Bankruptcy has become an everyday term, given the current economic situation in New York and the rest of the country. Despite the commonality of the word, most people don’t fully understand how bankruptcy works and what is needed to qualify. There are multiple types of bankruptcy filings, but two types of bankruptcy – Chapter 7and Chapter 13, are the most common. Under Chapter 7, you may be able to have all of your qualifying debts erased. Under Chapter 13, you cannot have all of your debts erased, but you are able to set up a workable plan to repay your debts.
While it may seem ideal to have all of your debt erased in a Chapter 7 bankruptcy, there are some restrictions as to who can utilize this debt relief tool. To file for Chapter 7 bankruptcy, you must be financially qualified. If your six months of income is more than the median income as defined by New York law, then you must pass a secondary financial analysis, called
