Many people get into financial debt because of legal problems. Individual legal problems can stem from contract disputes or tax problems. Speak with an experienced NY bankruptcy attorney to understand if the type of debt incurred from a legal dispute can be wiped out by filing bankruptcy.
A tax debt may not be dischargeable in bankruptcy, but filing bankruptcy may result in dischargeable debt that leaves cash to pay off tax debt.
In a contract dispute, there is a legally enforceable agreement between competent parties. Competent parties are those who have the capacity to contract – they are of sound mind. In a contract, one party agrees to do something in exchange for some form of benefit. This benefit could be compensation. A contract must contain an offer, acceptance of the offer, a promise to perform, and consideration such as money. Contracts are essential to business deals, property acquisitions, and service provider-customer relations. Contract disputes often occur in society and leave individuals with debt when there are lawsuit judgments for one party not fulfilling a promise in an agreement. Individuals see contracts everywhere from cellular phone providers to mortgages.
In a bankruptcy, an individual who owes money in a contract may decide to keep the contract and continue paying on the debt, or let the creditor know that the individual does not plan to perform under the contract. If an individual does not perform under a contract, the person has to give up any property such as a car that the contract involved.
Bankruptcy is a legal proceeding to discharge debt for individuals. A debtor is able to forego debt in bankruptcy because bankruptcy provides a new start to debtors by cutting off old debt. Bankruptcy involves the bankruptcy court, judge, attorneys, creditors, debtors, and trustees. The trustee represents the creditors and goes through a petitioner’s bankruptcy filings with a fine-tooth comb. The judge tries to keep proceedings on track and fair. For instance, when a person is late for court, the judge may give the person a chance to arrive by waiting 20 minutes to call a case again before dismissing the case. This gives the party due process. The attorneys represent the different parties in the bankruptcy. They may represent the creditors or the debtors.
Two popular types of bankruptcy filings for individuals are Chapter 7 and Chapter 13. Chapter 7 bankruptcy discharges all an individual’s debts except for some non-dischargeable debt, and is best for individuals who do not have many assets, and whose home equity does not exceed an equity limit.
Chapter 13 is for individuals whose income prohibits them from filing a Chapter 7 bankruptcy or who have assets they want to keep from getting sold to pay off creditors. In Chapter 13, the debtor makes repayments to creditors over a three to five-year payment plan. At the end of that period, the remainder of the person’s debts is discharged.
If you are in debt, speak with an experienced NY bankruptcy attorney about your bankruptcy options.