Bankruptcy in Long Island: How Come I have to Pay Back Creditors?

Bankruptcy in Long Island provides relief to debtors who are facing difficulty paying back their debt obligations. While bankruptcy can help you to deal with your debts, it does not necessarily mean that every dollar you owe will suddenly disappear. You may still have to repay creditors if the debt is not eligible for discharge in a bankruptcy. Individuals who file for Chapter 13 will also need to repay a portion of their debts as part of a repayment plan that could last anywhere from three to five years depending upon the circumstances.
Before you file for bankruptcy in Long Island, it is important that you understand what it can do for you. An experienced bankruptcy lawyer at the Law Office of Ronald D. Weiss, PC. can evaluate your situation, provide advice on how bankruptcy will help you, and guide you through the process of filing for bankruptcy. Call today to learn more.

Repaying Debts and Bankruptcy

Bankruptcy reforms in 2005 limited who can file Chapter 7 bankruptcy. Under a Chapter 7, some non-exempt assets were sold and the money distributed around to pay a part of debts owed. Any remaining outstanding money owed on eligible debts would then be distributed, without the need for you to pay anything more.
Now, however, individuals must pass a means test or have income below the median where they live for their family size in order to qualify for Chapter 7. Under Chapter 13, or wage earner’s bankruptcy, debtors are expected to make payments over time based on a modified payment plan agreed to by creditors. Payments are based on income and may be less, but you still have to pay. The good news is that any balance due at the end of the repayment plan is forgiven.

Some Debts are Ineligible

Whether you file for Chapter 7 or Chapter 13, there are some debts you are going to need to continue to pay regardless of the filing. For example:

• If you want to keep your home or car, you need to reaffirm the loan and keep paying, despite the bankruptcy.
• If you have student loan debt and certain kinds of tax debt, you’ll have to keep paying because the debt is not eligible for bankruptcy discharge.
• If you owe back child support, you will need to keep paying because student loans generally cannot be discharged in bankruptcy.