Many people struggle with their finances at some point throughout their life. When facing these situations, it can be stressful to handle and get under control. Sometimes, people are able to do this on their own. However, there are many cases in which a person may consider filing for bankruptcy to regain control of their finances. While it may seem daunting, filing for bankruptcy can be beneficial for an individual, as it allows them a fresh start regarding their financial state.
What is Bankruptcy?
Bankruptcy is a legal proceeding that allows a person a new financial start when they are unable to pay their bills. There are different types of bankruptcy, including Chapter 7, Chapter 13, and business bankruptcy. These cases are handled in federal court in which debtors can work to restructure their finances in order to pay back creditors what they owe them. Once the plan is determined, the Automatic Stay is enacted. This prohibits all creditors from seeking to collect debts from the debtor until their finances are sorted out.
What Assets Can I Keep?
The thought of bankruptcy often frightens people because it is sometimes associated with liquidation. This means that debtors can have their properties sold so that the money is given to creditors. However, it is important to know that some assets are “exempt” in these situations. This means that these assets cannot be claimed by creditors and debtors can keep them.
When dealing with Chapter 7 cases, there are different exemptions under Federal and State law. As of 2018, the state of New York has the following exemptions for bankruptcy cases:
- $82,755 in equity in the debtor’s home
- $4,425 in equity in the debtor’s home
- Most clothing, furniture, and household goods (TV and computer)
- $3,330 in items needed for the debtor’s job (tools, books, etc.)
- $1,100 in any property or cash if they do not have an exemption on their home
- Certain benefits such as child support, Social Security, Social Security Disability, SSI, unemployment insurance benefits, veteran’s benefits, public assistance, retirement funds, pensions, etc.
If a married couple files for bankruptcy together, the amounts of these exemptions are doubled. In determining what property is exempt, it is important to understand that the current value of the debtor’s property may not be what they originally paid for it. This can be the case for furniture, cars, and homes. If the debtor has a mortgage or loan on these properties, they may be required to make payments to creditors in order to keep them. If payments are not made, the creditor may be able to sell the properties.
Contact our Firm
Zimmet Law Group, P.C. is an experienced team of attorneys guiding clients through matters of estate planning and administration, divorce and family law, real estate, commercial litigation, business law, bankruptcy, and landlord-tenant law. If you require the services of an effective New York City attorney, contact our firm today to schedule a consultation.