FRIENDLY, AFFORDABLE AND KNOWLEDGEABLE Chapter 7 Chapter 13 Loan Modifications

What is Bankruptcy?

Bankruptcy affords honest debtors a fresh start by reducing or removing debts. Through the mechanisms of stays and discharges, a bankruptcy proceeding alleviates the pressures of calls, letters and suits from creditors and mounting balances that you cannot repay.

Federal law determines the type of bankruptcy you can file, your obligations as a debtor and the extent of the relief you can obtain under bankruptcy. The laws of New York also impact limited aspects of your bankruptcy case. A Long Island bankruptcy attorney can help you with the questions you have and which may arise in a bankruptcy case.
Bankruptcy Advice Are you drowning in debt? Are creditors harassing you day and night? Bankruptcy is a viable option to start over with a clean slate or repay your obligations under a reorganization plan. It may seem like credit death to ask the court for help, but it's one of the best choices if you need help stopping wage garnishments, foreclosures, and repossessions. Here are some of the most asked questions we receive, but if you have any further inquiries that you cannot find here, please don't hesitate to call us directly for assistance. We understand how significant this decision is to you and your family.

How Bad Is Declaring Bankruptcy?

Declaring bankruptcy is a decision that you shouldn't take lightly. This public record will remain in your credit report for up to ten years. However, most folks that need this type of court assistance already have credit problems that have impacted their score, so it’s one of the best options to get debt relief. There comes tremendous stress with being in debt and not having enough money to make ends meet. Many can’t get a reorganization loan from a bank, so it’s one of the few options left. Sadly, you can run yourself right back into the same situation if you’re not careful, so you must attend credit counseling and incorporate better financial practices in the future. However, you shouldn’t beat yourself up over filing bankruptcy as Debt.org reported that 774,940 people filed in 2019 alone.

When Is Declaring Bankruptcy the Best Option?

If you don't have enough money to pay your bills each month, then you should consider bankruptcy. You should be behind on your debts by a couple of months to show that there is a genuine need. Many people use credit cards to live on and have huge balances. If you feel that you cannot sustain your life anymore without the court's intervention, then it's a good choice. However, it should be the last option and not the first choice for debt relief.

Is There a Limit or Minimum Amount of Debt You Need to Declare Bankruptcy?

The US Bankruptcy court doesn't have any minimum debt for filing a chapter 7 or 13 case. However, when it comes to chapter 13, the maximum amount that you can have is $1,184,200 in secured debt or $394,725 in unsecured.

What Are Some Things That Most Won’t Tell You About Declaring Bankruptcy?

There are many things that people don’t know about asking the court for help in erasing or reorganizing their debts. Here are just a few of the most overlooked facts:

•It Takes Two Years or More to Rebuild
One person that you should familiarize yourself with if you are filing for bankruptcy on Long Island is the trustee. Their official roles are to review your income, debts, assets and distribute any property that you might own to the creditor. They are a neutral third party that is not there for you or the creditor; instead, they want to act as a mediator in your case.

Understanding the Role of The Bankruptcy Trustee

The official in this role has control over your property that is held in trust. They have a fiduciary responsibility to act impartially towards both person and business. They act as the overseer for the court, so this individual must be well versed in legal issues with bankruptcy, accounting, and management. Think of them as the “watchdog” over your case.

For those who are contemplating filing bankruptcy, some of the terms can be confusing. The following information may help clarify some of the terms.

What Does a Discharged Bankruptcy Mean?

An order of discharge in bankruptcy means that the debtor is free of liability for a debt that was incurred. The legal obligation for repayment has been nullified by a permanent court order, and the creditor can no longer pursue the debtor for satisfaction of the debt. This also means that the debt cannot be sold to a collection agency since, in essence, the obligation no longer exists.

Which Debts May Be Discharged?

Not all types of debts are dischargeable in all types of bankruptcies. Chapter 7 and Chapter 13 bankruptcy filings are generally used for personal or sole proprietor debts. Although secured debts may be discharged in a bankruptcy filing, the creditor may have the option of reclaiming the security. Unsecured debts that can be discharged in both Chapter 7 and Chapter 13 include:
  • Credit card debts
  • Debts from a vehicular accident
  • Judgments from lawsuits
  • Leases and contractual obligations
  • Medical bills
  • Personal loans and promissory notes
  • Some types of miscellaneous debt
  • Some types of tax debt
Debts that aren't dischargeable in Chapter 7 but can be discharged in Chapter 13 only include:
  • HOA fees, condo and co-op fees
  • Court fees
  • Debts that weren't discharged in a prior bankruptcy
  • Loan debt that was used to pay a tax debt
  • Loans from a retirement plan
  • Marital debt from a divorce or property settlement agreement

What Types Of Debts Can Be Discharged?

Not all types of debt can be discharged in a bankruptcy filing, whether it's Chapter 7 or Chapter 13. Types of non-dischargeable debt include:
  • Alimony
  • Child support
  • Debts incurred as a result of driving under the influence
  • Debts for luxury items purchased within specific time frames prior to filing for bankruptcy
  • Debts from fraudulent activities
  • Monetary penalties and fines incurred as a result of breaking the law
  • Some types of tax debt

What Does a Bankruptcy Dismissal Mean?

If a bankruptcy case is dismissed, it has the same result as if the case were never filed. There is no discharge of indebtedness and the debtor remains responsible for the debt. Dismissal can occur due to filing errors or other types of errors. When a bankruptcy case is dismissed, the automatic stay is terminated and creditors can resume their efforts to collect their debt up to and including foreclosures, placing liens on real and personal property, and seizure of tangible assets.

What's The Difference Between A Voluntary And An Involuntary Dismissal?

Voluntary Bankruptcy Dismissal

When an individual files for Chapter 13, they can request a voluntary dismissal if they decide that filing bankruptcy was an error in judgment. This could be due to finding successful employment or learning that a particular debt isn't dischargeable or for another reason. The court can then order a dismissal of the case. Under Chapter 7, however, once the case is filed, only the judge can order a voluntary dismissal.

Involuntary Bankruptcy Dismissal

If an individual doesn't make the required payments on a bankruptcy or otherwise fails to meet the requirements of the court, then the court may file an involuntary dismissal. Although the decision to no longer make payments or otherwise meet the court-mandated requirements is voluntary, the dismissal is not considered voluntary. Sometimes, an involuntary dismissal can be reversed and the bankruptcy reinstated, but this must be done in an expedient manner, and reinstatement is ultimately up to the court's discretion.

Filing for Bankruptcy Again After a Dismissal

When re-filing to have a bankruptcy case reinstated, the individual must meet specific time limitations. It's imperative to learn the reason for the dismissal before proceeding with the request for reinstatement. Involuntary dismissals can occur due to simple clerical errors or missed deadlines or other issues. If the dismissal occurred due to information supplied by creditors, then it may be more challenging to have the case reinstated. Whether the case is voluntarily or involuntarily dismissed, the protection and automatic stays cease at the time of dismissal, and the creditors will be notified of the dismissal so that they can resume their collection efforts. If the dismissal was involuntary, then it may be possible to file another bankruptcy case, but there are time constraints and federal restrictions that must be met. As long as the requirements are met, it doesn't matter whether the original case was a Chapter 7 or a Chapter 11 bankruptcy. However, the second filing may appear on the credit report as a separate bankruptcy filing, which may result in a significant reduction of an individual's credit score.

