It is not necessarily a bad thing for people in New York to have some debt. It is important for people to have a credit history because there are purchases that most people are not able to pay for without borrowing money. This could be purchasing a house or vehicles. People also may experience a medical emergency or need to have a major repair in their house and need to take out a loan to pay for it.
Having these debts is not bad as long as people can make their monthly payments and still meet their other needs. Debt can become an issue though if people are no longer able to make the monthly payments. Eventually if the debt grows, people may find themselves in a position where they do not think they will ever rid themselves of their debt.
People who are overwhelmed by their debt may be able to rid themselves of the debt through bankruptcy though. People may have heard of various Chapters of bankruptcy. The most common types people hear about are probably Chapter 7, Chapter 11 and Chapter 13. It is important to know the differences between these to know which is the best option for their situation.
Chapters of bankruptcy
- Chapter 7 – This type can be for both individuals and businesses, and is a liquidation plan. People liquidate their non-exempt property to pay any existing debts. Most debts not paid for through liquidation are discharged at the end.
- Chapter 11 – This is generally for businesses. Through this process the business reorganizes and develops a plan to pay back creditors. Once the plan is complete, most remaining debt is discharged.
- Chapter 13 – This is also for individuals generally. However, instead of liquidating their assets people can keep their property and instead develop a repayment plan for creditors. At the end of the plan, most debts not paid for will be discharged.
Many people in New York may find themselves with overwhelming debt. Bankruptcy may allow people to achieve a fresh start, but each situation is different though and knowing the best option is important. Consulting with experienced attorneys could be beneficial.