He could not stand the pressure of the monthly note payments so he visited us for advice. We determined that he could not file chapter 7 bankruptcy because his house was worth too much. It appraised at $485,000 and he had paid down his mortgage to $63,000. That left $422,000 in equity. His wife owned half the house, so his share was worth $211,000, but he was entitled to a homestead exemption of only $165,000. That left $46,000 of equity that could not be protected. If we filed a chapter 7 case, the bankruptcy trustee would ask him to pay a lump-sum of $46,000, and if he could not pay it, the Trustee would sell the house.
Taxi medallion owners face overwhelming challenges these days. After they make their loan payments and operating expenses, they have nothing left to support their families. While Chapter 7 bankruptcy (surrender your medallion and wipe out your debts) works if you have no other assets, there are times when filing Chapter 7 creates too much risk.
Due to the construction slump, his union furloughed him for a number of months after each job. What types of people seek bankruptcy help? His wife was lucky enough to be able to take pension and annuity loans to fill the gap. But after many years, her four monthly retirement loan repayments took so much of their pay that there was not enough money left to live.
How much will you leave to your children?
No two people have the same financial situations, which also means no two people handle their debts the same way either. It's a fact not lost on people in New York where the sudden loss of a job or serious illness or injury could just as easily create a challenging situation here as it could anywhere else in the country.
You may be eligible for either Chapter 7 bankruptcy or Chapter 13 bankruptcy. Therefore, it becomes simply a matter of which type you want to file for. While there are many things to consider, one is that you can, in some cases, save assets that you own when you decide to use Chapter 13. If you use Chapter 7 in the same situation, you may lose those assets.
If you're considering Chapter 13 bankruptcy in New York, the first thing you need to know is whether or not you're even eligible. Remember, this is a reorganization plan, which does not eliminate all of your debt. Instead, a payment plan is set up and the payment structure must be followed.
Chapter 13 bankruptcy is for people with large debt or for companies that need to re-arrange their finances. You have to pay the debt back but you can pay it back, or part of it back, in monthly installments for three to five years. Most of the debt will be pooled together and you make your payment to an individual assigned to your case. This person is your trustee. Your trustee makes sure that your creditors are paid every month.
Perception and truth can be very different. You, like other New York consumers, may feel bankruptcy is a reflection of poor money management. You wouldn't be wrong in some cases, but the bulk of bankruptcies are caused by something many consumers cannot control -- extraordinary medical expenses.