Can Your Bankruptcy Discharge Be Denied?

Although bankruptcy cases can be denied, it seldom occurs. When it does, it's usually due to fraud on behalf of the debtor, and it's usually committed against one or more creditors. The most common reasons for having a bankruptcy denied include:
  • Defrauding a creditor: When personal property is transferred, sold, destroyed, or concealed within the year immediately preceding the bankruptcy filing, it may be evidence of an attempt to defraud. The decision to assign fraudulent intent is at the discretion of the judge.
  • Deficiency in assets: When there's no satisfactory explanation for a deficiency in assets, then a judge may decide that there's an intent to defraud.
  • Misrepresentation of facts: Also called lying, bankruptcy forms require the filer to state under penalty of perjury that the information is true and accurate to the best of their knowledge. If this is subsequently proven to be false, then the petitioner can be deemed to be attempting to perpetrate a fraud, and their bankruptcy case can be denied.
  • Misrepresenting or hiding financial information: Failure to disclose financial information or assets can be considered an attempt to defraud and result in the denial of the bankruptcy case.
  • Non-compliance with court orders: If a debtor doesn't complete the courses required by the court or doesn't obey other lawful court orders, they can be considered fraudulent debtors and their bankruptcy case denied.

Can Creditors Still Call After A Bankruptcy Has Been Discharged?

When a debtor files for bankruptcy, whether it's Chapter 7 or Chapter 11, an automatic stay of collection is put into place. When the case is discharged, then creditors have no legal right to continue their collection efforts. Those creditors who continue to call after the debtor has filed Chapter 7 or Chapter 11 bankruptcy or after the debt has been discharged are in violation of the law. The debtor may have legal recourse against them unless the court has granted the creditor the right to continue their collection activities. If a creditor continues to attempt collection efforts despite being informed of the bankruptcy, then they may be liable for legal action, especially if they threaten to place a lien or garnish wages. It's essential to keep detailed records of their activities, including names, dates, times, and types of contact, whether it's email, phone, text, or U.S. mail.
If you have already filed for chapter 7 relief or you are considering doing so, then you should be aware that you will be required to go to the bankruptcy court and attend a Section 341 Meeting of Creditors.

In every bankruptcy case, regardless of whether it is Chapter 7 or Chapter 13, there is always a 341 Meeting of Creditors. This meeting, often referred to as a 341 hearing, is not held in a courtroom. There will be no judge. It usually takes place in a meeting room, presided over by a trustee, appointed by the Office of the United States Trustee (a Government Agency which oversees all bankruptcies in the USA), approximately one month after a case is filed. Although it not held in a court room, 341 meetings are nonetheless legal proceedings, and anyone who is examined or questioned, will be under oath.
Are you facing judgement, repossessions, or a foreclosure on your home? Do you know that you need to file for bankruptcy protection, but you are apprehensive about the process and going to court? You don't have to let your payment history or credit utilization hold you back anymore. We are facing a unique time in history with the Covid-19 pandemic that’s occurring. Just as it has changed many things in your life, it’s also changed the court processes for the safety of the staff and those seeking debt relief. Following tips from the CDC, the court is protecting you while still servicing your needs. While the pandemic hasn’t stopped the court from processing bankruptcy requests, it has altered things dramatically. The first step is to see if you qualify for a Chapter 7 bankruptcy or if you will be required to file a Chapter 13. The deciding factor is whether you have any disposable income and a method to repay some of the debts you owe.

Credit Counseling and Debtor Education

When bankruptcy reform occurred in 2005, the rules change significantly. Credit counseling is something that was added to the requirement list. Before you can file for bankruptcy protection, the court wants to see that you have a certificate where you have completed credit counseling. Before you can get a discharge from your debts, you must complete debtor education. Due to Covid-19, you can take these classes over the phone or on the internet, and many companies are waiving fees to people who cannot afford these services.

The Means Test

During your consultation with our Long Island bankruptcy team, we will use the information you give to decide which chapter will be right for you. However, if we believe that you will file a Chapter 7, we will issue you this expenses and income evaluation. The Means Test is an examination given when a person wants to file for complete liquidation. To file for Chapter 7, you must show the court that you have no way to pay back your debts. This test will evaluate your income versus your outgoing and see if there is any disposable income. Due to the number of people out of work and the drastic hit to credit scores, many people are looking to the court for help. You can only file for a complete liquidation once every eight years, but it’s the perfect time to take care of this now that everything has been simplified.

Chapter 13 Repayment Plan

If you have told us that you have disposable income, or if the Means Test has shown that you can repay some debts, you must file for a Chapter 13. Additionally, if you have filed for bankruptcy in the previous eight years, the court will require you to file this method. During a Chapter 13, your disposable income will be used to pay back some of your debts. The amount of disposable income will dictate how much you will pay. Many just pay pennies on the dollars, but it’s all dependent on your situation. The benefit of using this chapter over others is that you can keep assets like cars and homes through reaffirmation of the debts. Though it’s also possible in Chapter 7, it’s easier when you have money and can prove to the court you can repay the debt. Additionally, the fees paid for our services can be worked into the plan so that you less out of pocket.

The Petition

The petition is quite lengthy, and it has several schedules that must be completed. This paperwork is essential to your case because if anything is left out, then you won’t get protection from the bankruptcy court for this debt. It’s vital that you take your time, gather your bills, pull your credit reports, and have a complete list of all your debtors. Any charge-off debts that are on your Experian, Equifax, or FTC reports must be reported. The trustee assigned to your case will go through your petition and check for any inaccuracies. If you leave anything off this petition or attempt to hide debts, it can be considered fraud. So, before your first meeting with us, make sure you have an accurate list of all your debts as well as income. Transparency before the court is of the utmost importance. If you cannot pay for the filing fee, we can ask the court to split the payment into four smaller installments. They usually approve these if they see that a person is struggling financially and unable to pay it. They are also more understanding of financial suffering during this Covid-19 crisis. So, a lack of money should never be the reason you don’t file for the court’s protection.

The 341 Meeting of Creditors

About 20-40 days after we file your petition, the court will schedule your Meeting of Creditors. Traditionally, you would go to the courthouse, and any lender that wanted to appear against you would come and file an objection to their debt being discharged. You would sit at a table and be sworn in by the trustee of the court. This process makes people very anxious even though we are standing beside you the whole time. Due to the Covid-19 pandemic, these meetings are now being conducted over the phone. You will be in a recorded session and answer the trustee’s questions. Your creditors can still file an objection, but nothing will be done in person. The good news for you is that you can take care of these matters in the comfort of your own home. You don’t have to go to court, deal with the nauseating nerve issues, and worry about finding parking. If you tend to be a bit shy and don’t like confrontation or appearing in front of others, then this is the time to take advantage of the court’s assistance during these unprecedented times. You don’t even need to worry about getting dressed in court attire.

