What happens to your debt when you file bankruptcy?
Financial challenges can weigh heavily, and for many individuals or businesses, filing for bankruptcy provides a legal pathway to address overwhelming debt. Bankruptcy doesn’t erase every type of financial obligation, but it offers powerful relief by discharging certain debts and restructuring others. If you’re managing bankruptcy in New York, the experienced team at Ursulova Law Offices, P.C. can help you explore your options to achieve financial recovery.
Immediate Relief Through the Automatic Stay
The moment you file for bankruptcy, an automatic stay goes into effect. This legal mechanism halts most creditors’ collection actions, including lawsuits, wage garnishments, and harassment. Whether you file Chapter 7 or Chapter 13, this pause allows you the breathing room to manage your debts without constant pressure. However, some actions, such as child support collections, are exempt from the automatic stay. Understanding the full scope of these protections is essential, and the attorneys at Ursulova Law Offices, P.C. can provide personalized guidance.
Which Debts Can Bankruptcy Discharge?
In a Chapter 7 bankruptcy, unsecured debts like credit card bills, medical bills, and personal loans are generally dischargeable. On the other hand, Chapter 13 allows you to reorganize these debts into manageable payments over three to five years. Some debts, including tax obligations, student loans, and court-ordered payments, are less likely to be discharged, though exceptions exist. A bankruptcy lawyer in Brighton Beach can help you determine which debts apply to your case.
What Happens to Secured Debt?
Secured debts, such as mortgages or car loans, are tied to specific property. In bankruptcy, you can often choose between surrendering the property or continuing payments under revised terms. For instance, Chapter 13 may allow you to catch up on past-due amounts while keeping the asset. If you’re dealing with secured debt, a Brighton Beach bankruptcy lawyer can help evaluate the best course of action to protect your assets while reducing financial strain.
The Impact on Co-Signers
If a family member or friend co-signed a loan with you, their liability may be affected depending on the type of bankruptcy you file. In Chapter 7, creditors can still pursue co-signers for repayment, while Chapter 13 may offer additional protections through the automatic stay. Discussing these implications with a bankruptcy attorney in New Brighton ensures your loved ones understand the potential impact.
Rebuilding Your Financial Future
While bankruptcy does impact your credit, it also offers a chance for a clean slate. With discharged debts, you can begin rebuilding your financial stability. Simple steps like budgeting, saving, and exploring secure credit options can help restore your creditworthiness over time. Additionally, our attorneys at Ursulova Law Offices, P.C. can connect you with resources to support your recovery process.
When Bankruptcy May Not Erase All Debts
Certain obligations remain even after bankruptcy. For example:
- Student Loans: These are only dischargeable under specific circumstances, such as undue hardship, and require additional legal proceedings.
- Tax Liabilities: Some older income tax debts may qualify for discharge, but most taxes are not forgiven.
- Family Obligations: Child support and alimony are not dischargeable under federal law.
If you need clarification on which debts apply to your case, a Brighton Beach bankruptcy attorney can provide accurate insights tailored to your situation.
Your Path to Financial Freedom Starts Here
Facing overwhelming debt can feel insurmountable, but the attorneys at Ursulova Law Offices, P.C., with offices in Brooklyn, Brighton Beach, and Garden City, are here to guide you toward financial relief. By providing tailored solutions for bankruptcy and no-fault legal matters, our firm has earned a reputation for helping clients overcome financial challenges and achieve favorable outcomes. Whether you need a structured approach to manage your debts or seek a fresh start, we offer clear and actionable strategies to help you regain stability. Contact us today to explore your options and take the first step toward a brighter financial future.
