You can’t be Half Bankrupt
Just like the expression “You can’t be half pregnant”, the same is true for Bankruptcy in New York. What I mean by this is that I have to turn away many potential clients who want to file for Bankruptcy but have considerable assets which they do not want to give up during the Bankruptcy process. Now many lawyers will say you can protect some assets and even engage in something called “exemption planning”, and that is all well and good. However, if you have considerable assets, for instance a car which is only a few years old and is paid off, chances are you likely will not be able to protect that asset when filing for Bankruptcy. In other words you’re either going to have to surrender it, or you’re going to have to buy it back from the Trustee for a particular price. The monies used from the sale or from your re-purchase go to the creditors. Thats what the entire process is intended to do. It’s intended to allow you to take care of various unsecured debt that you have, however the caveat is that if you have assets which fall above the limit that the Bankruptcy law protects, you will have to give up those assets. Taken in context, this, for many, is a great deal.
Lets say you have $100,000 in credit card debt and your assets fall above the exemptions allowed under Bankruptcy law. For instance lets say you have a rare book collection worth $10,000 . The Bankruptcy exemptions under New York Law will likely only protect a portion of the value of those books, so they likely will have to be sold and proceeds used to pay off the creditors. However, for about $10,000, you get rid of $100,000 worth of debt. That means no more restraints on your bank account or garnishing wages. It should be looked at as a relief. Now, again, many people do not have assets or assets whose value goes above the amount allowed under the Bankruptcy Code. But if you’re one of the few who do, realize that you cant get rid of your debt AND not give up valuable property. However, for a fraction of the cost of the actual amount of debt, you’ll be able to start fresh again.