Receiving a Discharge

If no one files an objection to the liquidation of their debt, then you will be granted a discharge from the court. They will typically issue a discharge 4-6 months after you file for a Chapter 7. If you successfully complete your Chapter 13 payment plan, then they will give a discharge within 60 days after your last payment. Keep in mind the repayment plan can last anywhere from 3-5 years, so it will take some time to get discharged using this method.

The Benefits of Bankruptcy

One thing that many people don't consider is that they can repair their credit through this process. We can give you many tips and develop a strategy to help you fix your score. Your payment history and credit utilization won't be erased, but the bankruptcy will go on your report drawing a defining line of debt forgiveness. You can start rebuilding your credit right away. Those inquiries and negative marks on Experian, Equifax, and FTC will not have such an impact moving forward. Yes, your charge-off debts and foreclosures also will not have the effect on your score as this strategy will help you fix and repair your credit. Though a bankruptcy will stay on your record for 7-10 years, it’s not going to stop you from rebuilding. While Covid-19 has brought unprecedented issues, it has helped those who want to file for bankruptcy.

The Law Offices of Adam C. Gomerman can help navigate you through this process. While you’re dealing with all these issues, the last thing you want to handle is the financial debts on top of everything else. Thankfully, this horrific time in history has led some assistance in seeking debt relief. Call today at 631-549-1111 to schedule your appointment for a consultation to get rid of your debts. 
Thinking about asking for a loan modification during the Covid-19 pandemic? This post may help guide you. To speak with our team directly, please do not hesitate to contact our office immediately with questions and concerns.

Since the first cases of the coronavirus in the United States in January 2020, healthcare providers, scientists and government leaders have grappled with treatment, finding vaccines or other defenses and limiting the spread. In the early months, state and local government officials in particular imposed state-at-home mandates and ordered the closure of many businesses. Since the late spring and into the summer, phased and limited openings have been allowed. Even with recent loosening of restrictions, COVID-19 has left many businesses and employees without income. The economic downturn has threatened many homeowners with the loss of their homes in foreclosure. In turn, the federal government and banks have adopted measures to help you keep your home in these challenging economic times.

A Temporary Halt to Foreclosures During Covid-19

If you have a loan backed by Fannie Mae, Freddie Mac, the Veterans’ Administration, the U.S. Department of Agriculture or the Federal Housing Administration, you have protection against foreclosure through at least August 31, 2020. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES) was enacted as an effort to mitigate against potential home loss. The law prohibits the initiation, continuation or finalization of foreclosure proceedings between March 18, 2020, and August 31, 2020, on loans backed by the federal government or by Government-Sponsored Enterprises (GSEs)--Fannie Mae, Freddie Mac or Ginnie Mae. You can find out whether your loan is backed by a GSE or the federal government and, thus, qualifies for CARES Act protection through a number of sources: *Contact your servicer. Your monthly statement should contain the name, address and telephone number of the servicer. You may also search through the site for Mortgage Electronic Registration Systems, which allows you to find the servicer based on your property address. Also, upon your written request, the mortgage servicer must furnish you the name, address and telephone number of the owner of your mortgage. *Lookup Tools. Both Freddie Mac and Fannie Mae have self-service look up tools for you to know if either owns your mortgage. To use the tool, you will need your property address and the last four digits of your Social Security Number.

Forbearance During Covid-19

With a federally-backed or GSE-backed loan, you qualify for a forbearance on payments under the CARES Act if the COVID-19 pandemic causes you financial hardship. While the specifics depend on the particular mortgage, the forbearance typically comes as a suspension of or reduction in your payments. The law gives eligible homeowners a period of 180 days, with an option to request an additional 180 days if the financial hardship continues. These programs do not relieve you of the repayment obligations. At the end of the suspension or reduction period, you will still owe the unpaid amounts. With GSE or federally-backed loans, you will not be required to make a lump-sum payment at the end of the period to cure the unpaid amounts. Instead, the loan servicers for these loans may offer options, such as: *A repayment plan *Deferrals, with the unpaid sums due either upon sale or refinance of the home or at the end of the term Once such deferral takes the form of a junior lien, otherwise known as a “COVID-19 Standalone Partial Claim,” is available to those whose loans are backed by the U.S. Department of Housing and Urban Development (HUD) or the Federal Housing Administration (FHA) and who were no more than one month behind as of March 1, 2020. Many banks and other lenders also afford forbearance plans. The length of the period and repayment terms vary by institution.

Loan Modifications During Covid-19

You can save your home through a loan or mortgage modification if you face the threat or imminence of foreclosure. The grounds for which you may claim a hardship are broader than allowed for protections offered under the CARES Act. Typically, these include: *Divorce *Illnesses or disability that result in the loss of income *Property losses not covered by insurance or other sources *Death of a family member who earned income *Hurricane, tornado outbreak, flood, earthquake or other event causing a natural or declared disaster In a modification, the lender does not grant a new loan as in a refinance. The original one still exists, but the lender agrees to change the terms. Changing the contractual agreement has as its ultimate goal lowering your monthly payment. Those engaged modifications or housing counseling often seek a payment such that the borrower’s monthly debt does not exceed 31 percent of gross income. In one approach, your bank or other lender may add the amount of delinquent payments to the unpaid balance and, in many cases, will generate a new repayment length. Your new monthly obligation will be calculated based on the new number of months and the recalculated balance. In effect, you borrow the amount of your delinquency and pay them over a period of time. Other changes may include: *Converting a variable or adjustable-rate to a fixed-rate. With this change, you seek to avoid higher monthly payments that result from increased rates. *Extending the term of the mortgage. The number of months you have to repay is increased, for example, from 30 years to 40 years. The lender then amortizes based upon the longer period of time. *Lowering the interest rate. Such changes can be temporary or permanent. *Reducing the principal balance. The lender decreases the amount of principal that you owe, so that you are paying back less. Such an agreement effectively is a partial forgiveness. You might have income taxes to pay on any reduction of principal.

Your Credit Report

The COVID-19 relief bill offers certain borrowers protection against negative credit report information arising from forbearances or modifications. By default, a lender may report payments not made under a forbearance agreement as delinquent. The CARES Act requires the lender or servicer to report your account as current if you were current on payments at the time you entered into a forbearance or modification arrangement. You get this protection even if Fannie Mae, Freddie Mac, Ginnie Mae, the Veterans’ Administration, HUD, or the U.S. Department of Agriculture does not back mortgage. If you were behind at the time the lender afforded you a forbearance or modification, the lender may continue to report your or account to the credit bureau as delinquent. Once you have cured the delinquency or default, the lender or servicer must tell the credit reporting agency that you are current. These protections apply to arrangements made between January 31, 2020, and 120 days after the end of the national coronavirus emergency.

