Brooklyn Bankruptcy Lawyer

At the Law Offices of Wenarsky and Goldstein, LLC, we guide individuals and families through bankruptcy with care and experience after taking the time to understand their financial situation. If you’re considering bankruptcy in Brooklyn, our trusted Brooklyn bankruptcy lawyer can help you take back control and move toward a more stable future. 

Reach out today to learn how we can help.

What You Should Know About the Bankruptcy Process

The U.S. Bankruptcy Code provides for several types of bankruptcy (known by the chapters of the Code where they appear), but for most individuals, the main options are Chapter 7 and Chapter 13. 

Chapter 7 Bankruptcy

Chapter 7 is intended for people who sincerely can’t afford to pay off their debts and need a fresh start. Once the process is complete, most unsecured debts (debts without collateral), such as credit card bills, medical expenses, and personal loans, are eliminated/wiped out.

To qualify for this type of bankruptcy, you must pass what’s called a means test. This test looks at how much money you earn and compares it to the average income for a household of your size in New York:

• If your income is lower than the state average, you usually qualify.
• If it’s higher, the test examines your expenses and financial situation more closely to determine whether you have enough money left over to pay your debts after deducting your essential expenses. If the numbers show you have enough disposable income to make monthly payments, Chapter 7 may not be a viable option.

Chapter 7 may also involve the liquidation of certain non-exempt assets. This means the bankruptcy trustee could sell your belongings to repay creditors unless they are protected by law. But most people who file don’t lose everything. State and federal laws allow exemptions for basic necessities, like clothing, modest household goods, and sometimes even a car or home equity, depending on your situation. 

Once you file Chapter 7, an automatic stay is activated. This stay immediately stops most collection actions, including phone calls from creditors, lawsuits, wage garnishments, and even foreclosure efforts. However, some obligations, like child support, are not affected by the stay, which means such actions can proceed alongside the bankruptcy.

In any case, the Chapter 7 process is fairly quick and is typically concluded within a few months. But it’s still a legal proceeding with many steps and deadlines. Having a bankruptcy attorney by your side is important to help you protect your property, avoid delays, and make sure everything is handled correctly.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy works differently. Instead of wiping out debts right away, it gives debtors time to catch up on their debts and slowly pay them off through a structured repayment plan. It’s meant for people who have a steady income but are falling behind on bills or need help managing debt more effectively.

The repayment plan is the heart of the Chapter 13 bankruptcy process. This plan, which is proposed by the debtor and must be approved by the bankruptcy court, outlines how they intend to pay back some or all of their debts in monthly or bi-weekly installments. 

If you file this type of bankruptcy, the amount you have to pay depends on your income, living expenses, and the types of debt you owe. Some debts might be paid in full, while others could be reduced or eliminated altogether by the end of the plan. The plan itself typically lasts three to five years. How long it takes depends on how much you earn and how much you owe.

The biggest advantage of Chapter 13 is that it lets you keep your assets. This makes it a good option for people who are behind on mortgage payments and want to avoid foreclosure.

Just like with Chapter 7, filing for Chapter 13  (and indeed any other type of bankruptcy) sets off the automatic stay to protect you from creditors while you get your finances under control through the bankruptcy process. However, the stay is not absolute and can be lifted by the bankruptcy court in certain cases (usually at the instance of a secured creditor). But while it lasts, it keeps you safe from your creditors and their collection efforts. 

Filing for bankruptcy may still be helpful if:

• You have other debts that are still within the statute of limitations
• You’re facing wage garnishment or lawsuits
• You need help managing overwhelming debt in general.

Common Bankruptcy Myths and Misconceptions

Bankruptcy is often misunderstood due to several misconceptions about the process and its effects floating around. These myths can cloud judgment and prevent individuals from seeking the help they truly need.

In this section, we aim to clear up some of the most common myths to help you make informed decisions and approach bankruptcy with a clear understanding of its effects and benefits.

Bankruptcy Will Ruin Your Credit and Finances Permanently 

One of the most common fears is that bankruptcy will lead to permanent financial ruin. But the truth is, bankruptcy is not the end. It’s a legal tool designed to help businesses and individuals regain financial control, not destroy it.

It’s true that filing for bankruptcy will initially impact your credit, which can affect your ability to qualify for loans or new credit. However, this hit to your credit score is not permanent. With the right steps, such as budgeting, avoiding new debt, and generally adopting sound financial practices,   you can begin rebuilding your credit and finances within a short time.

Bankruptcy Will Discharge All Your Debts

Another common misconception is that bankruptcy wipes out all debts. That’s not always the case. While many unsecured debts like credit cards, personal loans, and medical bills can be discharged, others cannot. Student loans, most tax debts, child support, and alimony typically remain after the process. It’s important to understand the difference between what is dischargeable and what is not before filing.

You Will Lose All You Own if You File for Bankruptcy 

Some people fear they’ll lose all their possessions in bankruptcy. In reality, the risk of losing assets depends mostly on the type of bankruptcy you file. Chapter 13 bankruptcy focuses on reorganizing debt through a repayment plan, so you can usually keep your assets as long as you stick to the payment plan.

In Chapter 7 bankruptcy, on the other hand, your assets may actually be at risk of liquidation, meaning some of your property could be sold to repay creditors. However, there are bankruptcy exemptions that can protect key assets like your home, car, clothing, and household goods. Exemptions are laws that allow you to keep certain property while discharging your debts. There are federal and state bankruptcy exemptions available, but the set of exemptions you are allowed to use depends on the state where you file. 

Fortunately, New York is one of the states that allows debtors to choose between state exemptions or federal exemptions, but not a combination of both. This gives you the flexibility to choose the set of exemptions that offers the best protection for your property. 

An attorney can help you navigate the complexities of exemptions and ensure you protect as much of your property as possible during the bankruptcy process.

What to Expect at Your Bankruptcy Consultation

Your first meeting with a Brooklyn bankruptcy lawyer typically begins with a review of your financial situation, including income, debts, and assets. The attorney will explain your available options and help determine whether Chapter 7, Chapter 13, or Chapter 11 is most appropriate. This bankruptcy consultation provides clarity on the best path forward while answering questions about costs, timing, and outcomes.