Chapter 7: Top 5 Questions

Whenever considering a bankruptcy, you want to make sure you are completely informed of what you are signing up for.  Our Westchester bankruptcy lawyers are here to assist you through these difficult financial times.  Here are some of our clients pressing concerns….

 1.       Why do they want to know my husband’s income, he is not filing?

One of the grandest changes to the bankruptcy laws in 2005 was what the court has deemed “disposable income”.  Under the new laws, we must consider all of the household income; that includes your husband/spouse who is not filing, or even your parents who are living wih you – their  Social Security income gets counted.  Even though finances may be separate, the Court considers that if it’s your debt…it’s the household’s debt.  So if the household can afford to repay your creditors, unfortunately a Chapter 7 is not an option.  Now this does not mean your bankruptcy will show up on his credit report, just that we have to consider his income.  At the same time, the court will allow us to allocate his income to his expenses, and that could get you right back into the Chapter 7 arena.

 2.       What is a reaffirmation agreement?

A reaffirmation agreement literally is a re-commitment on debt that otherwise would have been discharged in your bankruptcy.  These are most common with mortgages and car creditors for homes/cars that you want to keep.  The creditor wants to make sure you stay responsible on the debt.  The positive side of a reaffirmation agreement is that it will help rebuild your credit as your payments will report to the credit bureau and allows the lender to work with you on loan modifications in the future.  The down side: if something happens to you financially in the future, you are still responsible on the debt regardless.

 3.       Is it ok if I keep a couple of my credit cards?

Unfortunately, we recommend no – after all, this is part of the reason for the bankruptcy in the first place.  But the creditor has the right to shut off your account even if you leave them out.  There are other ways to rebuild your credit after a bankruptcy rather than keeping a debt that is dischargeable.  The purpose of this bankruptcy is to give you a chance at a fresh start, you rob yourself of that opportunity when you seek to keep a debt.

 4.       Will I be able to buy a house after I file?

Bankruptcy is just one issue mortgages consider when looking to finance you in the future.  They will also consider what happened after you filed, how is your income today, what is the value of the home.  It may take some time, but yes there is a future after bankruptcy that will allow you to purchase a home.

 5.       Is anyone going to know?

Bankruptcy is a public record, so it can be found out.  The court is only going to notify your creditors, but they will also notify any co-debtors.  If your mom co-signed on your car, she will get a notice of your bankruptcy filing (it won’t effect her credit, but she will get a paper in the mail).  Bankruptcy is nothing to be ashamed of, more and more of your friend and family are using bankruptcy as an option to better their life, to stop those dinnertime phone calls, and end the cycle of “robbing Peter to pay Paul”.  While no one likes the feeling of filing bankruptcy, we will work with you through this process so you have an end to your debt.


Please contact our Westchester Bankruptcy Attorneys today at (914) 864-2465 or (845) 628-4301 to discuss which option is right for you. Our Chapter 7 bankruptcy lawyers will work with you to manage your debt and help you through your bankruptcy filing.