Getting Your Credit Report

The information furnished to a credit bureau affects your score. Accurate credit reporting is crucial for a good score and your prospects of obtaining credit, insurance or even employment. For those reasons, you need to regularly review your credit report for errors that you can dispute and have removed from the report. In normal times, you get one free credit report per year from each of the major credit reporting agencies -- Equifax, Experian and Transunion. You can obtain the report through annualcreditreport.com. In response to the coronavirus pandemic, these credit reporting bureaus are providing you free weekly reports through April 2021. You may dispute errors on your report either by phone, mail or online. The Federal Trade Commission has a sample letter to guide your written dispute. If you contend that the servicer or lender has incorrectly reported you as behind rather than current, you likely need receipts or statements to show you were current at the time you sought relief. You may ask the credit reporting agency to include on your report a statement that you are presently unable to pay due to the coronavirus pandemic.

Finding the Best Option During the Pandemic

HUD approves agencies and people who offer housing counseling for homebuyers and those facing the possible loss of their home. As to foreclosure prevention, counselors assist you with getting information from the servicer or company on options for modification or forbearance. They explain those alternatives to you and help you determine what constitutes an affordable plan for you. To that end, if you seek housing counseling, you will need: *Your most recent payment *The regular monthly amount *The amount owed *Your recent paystubs or other information about your monthly income You can also contact your bank or lender directly to learn your options if you experience a financial hardship.
The vast majority of Americans have had their lives turned upside down by the coronavirus pandemic. They have not been able to perform their daily activities and go on any sort of vacation. Many people have also lost their jobs or faced some other sort of economic hardship. These individuals have been unable to pay all kinds of bills. Perhaps the most important bill for the vast majority of Americans to pay is their mortgage. These people want to do whatever they can to avoid foreclosure and stay in their homes. They may have to take extraordinary steps over the next few months in order to do so.

Access Temporary Mortgage Relief

One of the fastest ways to avoid foreclosure during the current COVID-19 pandemic is to access temporary mortgage relief. Millions of Americans have been thrown out of work or had their hours greatly reduced. These men and women are on hard times and a large number of American companies know this. Many mortgage companies have introduced a wide variety of plans to help people pay off their mortgages and stay in their homes. A lender has several reasons to take these steps. They want to retain customers and aid their image through such a stressful period. These companies also want to keep within government regulations. A large number of areas banned foreclosures and evictions for a significant period of time. Holding the court hearings and auctions associated with these events would have violated social distancing guidelines in places such as Long Island and New York and been dangerous for a number of people. In addition, the government also made billions of dollars in loans available to companies that have faced economic hardship from the pandemic. Many of the losses that mortgage companies suffer helping out their clients can be covered by a loan from the federal government.

Avoid Foreclosure

Home owners should try as hard as they can to structure their payments and stretch their budgets to where they do not have to foreclose on their house. Foreclosure is a terrible process that no family wants to endure. They are physically removed from their house with all of their possessions. Individuals have to find somewhere to live with little to no warning. They have a black mark on their credit that they cannot take off for several years. A person would often rather avoid all of their other payments then fall behind on their house. Avoiding many payments involve a company sending in threatening letters and bill collections phone calls. Not paying an internet bill may lead to an individual not having internet and having to go to the local cafe in order to get online. Having a car repossessed forces an individual to potentially take public transit to work. But all of these negative consequences pale in comparison to what would happen if an individual did not have their home anymore. Most people who suffer through foreclosure have to live in expensive motels until they can find an apartment of some kind. Many of the people who are foreclosed upon simply end up homeless. This is one of the worst financial tragedies that a person can endure and it does not have to happen in many cases.

Home Loan Modification

Some home owners will be eligible for home loan modification in order to help with avoiding foreclosure. This modification involves a home owner changing the structure of their loan to avoid current payments. It is particularly beneficial for individuals who are currently out of work but hope to go back soon. They can take the money they have now, save up, and eventually use extra income to pay off their mortgage at a later date. There are two main strategies that these companies have used to aid with this process. One of these is deferment. Deferment involves allowing a person to avoid a few mortgage payments now and simply tacking those payments onto the end of the mortgage. The bank may take a short-term hit but does not lose money in the long term. Individuals also expect to have more money later on and do not have to suffer any problems with their credit in most instances. The other approach is forbearance. In forbearance, an individual misses several payments and then have to pay them all back in a lump sum in the near future. If an individual can, they should emphasize taking deferment over forbearance in all cases. Many individuals cannot pay the lump sum involved in forbearance. But if it is all that a mortgage company will offer, it is certainly better than risking foreclosure with missed payments.

Filing for Bankruptcy to Prevent Foreclosure

In some rare cases, an individual's best option to avoid foreclosure is to declare some form of bankruptcy. This status is when a court declares that a person does not have the capacity to pay off their debts as they are currently constituted. There are two main options for an individual after the bankruptcy process. In Chapter 13 bankruptcy, a person sets up some sort of payment or refinance plan for at least a portion of their debt over a period of three to five years. In Chapter 7 bankruptcy, they often do not pay off a large number of their debts. Those debts are wiped clean. Bankruptcy is a problematic process for many reasons. First, it harms a person's credit immensely. They will often have this black stain on their credit report for many years. The records of their bankruptcy will be in the public domain for anyone to access. Also, there is no absolute guarantee that they will be able to keep their home. Some forms of bankruptcy do not allow a person to keep their home if they do not have a certain amount of equity. A person is basically trusting their attorney and a judge to make the best decision that helps them retain their home and avoid foreclosure. This risk is massive and is not a level of risk that most individuals should take on with their home.

Avoid Foreclosure Scams

Any individual who is potentially in the foreclosure process must look out for scams that try to take advantage of them. These scams come in many forms and mostly revolve around a person's desire to become whole with their mortgage company. Some scams promise to get an individual out of their underwater mortgage and many other debts. In a common form of the scam, the debt settlement agency advises that a person stop paying off all of their debts for a period of several months. Then, the agency advises that a person comes back with an offer to settle for all of those debts that they did not pay. The theory behind this is that the company will want something rather than nothing and negotiate with an individual. But banks often want to keep the mindset of people paying debts on time rather than gain every single time they can from a potential borrower. Therefore, they will simply foreclosed on an individual if they go too long without making their payments. This approach often costs a person several thousand dollars and is not particularly helpful in the long run.

Hire an Experienced Attorney for Guidance

Many of the options listed to help with foreclosure involve complex plans and the legal process. This process is especially true of bankruptcy. There are a number of concrete steps to take with bankruptcy that a person has to make sure that they follow. A lawyer can help with all of these steps. He or she can help a person settle their debts or argue their case in front of the judge. An experienced Long Island attorney can help you avoid potential foreclosure scams. Our team can represent you in any financial dealings that they have and can help shine the way forward on getting out of what looks to be insurmountable debt.

Take Action Today

Anyone who is looking at foreclosure is in a precarious position financially. They are understandably scared and perhaps desperate. These individuals are prime targets for a wide variety of scams and cons. They have to remain careful and diligent. They also need to secure the help of an experienced real estate attorney. For more information on how to avoid foreclosure during these difficult times, contact the office of Adam C. Gomerman today and speak with our experience Long Island legal team.
The coronavirus epidemic has caused bankruptcies across the nation to skyrocket. Millions of Americans have been left marooned without a job in the wake of this devastating pandemic. A lot of people don't fear the virus quite as much as they fear the economic fallout that could result because of it. No one questions the potential for dangers that could happen because of it as we have also had to navigate the possibility of a food shortage from so many people being off work in crucial industries.

