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How Can NYC Bankruptcy Lead to a Stronger Financial Future?

Most conversations about NYC bankruptcy occur in a negative context. It’s complicated and requires a debtor to follow strenuous procedures. Filing for NYC bankruptcy has repercussions for your credit score and borrowing capabilities. Bankruptcy can even feel like a financial failure.

Yet, an NYC bankruptcy lawyer also sees the opportunity that comes after the bankruptcy process. There is a positive impact when you overcome your debts. Ultimately, NYC bankruptcy can create a stronger financial future for an individual in substantial debt.

Filing for NYC Bankruptcy Halts the Credit Calls

During the NYC bankruptcy process, the debtor is no longer responsible for deciding what debts to repay and which ones to ignore. The bankruptcy trustee is tasked with this responsibility. The bankruptcy trustee repays your debts out of the bankruptcy estate, which is created at the time of your bankruptcy filing. It is necessary for the bankruptcy trustee to follow specific rules when determining the order to repay creditors. This order is called priority.

The creation of a bankruptcy estate and the imposition of priority for repayment make it impossible for the debtor to control any property or payments. Therefore, one requirement of NYC bankruptcy is creditors must cease all collection actions. Phone calls, emails, visits to a public place, and other demands are prohibited, giving a debtor an opportunity for relief from the constant contact from creditors and collection agencies.

NYC Bankruptcy Imposes Financial Restrictions

There are two chapters of the U.S. Bankruptcy Code utilized by individuals to overcome debt. Chapter 7 is referred to as liquidation because all the non-exempt property of the debtor is sold and the funds used to repay creditors. A Chapter 7 bankruptcy typically takes three to six months.

Meanwhile, Chapter 13 bankruptcy is called reorganization. In a Chapter 13 bankruptcy, the debtor isn’t required to liquidate his or her property. Rather, the court imposes a three to five-year plan for repayment of the outstanding debts. In this type of NYC bankruptcy, the debtor is responsible for adhering to the repayment plan. A Chapter 13 bankruptcy is only finalized at the end of the three to five years.


Both types of bankruptcy require commitment and participation by the debtor. It is mandatory to carefully manage assets and exempt property outside of the bankruptcy estate, not incur additional debt, and if filing under Chapter 13, follow the repayment plan. These stringent financial requirements can set better financial habits for a lifetime. An NYC bankruptcy lawyer helps you understand the exact requirements of bankruptcy and any conditions mandated by the bankruptcy court in your case.

NYC Bankruptcy Is a Fresh Start

Bankruptcy is a powerful tool because it gives an individual a fresh start financially. At the conclusion of an NYC bankruptcy case, any remaining debt that is included in your NYC bankruptcy is discharged. What does this mean? The slate showing your missed payments, outstanding credit card bills and other financial obligations is wiped clean.

Bankruptcy discharge is crucial for individuals that have overwhelming debts. There is a strong likelihood that without NYC bankruptcy those debts would never be paid, the collection calls would continue indefinitely, and there would be no opportunity to implement better financial practices. In this instance, the debtor and creditors all lose. However, NYC bankruptcy allows for an opportunity to spend and save money intelligently, without the crushing weight of earlier debts.

You Will Rebuild Credit After NYC Bankruptcy

A major concern for individuals facing bankruptcy in NYC is the impact bankruptcy has on a person’s credit score and borrowing capability. There is certainly an adverse effect on a person’s credit history in the short-term. A frequent question for bankruptcy attorneys is whether the individual will ever be approved for a mortgage, car loan, or credit card. The answer is yes.

The majority of individuals who file for bankruptcy are able to reestablish their lending capability and creditworthiness. This includes approval for a credit card and small loans within a few years of your bankruptcy discharge. Certain credit card companies will even approve an individual for a small line of credit within months of an NYC bankruptcy.

Rebuilding credit takes financial dedication and commitment, which makes it a fantastic goal after any bankruptcy. It requires close attention to income and savings, and a frugal approach to spending. These are all good habits following a Chapter 7 or Chapter 13 bankruptcy.

Talk with an NYC Bankruptcy Lawyer

If you are overwhelmed by debt and considering an NYC bankruptcy, it is important to talk with a bankruptcy lawyer first. At the Law Offices of Michelle Labayen, we help you assess the consequences and benefits of bankruptcy in a free initial consultation. Schedule your conversation with our legal team today by calling (973) 622-1584.