you need.
3. You can still get credit cards and similar lines of credit. It can be harder, and the interest rates may be higher, but it's not as if you're barred from using credit forever. In fact, many lenders offer special cards specifically designed for people in your position.
4. You can focus on the debt that really matters. For example, you will still have to pay child support or alimony after a bankruptcy filing, if you were paying before. By choosing bankruptcy, you get rid of other debt so that you have the money to make these important payments.
Before you file, make sure you know all of the pros and cons.
Source: FindLaw, "Pros and Cons of Declaring Bankruptcy under Chapter 7," accessed Jan. 15, 2016