What to Do as a Business

Perhaps you have begun to consider filing for Chapter 11 or Chapter 13 Bankruptcy. You have a few things that you should first know to help you avoid this. During this time of crisis, you have a couple of different options that you might be able to fall back on. Some of the options that you have available to you include:
  • Pay the minimum on your bills for as long as possible.
  • Negotiate a settlement with your lenders.
  • Seek a crisis loan from a financial institution.
During the peak of this crisis, many financial institutions and other companies have begun to offer help to businesses at a more affordable price. This will help businesses to recover from what could be a long-haul problem that we have to face. Don't jump right into filing for bankruptcy until after you have looked at some of these possible solutions to the Covid-19 crisis.

Small Business Assistance

Some of the possible loans that you could take advantage of as a small business include: We believe that you should never take bankruptcy lightly, which is why you should first look at all the options that you have available to you to stay afloat. Especially if your business was doing good before the crisis, it wouldn't be wise to walk away from that now. You have federal programs available, but you can also take advantage of some of the local and state programs as well built to help small businesses get through this crisis.

Work with Your Creditors

In general, it doesn't make sense for you to file for bankruptcy right off the bat because a lot of lenders will be more willing to work with you during this time. For example, you could ask to have your monthly payments lowered during this time to help with paying for it. Especially if things were going well for your business before this crisis, you may find it more advantageous to try to wait out the storm. Do your best to stay afloat and keep paying your bills. You have lawmakers, regulators and banks that have all come together during this difficult time to help companies get through it. You might as well take advantage of these programs while you have it available to you. When Congress passed the $2 trillion relief package, this blocked lenders from opening the foreclosure proceedings on any loans that have been federally backed. That means that you don't have to go to foreclosure court just yet in most cases. Most people during this time are understanding that there are issues that exist, and they're willing to work with you because of those issues.

Ask for Assistance

During the Covid-19 crisis, many companies understand that everyone is having problems. Because of those problems, they're willing to work a special payment plan, suspend rent and mortgage payments and forgive late fees. However, to get this relief during the coronavirus, you will also have to ask for it. You should first learn about the options that you have available to you during Covid-19 because you may not even have to file for bankruptcy.

Protecting Your Credit

Especially during the time of the coronavirus, you don't want to have to worry about credit repair after. To get past the need for credit repair, you might first contact your lenders to see if they will work with you. It can get difficult, but we advise that you try to make the minimum on your payments because this show them that you're doing your best to stay on track with them. In addition, it won't harm your credit score as much as an actual late payment. If you happen to see any information online that doesn't check out, you can choose to dispute the information. You have to make this dispute with each bureau. That's another one of the reasons that we don't believe people should file for bankruptcy. That remains on your credit score for seven years. We should emphasize that a Chapter 13 remains on your credit report for seven years. Let's say that you go through the court to file a Chapter 7. With Chapter 7, this stays on your credit report for up to 10 years. That will be extraordinarily damaging to you, and it can keep you from getting loans in the future to succeed as a business owner.

What Happens as the Relief Program Ends?

You should understand how this relief may not be there forever, and once the Covid-19 crisis ends, it is likely that you will have to pay your bills regularly again. Because of that, you should stay prepared. In fact, you should beware of how some companies might even require that you pay all the bills that you had missed up until that point, which could be devastating if you don't prepare for it. What can you do to prepare? You might ask your lender if they can lower the monthly payment or the interest rate to help you with getting back on your feet. They could do this for mortgages, credit cards and auto loans.

How to Handle Getting behind on Your Debts

Let's say that you have gotten behind on your mortgage. You might fill out the application for loan modification. This will help to rework the terms of the mortgage so that it will look more favorable than what it might have been from before. Let's say that you got behind on your credit card during this time. How can you respond to it? During the coronavirus crisis, it may not be wise to pay it all off at once. You can use the money for emergency circumstances instead. As of right now, some credit card companies have even agreed to wipe out overdue balances to help people get through this difficult time. Keep in mind, however, if you already happen to be up to date, most companies won't work with you during the time of the coronavirus. If you're facing Chapter 11, however, you could still have resources available that can help you to get through it unscathed. You simply have to look at the difference assistance programs available at the federal, state and local level. You have many different choices available, but you want to apply quickly because some of these programs have been filling up. You could also work a payment plan that may be helpful.

It Costs Money to File for Bankruptcy

Believe it or not, you won't get off the hook from debts because it still costs anywhere from $300 to $350 to file for bankruptcy. It costs to go broke. However, you might be able to work payments on this that will make it more affordable. Covid-19 has brought many American businesses to their knees, and with no definite end in sight, we have to prepare for the long haul of this crisis. This is the most significant crisis that we have seen since World War II, which should give you an idea about the gravity of the situation. Because of that, many programs have been offered out to help people get back on their feet.

If you have questions about the bankruptcy process during this difficult time, please contact our Long Island bankruptcy and credit repair office: The Law Office of Adam C. Gomerman.
With cases of COVID-19 now nearing close to 180,000 in the United States, significant and perhaps irreparable damage has been dealt to the economy. Worryingly, there’s almost certainly more disruption to come. Layoffs have already begun, with unemployment applications hitting a historic high with more than three million workers filing for jobless benefits last week and bankruptcies are up.

This means many Americans are already being subjected to financial hardship due to the spread of COVID-19. The good news, for many Americans who are homeowners, banks and lenders have been instituting financial relief programs related to their homes. This can include measures like deferment of mortgage payments for a period of time, loan modifications, waiving late fees on loan products or even lowering interest rates. In some cases, this measure might help in avoiding foreclosures, bankruptcy, and more.
The thought of losing your Long Island home because of an unforeseen financial hardship can keep you awake at night. You might be struggling to make ends meet because of job loss or an unexpected financial setback. Anxiety sets in because you do not know how you are going to make your mortgage payments and cover your daily living needs. Take a deep breath. There are options available that will help you keep your home and gain control of your debt. You can choose to lower your monthly payments by obtaining a loan modification, refinancing your mortgage, or filing bankruptcy. Whichever option you choose, it is important to contact your mortgage servicer or bank as soon as possible. The longer you wait, the fewer options you have.

What Is Loan Modification?

