You may be wondering whether or not you have a need to file for bankruptcy. Bills may be piling up on you, and you may not understand when filing for bankruptcy protection in New York is justified.
Believe it or not, becoming bankrupt is a black and white experience much more than it is a gray one. As a general rule of thumb, you are completely financially bankrupt if your current sustainable income plus any cash reserves will not pay all of your living expenses, pay interest on outstanding loans, and reduce some of your principal on those loans while paying on them for five years. If you live in the state of New York, the formula should not include any of your retirement moneys as cash reserves. Paying off debts for five years is chosen because five years is the maximum legal number of years a United States Bankruptcy Court allows an individual to work their way out of bankruptcy protection.
Coming down to justifying whether or not to file for bankruptcy protection basically involves making simple choices to eliminate unfavorable circumstances for more favorable ones. Whether you live in the state of New York or anywhere else, you basically have three choices you can make about filing.
First of all, you can select to do nothing, not file, and get further into debt. The results of that decision will likely cause your creditors to continue to pursue you possibly invoking debt collection procedures, law suits, garnishment, attachments, evictions, foreclosures, and the like. Making this choice may further endanger what assets are remaining in your estate. If you have no assets for creditors to take and your income is protected by law, then most likely, you are collection proof and may not need to file for bankruptcy protection at all. Eventually, the statute of limitations will run its course and collection activities will cease.
Secondly, you can attempt to negotiate with your creditors, use debt management companies, or consolidate your loans. If successful, you will not have to file for bankruptcy protection. If not successful, your problems with debt collection will most likely intensify, and you may be worse off.
Finally, you can file for bankruptcy protection invoking the automatic stay which is common to all bankruptcy proceedings and immediately prevents creditors from bringing certain lawsuits, foreclosures, utility shut-offs, evictions, repossessions, garnishments, attachments, and debt collection harassment. This decision, if the bankruptcy is brought to a culmination by discharge, will effectively end debt collection activities and may provide you with a fresh new start.
Some debtors have a hard time justifying the filing for bankruptcy protection because they fear having the bankruptcy on their credit report for up to 10 years. This fear is really unfounded when you consider the fact most everyone who comes to the place of facing bankruptcy has already had their credit ruined. In addition, anyone who files for bankruptcy protection can immediately begin to rebuild their credit. They do not have to wait until the 10 years are up to have a good credit rating, despite the bankruptcy remaining on their record.
Bankruptcy laws are primarily federal laws designed to protect both creditor and debtor and to allow the honest person or business to work their way out of a bad financial situation, or in some cases, to completely start fresh. State bankruptcy laws supplement the federal bankruptcy laws filling in missing details. Bankruptcy laws are provided for in the Constitution of the United States making it your Constitutional right to file. In no case should filing for bankruptcy protection be viewed as anything other than a tool used by our society to potentially help alleviate a bad financial situation between two parties.
If you are bankrupt, common sense indicates you will need a bankruptcy lawyer in order to help you properly understand how complex bankruptcy laws may apply in your particular situation. If you determine you are in need of relief from the stress associated with debt and you live in or around the metropolitan counties of Nassau or Suffolk, New York, contact us here today at . We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.
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