There is no such thing as a partial bankruptcy

Every once in awhile I get asked if it’s possible to file a “partial bankruptcy.” There is no such thing in the bankruptcy code.

A chapter 7 bankruptcy proceeding involves having a court-appointed trustee look at your whole financial picture, and report back on whether it might be possible to pay off your debts by selling some of your stuff. There are exemptions New York that are generous enough that losing your house or car would be really unlikely.

There are exceptions to that:

• If you have a second home or multiple cars, and you’re still under the income limits for a chapter 7 bankrtuptcy, then the trustee might take a very close look to understand what’s going on.

• You need to be able to afford any home or car loans you have, because bankruptcy won’t protect you from having the lender lay claim if you have that kind of secured loan that you cannot pay.

What happens next depends on your personal circumstances. If you do have a secured debt you can’t afford even after your credit card and medical bills are discharged, it may make sense to sell the home, or surrendur the vehicle to the lender. Once we chat about your situation, I can give you that kind of legal advice, but not until then.

Assuming the trustee agrees that you don’t have enough income to cover all of your debts and expenses, the judge will get a report to that effect, which will probably lead to a discharge of all of your debts. We can talk about what that might mean for your credit rating during your free consultation.