A modification is a form of loss mitigation designed to protect both the borrower and the lender. The lender agrees to change the terms of the mortgage to make monthly payments more affordable. Lenders can permanently change the terms of the mortgage by:
  • Extending the duration of your agreement
  • Adding past due payments to the unpaid principal balance
  • Reducing your interest rate
  • Forbearing payments for a short-term
  • Changing your mortgage type (for example changing an Adjustable Rate Mortgage (ARM) to a Fixed-Rate Mortgage)
Some Long Island homeowners may benefit from the government-sponsored Flex Modification program created to assist borrowers who have Fannie Mae and Freddie Mac home loans. The program can reduce a borrower’s mortgage payment by around 20 percent by adding the past due amounts to the outstanding loan balance, modifying the interest rate, extending the loan terms, or setting aside some of the principal balance before recalculating the monthly payment. This is called a forbearance and is a temporary option to get you back on your feet. You may be eligible for the Fannie Mae or Freddie Mac Flex Modification program if:
  • The loan is a conventional first mortgage
  • The borrower has enough income to make the monthly payment, and
  • The loan was acquired at least 12 months before Flex Modification evaluation
There may be other programs offered by your state. For example, the New York State Mortgage Assistance Program (MAP) provides a zero percent interest deferred payment mortgage loan up to $80,000 to New York homeowners who have exhausted all other avenues of help. This program is available statewide, so it does not matter whether you live on Long Island or in Buffalo. According to the New York Housing Conference, you can use the funds to bring your mortgage current, get a modification, or pay off property tax arrears. Typical loan recipients are low- to moderate-income homeowners with an average household income of $53,311. Long Island residents can receive assistance and personal counseling through the Community Development Corporation of Long Island

Modification Eligibility for New York Homeowners

Eligibility varies from lender to lender, but the process begins by completing and submitting an application with the required documentation to the lender. The list of required documentation will vary but the following documents are generally required:
  • Proof of income and an expense finance worksheet
  • Tax returns for the last two to three years
  • Proof of additional income such as alimony, social security, disability, child support
  • Bank statements, and
  • Proof of your hardship which can be a hardship letter or affidavit
  • Proof of additional debt such as student loans, credit cards, and car loans
If find yourself having difficulty with the modification application or you feel your lender is not abiding by state laws, consider contacting our Long Island office and we can guide you through the process. You do not need to hire an attorney to obtain a loan modification, but employing a qualified professional can make the difference between keeping your home or losing it foreclosure.


Refinancing your loan replaces your old loan agreement with a new one and can be completed by either your current lender or a new one. To qualify for a refinance, you must be creditworthy and not owe more than the house is worth. While creditworthiness is not a major concern with a modification, a lender or bank does require that you be able to make the new payments. Unlike a modification, you may have to pay closing costs and other fees to complete the mortgage refinance process.

Mortgage Modification and Bankruptcy

Chapter 7 and 13 are the most common types of bankruptcy filed by individuals. Chapter 7 bankruptcy is a liquidation process in which the trustee sells non-exempt assets and uses the proceeds to pay creditors. There are no provisions in a Chapter 7 bankruptcy that allows you to keep your home, but it gives you time to find other housing or enter a loan workout plan with your lender. There is nothing that states your lender cannot agree to a modification after you file a Chapter 7. However, this is at the lender’s discretion. A Chapter 13 bankruptcy generally allows you to keep your home and pay creditors under a court-supervised repayment plan over three to five years. Once the court approves the repayment plan, the lender cannot foreclose. Additional advantages of a Chapter 13 bankruptcy include:
  • Automatic stay (an injunction that temporarily prevents creditors from pursuing or continuing credit collection actions)
  • Extending your secured debt over the life of the repayment plan
  • Protecting third parties such as co-signers
  • No direct contact with your creditors. Payments are made to the trustee who disburses the payments to the creditors
According to the United States Courts, you do not need an attorney to file bankruptcy. However, due to the long-term legal effects surrounding a bankruptcy, hiring a bankruptcy lawyer who will work to protect your rights, recommend the best bankruptcy for you, and guide you through the process adds an additional blanket of security should a problem arise.

If you would like more information on the home loan modification process, or if you have questions regarding bankruptcy filing, considering contacting The Offices of Adam C. Gomerman. Our Long Island based team of attorneys has years of experience in advising clients on the home loan modification process and personal bankruptcy process.
Most Long Island residents who are under financial duress look for relief. Some need a fresh start and some need a financial plan to prioritize debt, but most importantly, people need help. One such way to get assistance is by the protection of the bankruptcy laws. For an individual, there are two chapter filings that can provide relief, and they are Chapter 7 and Chapter 13.

To provide a sense of comfort, the term bankruptcy does not necessarily mean that you lose everything. This is a common fear, however, there are certain exemptions that are in place that allows you to protect your property. These exemptions allow certain items to be protected against being sold in the repayment to creditors. These exclusions vary from state to state and is totally dependent upon where you reside. Regardless of the state that you live in, an attorney is necessary who will work on your behalf. The Law Offices if Adam C. Gomerman are licensed in the State of New York and are happy to speak with any Long Island resident regarding bankruptcy and the oftentimes confusing questions surrounding asset protection and bankruptcy exemptions. 
Millions of Americans, and thousands of Long Island residents, are drowning in a sea of debt. This debt has many different causes. Some people are faced with underwater mortgages for houses they never should have bought. Other people are forced to pay massive medical bills or run up tens of thousands of dollars on credit cards. These people are often overwhelmed by the process of asking for help or applying for discharge. This feeling can be mitigated somewhat by the emergency discharge process. Emergency bankruptcy is by no means a solution to a person's financial problems. Instead, it is a tool that a person can use to stem the damage from their obligations and eventually get back on track. If you are looking for emergency bankruptcy filing in New York or on Long Island, contact The Law Offices of Adam C. Gomerman today to speak with an experienced Long Island bankruptcy attorney.

Why would one need an emergency bankruptcy filing?

The process of gaining official debt liquidation or repayment is a time-consuming one. It can involve signing and processing a number of forms and aggregating a considerable amount of financial data. This process can be stressful for a person who has nothing else to do. But people who are going through discharge are incredibly stressed and face pressure from a number of different areas. They are often being harassed by creditors and bill collectors. The tactics of many bill collectors are ruthless and unscrupulous. Some collectors knock on a person's door and directly demand the money that is owed. They can call at many hours of the day and constantly send pieces of mail threatening wage garnishment. In many instances, bill collectors will try illegal tactics such as impersonating law enforcement. They count on people facing overwhelming bills to be too overwhelmed to fight back and file charges. In many instances, that assumption is correct. Some parts of the bill collection system are irreversible. Many banks will have a foreclosure sale for people who are far enough behind on their debts. These sales are final and cannot be undone. Therefore, people sometimes need an emergency option to stop the foreclosure system at any time. Emergency creditor relief filing is useful for these situations. A person can go through an immediate filing and secure an immediate halt on a foreclosure procedure. They can then work their way through the procedure and secure protections for their property. Preparing a filing is much easier when a person is able to do so in the comfort of their own homes.

Types of bankruptcy Long Island, New York

Along with filing for official protection from their creditors, individuals looking for an emergency filing on Long Island or New York need to determine what kind they are filing for. Chapter 13 is a common form that involves a person setting up a sanctioned debt repayment plan out of their regular income. This type of bankruptcy is for people who have a considerable income and still work a job. It can be less debilitating to a person's overall credit score and credit history than a Chapter 7 discharge. In Chapter 7 in NY, a person secures discharge of their debt except for special cases such as student loan debt. Chapter 7 discharge takes away many types of property from a person and sells that property in order to help discharge debt. Creditors, like credit card companies and hospitals holding medical bills, line up and are paid according to the importance of their bills as determined by a court. Some creditors will receive nothing in a process that reflects the risk they took on when they made a loan or extended a line of credit. People who go through Chapter 7 often are unable to borrow money for seven years. They have to start over financially from scratch but are able to do so without fear of foreclosure or constant calls from bill collectors.

