Due to divorce and lowered income . I am struggling to make minimum payments and can not afford my car lease anymore, however I still need a car for work and my child
Your savings and mutual funds are sheltered and excluded from a bankruptcy if they are in an ERISA qualified account, like an IRA, 401(k) and similar instruments. Your bankruptcy lawyer will be able to help you understand what exemptions are available for you in your situation and what are not. There are also other exemptions. Depending upon the amount and the exemption, you may be able to shelter your savings and mutual fund accounts.
First, I changed the Practice Area to Bankruptcy & Debt because that area more accurately covers your question.
Second, if you file Chapter 7 bankruptcy, then you may be able to keep your car lease, and possibly reaffirm the debt by entering into an agreement with the lender. However, this is subject to the Court's approval. Similarly, you may be able to work out with the lender to surrender the car in such a way that will have minimal impact on your ability to get to work and transport your child. Once you receive a Chapter 7 discharge, if you do surrender the vehicle, you should be able to get a loan to purchase a replacement vehicle, but at a higher interest rate because of the recent bankruptcy.
Third, what happens to your savings and mutual funds depends on certain facts and circumstances. Generally, your assets are entitled to certain exemptions under either New York State or Federal law, which means that if your assets are beneath a certain value, then the Trustee cannot seize or sell those assets. Even if the assets are above that certain value, and the Trustee wants to seize and sell them, you still receive the value up to the exemption limit. Specifically, if your mutual funds are within an IRA, for example, then you may still be able to keep all of them.
Bankruptcy requires planning before filing. A conversation with an experienced bankruptcy attorney could be helpful.
You really need to retain the right type of attorney or you will be making a serious mistake. You will be able to keep your mutual funds only if they are in a retirement account or if you do not own real estate, in which case it will be covered by a wild card exemption. You should also seek modification of any child and spousal support payments. To properly answer your questions and address your concerns, the best way to handle this is with an in person consultation with an experienced bankruptcy and matrimonial attorney.
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