Bankruptcy in New York
When debt keeps piling up, it’s easy to feel like there’s no way forward. Unexpected life events—like job loss, medical bills, or divorce—can push even the most careful planners into a financial crisis.
Filing for bankruptcy in New York can stop creditor harassment, freeze foreclosure proceedings, and even wipe out certain debts. Whether you qualify for Chapter 7 to erase unsecured debt or Chapter 13 to restructure payments, bankruptcy can give you the breathing room you need to rebuild.
But every situation is different, and New York has its own rules. Having a knowledgeable attorney by your side can help you protect the assets that matter most.
We connect New York residents with experienced bankruptcy attorneys. If you’re ready to take the first step toward a fresh start, reach out today.
Types of Bankruptcy in New York
Bankruptcy is a legal process designed to give individuals and businesses a chance to rebuild. Filing can eliminate some or even all of your financial obligations, depending on your circumstances.
If you’re falling behind and can’t see a way to catch up, filing under Chapter 7, Chapter 11, or Chapter 13 might be the right step. Each chapter offers a different approach based on your financial goals, the assets you want to protect, and your income level.
In New York, bankruptcy cases are handled by the U.S. Bankruptcy Courts across four federal judicial districts: Southern, Eastern, Northern, and Western. Your case will be assigned based on your county of residence.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy can be a strong option for people who need a true financial reset. It’s often the best fit for individuals whose income is too low to realistically catch up on debts. Before filing, it’s important to take a close look at your income, expenses, and overall financial health.
Generally, Chapter 7 is reserved for those who have little or no stable income. While filing can erase most unsecured debts, it sometimes comes with the loss of certain property, such as a house, a car, or other assets, depending on what exemptions you can claim.
Once you file, an automatic stay immediately stops most collection activities like wage garnishments and foreclosure actions. Keep in mind, though, that some debts are not wiped out and must still be paid.
In New York, qualifying for Chapter 7 bankruptcy involves passing the means test, which assesses your income against state-specific thresholds. As of April 1, 2025, the median annual income limits are:
- 1-person household: $68,795
- 2-person household: $89,052
- 3-person household: $108,589
- 4-person household: $134,443
- Each additional person: Add $11,100
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is a more involved process than other types and is typically used by businesses or individuals with significant assets and complex debt situations. Instead of erasing debt or requiring you to sell off property, Chapter 11 focuses on creating a reorganization plan.
This plan usually spans four to eighteen months and outlines new, manageable terms for repaying creditors. You can also keep assets while working with creditors to stay current.
Filing for Chapter 11 bankruptcy requires a detailed look at every corner of your financial situation. You’ll need to present the court and your creditors with a full breakdown of your income, debts, assets, and expenses.
Getting these documents right is critical. The key forms you’ll need to submit include:
- Voluntary Petition for Individuals Filing for Bankruptcy (Form B101)
- Summary of Assets and Liabilities (Form B106)
- Schedules A/B through J (covering real property, personal property, debts, income, and expenses)
- Statement of Financial Affairs (Form B107)
- Chapter 11 Statement of Current Monthly Income (Form B122B)
- Creditor Matrix (a list of all creditors with their contact information)
- Schedule of Executory Contracts and Unexpired Leases (Form B106G)
- Proposed Disclosure Statement and Reorganization Plan
Chapter 13 Bankruptcy
Chapter 13 bankruptcy—often called the wage earner’s plan—gives individuals with regular income a way to catch up on debts without having to give up their property. In NY, once you file, the court will appoint a trustee who reviews your income, debts, and assets to shape a workable repayment plan.
Unlike Chapter 7, Chapter 13 focuses on reorganizing your debt into manageable payments over three to five years. The structure and flexibility of your plan will depend largely on the assets you want to protect and how steady your income is.
Compared to Chapter 7, which wipes out debt quickly but often requires giving up property, Chapter 13 lets you keep what you’ve worked hard to earn, as long as you stick to your plan. It’s also more streamlined and affordable than Chapter 11.
The Bankruptcy Process in New York
There’s rarely a perfect time to file for bankruptcy, but if you know there’s no realistic way to pay off your debts within five years, it may be the right move. Filing can help limit the long-term damage to your finances and give you a structured path to rebuild stability.
In New York, the first step toward filing is pulling together all of your financial documents. You’ll need to provide a full picture of your monthly expenses, total debts, assets, and annual income. The court relies on this information to assess your case.
New York’s exemption laws are generous in several key areas, making it possible to protect much of what you own while reorganizing or clearing your debt.
The state exemptions include:
- Homestead: Up to $179,975 in equity in your primary residence (amount varies slightly depending on the county)
- Motor vehicle: Up to $4,825 in equity; $11,975 if the vehicle is equipped for a disabled driver
- Personal property: Includes clothing, household goods, and appliances (reasonable value)
- Wildcard exemption: Up to $1,175 in any property, plus unused portions of the homestead exemption up to $11,825
- Tools of the trade: Up to $10,000 for necessary work tools or equipment
- Public benefits: Fully exempt, including Social Security, unemployment benefits, workers’ compensation, and public assistance
- Retirement accounts: Most tax-exempt retirement accounts, including 401(k)s, IRAs, and pensions, are fully protected
Work With an Experienced New York Lawyer
New York’s exemption laws offer important safeguards, but successfully navigating the process requires careful planning. Filing on your own can lead to avoidable mistakes that may cost you time, money, or valuable property.
Working with an experienced bankruptcy attorney can make all the difference. They’ll guide you through each step, help you maximize your protections, and put you in a stronger position to move forward.
Submit a request online or call us today at (866) 345-6784 to speak with an experienced lawyer in your area!
About the Author
Aaron is a professional legal writer with a B.S. in English Education from Southern Illinois University – Carbondale. He has written, published, and edited thousands of legal articles for RequestLegalHelp, which has connected over 5 million people to legal help in the United States.
With over five years of experience writing thousands of legal articles for law firms across the U.S. and Canada, Aaron specializes in covering federal, state, and city-level legal issues ranging from auto accidents to wrongful terminations.
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