Steps to filing for bankruptcy on long island

There are multiple steps to filing for bankruptcy on Long Island. The first step to an immediate bankruptcy filing is filling out a skeleton form. This form has a number of sections that must all be filled out quickly. There is a general information petition where an individual lists their identifying information, the basics of their situation, and what chapter they would like to file under. A person fills out this form along with a list of creditors and their addresses. This list is essential to informing these persons that they need to stop all collections procedures while a person is filing for official protection from their creditors. Then, a person needs to address the credit counseling requirement. They must show that they have attended credit counseling and that it has been unsuccessful in allowing them to meet their credit obligations. Finally, there is the filing of a form of dismissal along with the skeleton form. The form of dismissal provides for a legal justification to dismiss a case if the full amount of paperwork is not turned in within 14 days. All of these forms are filed together along with a fee. If a person cannot pay the fee or wants a payment plan, they can file a form requesting a waiver. All of these forms are quickly reviewed and put into action. Once the Long Island court accepts the emergency filing with the blessing of a lawyer review, they can immediately send out notices to creditors stopping all actions. The creditors then have 14 days to wait until it becomes clear what a person is going to do. If the person does not file their paperwork, they can go back to wage garnishment or foreclosure in order to retrieve their bills. But if they succeed in filing the paperwork, they are once again halted and have to go through the discharge process.

What to do next?

Any individual who is considering an immediate bankruptcy filing in Long Island needs to first consult an attorney and a financial adviser. The financial adviser and attorney will help an individual gauge their financial situation and determine if discharge is right for them. Many people feel overwhelmed by their bills and simply want out as quickly as possible. Professionals will help a person determine if they need to go this drastic step and what they need to do. Most courts in NY require that a person also go through credit counseling before filing for bankruptcy. The person should follow the suggestions of credit counseling as they attempt to work their way out of their debt problems. If a person has to file for emergency bankruptcy, they should first start by quickly filling out the required forms with the help of an attorney. Then, they should focus on filling out other required forms associated with creditor protection with the help of a lawyer. These forms include itemized lists of different pieces of property and means test forms as well as lists of expenses and income. Such forms help a court better ascertain a person's financial situation and the best way for creditors to receive as much as they reasonably can. A person needs to put all of their time and effort into filling out these forms on time. Missing a filing deadline can be debilitating in many ways. It can lead to a person being poorly treated in any future discharge filings as well.


An emergency bankruptcy filing should be viewed as a final step in the debt repayment process. People should do everything they can in order to avoid this drastic step. It may not be particularly helpful in the bankruptcy process after the emergency declaration has been granted. Enlisting the help of a lawyer may also cost money that a person does not think they have. But the process may be worthwhile if it means the difference between keeping or losing one's house.

To speak with a qualified, experienced bankruptcy attorney on Long Island today, contact our offices immediately to schedule your consultation.
Owning a company can be stressful, especially if your personal finances are in jeopardy. Bankruptcy seems to be the logical way out for financial woes, but you must wonder how this will affect your establishment. The structure of the company will dictate if any of the company assets can be used to pay back your creditors.

You have a few options when it comes to bankruptcy, but it's best to speak with an attorney to properly advise you on the best route. As an individual, you can file either a Chapter 7 or Chapter 13.
If you don't have the right amount of health insurance coverage, a serious health complication or injury that results in a trip to the hospital can cause you to be provided with costly health care bills that you have no way of paying. In many cases, these bills are unable to be repaid in a timely manner, which can cause the affected individual to file for Chapter 7 in an attempt have their debts discharged. If you're thinking about filing for bankruptcy because of the medical debts that you owe, it's important that you speak with a reputable attorney who can help guide you through this extensive process.

What Chapter 7 Bankruptcy Entails

Chapter 7 bankruptcy is available to certain individuals who are no longer able to make their loan payments and pay off their credit cards. When a person files for this form of bankruptcy, some of these debts will be erased and discharged. In order to repay what you owe, most of your possessions will be sold, which includes any cars that you own and even your home. You might want to consider the Chapter 13 option if you want to be able to hold on to some of your more important possessions.

While in Chapter 7 bankruptcy, you must continue to pay child support, spousal support, utilities, mortgage, rent, income tax, and insurance. If you belong to a homeowners' association, you must pay it. Chapter 7 is for individuals or business entities. Your checking account should not be in a lienholder's bank. Because you can lose your insurance by filing for Chapter 7 bankruptcy, your insurance policies should be paid a year in advance. Rental cars, leased furniture, leased business equipment, and home appliances not paid for in full are examples of items that can be returned to their owners. You can discharge the deficiency balance.

Post-Petition Payments and Chapter 7

Post-petition payments are due after you file your initial petition for Chapter 7 or those that you'll continue to pay after your debts are discharged. Medical bills incurred prior to filing your petition may be discharged. Bills from the same doctor while you're waiting for your final discharge must be paid. Examples of post-petition payments are student loans, debts for extravagant purchases, and court judgments and expenses.

Automatic Stay During Chapter 7

When debt becomes overwhelming, bankruptcy may be an option to help a person gain control of their finances and start fresh. The Law Offices of Adam C. Gomerman can help with your student loan questions as it relates to bankruptcy. A bankruptcy can often provide relief and potentially a discharge of many types of debt. However, those with high student loan payments are not always able to get relief. In general, student loans are not often considered for discharge. To receive any kind of relief from student loans in bankruptcy court, a person would have to prove that paying these loans would cause an undue hardship before this relief could even be considered. In these situations, the assistance of an attorney is often recommended to help ensure the right information is provided to the bankruptcy courts to ensure consideration for this debt is taken.

Student Loan Debt and Chapter 13 Bankruptcy

For many people with a regular income and high debt, Chapter 13 bankruptcy is the option they choose to find relief. Chapter 13 provides a method for consumers to have their bills reorganized and provides an affordable payment plan over the next three to five years. Often, the remaining debt can be discharged after the repayment period. However, bills considered non-dischargeable cannot be wiped out. Student loans are considered this type of debt.

Filing bankruptcy on Long Island is a decision that should not be taken lightly by anyone. The process can be intricate and confusing for most novice filers who attempt the legal task without the assistance or representation of an experienced attorney. The ramifications following a bankruptcy petition acceptance is long-term in most situations regardless of the chapter being requested. It is important to understand that filing a bankruptcy petition is the equivalent of asking the government to intervene in a private credit arrangement to block the creditors from exercising their rights to pursue legal remedies against an account discharge. The creditors can always contest the terms, and the court refuses more petitions than filers realize. It is not an automatic process by any stretch, and petitions filed without legal representation are commonly rejected by the court for a variety of reasons. Even qualifying within the scope of the means test can be complicated for a DIY bankruptcy petitioner.

