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Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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My Niece in approx. 30,000 in debt with credit cards, school

Resolved Question:

My Niece in approx. 30,000 in debt with credit cards, school loans and car payments. She is a single mother and has a low paying job. She is getting deeper into debt. What are the advantages to filing for bankruptcy v. disadvantages? What is the safest and most economical way for her to do it if necessary?
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  Ellen replied 6 years ago.

So sorry to hear of your dilemna. I will strive to provide you with legal information to assist you.

I am a lawyer with 25 years experience. Although I am not your attorney, I hope that I can give you helpful legal information on this open and nonconfidential forum.

Your niece may want to consider a chapter 7 bankruptcy. It will allow her to begin to reestablish her credit within a year. I will explain.

As an individual, there are two types of bankruptcy available. A Chapter 7 and a Chapter 13. There are distinct differences in between a Chapter 7 and a Chapter 13 bankruptcy.

A Chapter 7 bankruptcy could discharge (erase) all of her unsecured debt such as credit cards, judgments and personal loans. It would be an opportunity for a fresh financial start. However, she may have to surrender assets, if any, that exceed her exemption.

A Chapter 13 bankruptcy is a repayment plan for an individual. It may require that she repay some of your unsecured credit card debt over a 3 -5 year period. However, she may retain assets that exceed your exemption.

Here are the exemptions for New York:

Your niece will want to retain bankruptcy counsel to assist her in filing the petition. Although she may legally file herself without an attorney, bankruptcy is a complex procedure that is best handled with legal counsel.

Best wishes for a successful outcome. If you have additional questions, please do not hesitate to submit them to me directly.

Thank you,
Customer: replied 6 years ago.

I am not sure what you mean by the following?

"However, she may have to surrender assets, if any, that exceed her exemption."

Also, you mention personal loans; does this include school loans?
Expert:  Ellen replied 6 years ago.
Your niece would be able to retain assets that are considered exempt from the bankruptcy. Here is a list of what she would be able to keep:

Student loans may be discharged in a bankruptcy if they are not considered to be "qualified" student loans.

Only loans that satisy the requirements under 26 USC 221(d)(1) are considered a qualified education loan.

Here is an informative article on the subject.

Ellen and 2 other Bankruptcy Law Specialists are ready to help you