Understanding Consumer Bankruptcy: How the Law Offices of Wenarsky and Goldstein, LLC Can Assist You

Explore your consumer bankruptcy options with the guidance of the Law Offices of Wenarsky and Goldstein, LLC. Learn about the different consumer bankruptcy chapters and how we can help you navigate the journey to a fresh financial start.

What Is Consumer Bankruptcy?

Bankruptcy is a legal (court-supervised) procedure that helps individuals or businesses who can’t pay their debts. This process provides a fresh start by relieving debtors of the burden of unmanageable debt and offers a way for them to reorganize their finances long-term.

There are several types of bankruptcy in the U.S. Consumer bankruptcy collectively refers to the types of bankruptcy specifically reserved for individual consumers who cannot pay their personal debts. It is a veritable tool for debt relief, giving individuals a chance to start over and rebuild their finances.

Despite its immense benefits, bankruptcy can be complex because it involves intricate legal procedures and paperwork. Each type of bankruptcy has its own rules and requirements. Additionally, navigating the bankruptcy court system and understanding how the provisions of the Bankruptcy Code apply to individual situations can be challenging. 

Our dedicated bankruptcy attorney at the Law Offices of Wenarsky and Goldstein, LLC can guide consumer bankruptcy petitioners through the process, ensure their rights are protected, and maximize the benefits they can receive from filing for bankruptcy.

Below, we discuss the basics of consumer bankruptcy and share specific ways we can help. Read on for more details.

Types of Consumer Bankruptcy 

Consumer bankruptcy has several benefits for indebted individuals. One of its key features is the “automatic stay,” which kicks in as soon as someone files for bankruptcy. It stops secured and unsecured creditors from trying to collect debts or take legal action against the person filing, allowing them some breathing room to figure things out.

Another benefit is debt discharge, where some or all debts are wiped out, depending on the nature of the bankruptcy proceedings. This debt discharge is critical in facilitating a fresh start for individuals overwhelmed by debt.

Overall, bankruptcy offers a legal pathway for individuals to deal with overwhelming debts and get back on their feet financially. However, there are different types of consumer bankruptcy, each with different legal requirements and implications. Understanding how each one works is crucial before beginning the bankruptcy process.

Chapter 7 Bankruptcy (Liquidation)

Chapter 7 bankruptcy, often referred to as liquidation, involves the sale of the debtor’s assets by the bankruptcy trustee to pay off creditors. It is a quick process that can help wipe out all or most of your consumer debts so you can start off with a clean financial slate.

On the downside, you would likely lose your assets during the liquidation. However, there are federal and state bankruptcy exemptions that can help you protect your legal or equitable interests in certain assets (that qualify as exempt property), such as your home or car.

To qualify for this type of bankruptcy, debtors must: 

  • Pass a means test. This test compares the debtor’s income to the average household income in their state. 
  • Not have filed for Chapter 7 bankruptcy in the last eight years.
  • Complete a credit counseling course within 180 days before filing.

If you qualify for a Chapter 7 bankruptcy, most of your debts will be wiped out at the end of the process, giving you a fresh financial start.

However, filing for Chapter 7 can negatively impact your credit score and stay on your credit report for up to ten years, making it harder to get credit in the future.

Also, debts such as child support, alimony, and certain taxes cannot be discharged by bankruptcy judges because they are imposed by law. So, you still need to pay them after a bankruptcy discharge. 

Chapter 13 Bankruptcy (Reorganization)

Chapter 13 bankruptcy allows individuals to reorganize or restructure their loan payments and pay off their debts over time following the terms of a court-approved repayment plan.

The payment is spread across a 3—to 5-year period, allowing the debtor to catch up on missed debt payments without fear of foreclosure or repossession and without liquidating their assets.

To qualify for this type of bankruptcy, you must meet certain requirements, including the following. 

  • You must have a steady income to make monthly payments.
  • You must not have received a previous bankruptcy discharge for Chapter 13 bankruptcy within the last two years or Chapter 7 bankruptcy within the past four years.

Overall, Chapter 13 bankruptcy offers a way for individuals, especially those with secured debt, to pay off their debts without jeopardizing their assets.

The repayment plan is especially crucial for this type of bankruptcy. Careful preparation of the plan is essential because it determines the success of your bankruptcy case and affects your financial future. Working closely with a consumer bankruptcy attorney is important to ensure your plan is comprehensive, feasible, and compliant with legal requirements.

Choosing the Right Type of Consumer Bankruptcy 

Bankruptcy is not a one-size-fits-all affair. So, before filing bankruptcy, it is important that you first consider which of the above types best suits your circumstances.

As seen earlier, each type of consumer bankruptcy has its pros and cons. They also have unique legal requirements that petitioners must meet. So it’s not just a matter of choosing the type of consumer bankruptcy you prefer. You must be qualified for it; otherwise, you’d be engaging in a futile exercise.

Our experienced bankruptcy attorney can help you understand the pros and cons of each option, navigate the complex laws, and make informed decisions tailored to your situation. Without legal guidance, you might miss out on potential benefits or end up with a solution that doesn’t fit your needs. 

We are here to represent you and ensure you don’t miss any important details that could affect your chances of obtaining debt relief and getting back on track financially.

Contact Our Experienced Bankruptcy Attorney at the Law Offices of Wenarsky and Goldstein, LLC

Consumer bankruptcy can be a vital tool for individuals facing overwhelming debt, offering a chance to regain control of their finances and start afresh. However, navigating the complexities of bankruptcy law and choosing the right bankruptcy option requires careful consideration and professional guidance. 

Before opting for Chapter 7 or Chapter 13 bankruptcy, seeking the assistance of a knowledgeable attorney is essential to ensure the process is conducted smoothly and works in your best interests.

Our dedicated team at the Law Offices of Wenarsky and Goldstein, LLC can offer you the kind of support you deserve in these difficult moments and help you understand the available options, paving the way toward a brighter financial future.

 If your financial burdens seem insurmountable, contact us today and let us assess your case and qualification for bankruptcy. We’d be glad to guide you on this path as you work to extricate yourself from financial distress.

Call the Law Office of Wenarsky & Goldstein

At the Law Offices of Wenarsky & Goldstein, LLC, our New York and New Jersey attorneys are experienced and knowledgeable in bankruptcy, estate planning and probate, guardianship, special needs planning, and real estate law. To learn more about how we can assist you with your legal needs, call us today at 973-453-2838.