Preparation is Key to a Successful Chapter 13 Case

The best method of beginning the process is doing a complete workup well before filing. All aspects of the petition should be addressed on a practice version and evaluate the best information for each step. The first step will be evaluating the information needed for the means test, which will determine if you can even file. Each chapter of bankruptcy is different as well. Those seeking to discharge overwhelming debt will typically use Chapter 7, but all clear personal assets could be marked by a judge for sale with the proceeds being applied as payments to creditors. Chapter 13 filings are different to a large degree, and they are normally used to keep from losing a home or some other type of real estate that would be vulnerable for sale or possession in a Chapter 7 petition. The means test is also used to qualify for Chapter 13 as well, and the terms of the repayment plan must be acceptable to all other parties.

Chapter 13 Repayment Plans

DIY pro se bankruptcy petitioners must develop a feasible repayment plan that is usually set at five years for all outstanding debt to be considered paid current. Chapter 13 can include some discharging of debt as in a Chapter 7 filing, but the real advantage of a Chapter 13 filing is that it can protect a home from foreclosure and protect your credit rating in the end. Sometimes creditors will renegotiate outstanding accounts to avoid inclusion in a bankruptcy petition, but these must be finalized before the petition becomes effective. This is a component of filing for bankruptcy where having a legal representative negotiating an agreement is a real advantage. The purpose of a Chapter 13 petition is effectively a debt consolidation plan that repays as many creditors as possible while protecting a dwelling and minimized the credit rating damage to the petitioner. More on how Chapter 13 can impact your credit here.
Bankruptcy was designed to provide consumers a method of restructuring, reducing or eliminating debt, although not all types of debt can be eliminated through bankruptcy. The two most common types of bankruptcy are Chapter 7 bankruptcy, which is a debt discharge, and Chapter 13, which is a debt restructuring. Both types of bankruptcy guidance are offered by The Law Offices of Adam C. Gomerman here on Long Island.

Before you can file any forms for your discharge, you’ll need credit counseling from an agency that’s government-approved. This is mandatory and should be completed immediately before filing. Many consumers file for Chapter 7 on their own, which is called “pro se” or “pro per” representation. Although filing Chapter 7 for yourself will be arduous and tedious, if you are detail-oriented, you can do it and save some money on attorney fees. However, it’s always wise to have an attorney peruse your forms before you file them so that they aren’t returned for errors or improper filing procedures.

Learn the Bankruptcy Law in New York State

Laws have changed regarding bankruptcy, so familiarize yourself with the most recent changes, and ensure that you follow the instructions provided by the clerk’s office. Sometimes, issues can arise from matters as simple as using the wrong typeface, so be sure you’re aware of the information details about the correct process for filing. In preparation for filing Chapter 7, you’ll need a list of all your assets and liabilities. This includes your:
  • Home and other real estate
  • Furniture and appliances
  • Vehicles, tools, and equipment
  • Bank accounts, stocks, bonds, securities, cash on hand
  • Jewelry, clothing, and other personal assets
  • Animals used for commercial purposes or expensive hobbies
You’ll also need a list of all your creditors including credit cards, student loans, child support or any other entity to which you owe money or make monthly payments. You’ll need addresses and account numbers. Some types of debt, such as child support or student loans, are not dischargeable through bankruptcy, so make sure that filing Chapter 7 will accomplish your goals. Most of your assets will be liquidated in Chapter 7 so be prepared for that event. It will also become a matter of public record and will be available for friends, family, co-workers and prospective employers. Hiring a lawyer before you file may be money well spent so that you pursue the best course for your circumstances. It’s possible that a Chapter 13 or another avenue may be better for you.

Documentation Needed to File Chapter 7 Bankruptcy

You’ll need proof of income for the last six months as well as proof of expenses. Only consumer debt is considered, business debts aren’t included in this type of bankruptcy. This documentation is necessary in order for the court to determine your disposable income each month. If your median income is less than the median income for your area, then you’ll most likely be allowed to file for Chapter 7. If you have significantly more income than the median in your state and city, then the court may require additional proof of your need to file. Some individuals aren’t required to take the means test, including:
  • Disabled veterans
  • Some active duty personnel
  • Those with business debt rather than consumer debt
Some types of income aren’t included in the means test, such as:
  • SSI, SSDI, TANF, and Social Security Retirement
  • Payments to a victim of terrorism
  • Payments to a victim of a war crime
Income that’s included in the means test includes:
  • Wages, including bonuses and overtime, tips, commissions
  • Net business income
  • Rental income, royalties, dividends, annuities
  • Unemployment and worker’s compensation
  • Spousal support
  • State disability payments
The court will use all the financial information you provide -- income, expenses, and assets -- to conduct a means test that will determine your eligibility to file bankruptcy. The means test is only used for individuals or couples, it’s not used for businesses who file. If you urgently need to file Chapter 7 or Chapter 13 but time constraints limit your ability to amass and complete the forms, you may be able to submit an emergency filing that will provide you with the court-ordered stay that will protect your income and assets from being seized or attached. Laws governing Chapter 7 and Chapter 13 vary by state, but most don’t allow non-attorney personnel to provide legal advice or information to pro se representatives, so court clerks won’t be able to answer any legal questions. Some states allow you to initiate your case online, and you may be eligible for a fee waiver if you can’t afford the filing fees, which vary by state.

The Chapter 7 Bankruptcy Process

Once you have the information necessary to complete the forms, the following procedures will guide you through the process:
  • Get credit counseling if you haven’t already done so. Ask our office for credit help.
  • Obtain the forms, including the fee waiver if needed.
  • Complete the forms.
  • Consult with an attorney or a legal service to ensure that the forms are completed correctly.
  • File the forms. Protection from creditors is immediate upon filing your case.
  • A trustee will be assigned to your case and usually, the trustee is a lawyer.
  • A meeting of your creditors will occur and you’ll probably need to attend unless you have hired a lawyer.
  • Your eligibility to file will be determined.
  • Secured debt and property that isn’t secured are processed.
  • You’ll receive your discharge and your case will be closed within about a month..

Life After Chapter 7 Bankruptcy

After your case has been discharged, you’ll need to work on rebuilding your life and your credit. With the proliferation of Chapter 7 and Chapter 11 filings in recent years, more programs are available that will help with rebuilding credit and rebuilding your life. It was an event that was necessary, it happened. Don’t castigate yourself, use it as a learning tool and profit from the experience.
Many people face serious problems with debt. One small event or emergency has the potential to create situations where these people are unable to keep up with the payments on these debts. This can create further complications with that debt and may have devastating effects on their credit ratings. Low credit ratings cause issues in many aspects of a person’s life. It can prevent them from getting further credit. It can also have an impact on getting a job or even renting a home. Fortunately, there are methods available for gaining control of one’s debt.

Bankruptcy is an option available for people to gain control of their finances. Chapter 13 Bankruptcy provides a method for restructuring debt. A repayment plan is made that provides an affordable method for people to get their debt under control. There is also Chapter 7. This option is for those with little or no income. This type provides a process to allow debtors to discharge their debt. However, applicants must pass the Bankruptcy Means Test to be eligible for a Chapter 7.
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