Q: What are the steps and effects of declaring bankruptcy on debts in New York?

A: The first thing you need to do is meet with an attorney. Bankruptcy is sufficiently complicated that there isn’t really any scenario where it would be wise to file on your own. And so having said that the best place to start is with a consultation with an attorney

A: There are two types of individual bankruptcy filings, Chapter 7 and Chapter 13. Chapter 7 would get rid of almost all your debts without a payment plan while Chapter 13 is a payment plan over 5 years. You must qualify for a Chapter 7 based on your income. Chapter 13 is necessary if you sare behind on secured debt (mortgage, car loans, etc). You should speak with an attorney to see what would be best for you.

A: Filing for bankruptcy in New York requires careful consideration of your financial situation and understanding of the different bankruptcy chapters available to you. The process offers significant debt relief but affects secured and unsecured debts differently.

The bankruptcy process begins with mandatory credit counseling from an approved agency within 180 days before filing and submitting the certificate with your bankruptcy forms. You'll need to gather essential documents, including the last two years of tax returns, paycheck stubs for the last six months, and bank statements. After preparing your petition and schedules listing your assets, liabilities, income, and expenses, you file with the appropriate New York bankruptcy court and pay the filing fee (currently $338, with waiver options available for those who qualify).

For secured debts like your mortgage and car loan, bankruptcy does not automatically eliminate your payment obligations if you wish to keep these assets. In bankruptcy, you can force secured creditors to accept payments over time, but generally cannot keep the collateral (home, car) unless you continue making payments. With Chapter 7, you must typically choose to surrender the property, reaffirm the debt, or redeem the property by paying its current value.

Regarding your unsecured debts such as credit cards and medical bills, these are generally wiped out by a Chapter 7 bankruptcy, and you no longer owe the creditors any money. However, certain unsecured debts remain non-dischargeable, including child support, most student loans, and many types of tax debts. Chapter 13 bankruptcy offers an alternative where you develop a court-approved repayment plan over 3-5 years, potentially paying only a portion of unsecured debts while keeping your property.

Before proceeding, evaluate whether bankruptcy is truly your best option. The filing creates an automatic stay that immediately stops collection activities, including foreclosures and garnishments. Remember that bankruptcy will remain on your credit report for years, affecting future borrowing. For your complex situation involving both secured and unsecured debts, consulting with a bankruptcy attorney would be advisable to determine the most advantageous approach for your specific circumstances.