Bankruptcy in New York

Are you contemplating bankruptcy or hiring a bankruptcy attorney in New York? Are you tired of creditors calling for payments you can’t make? Maybe looking for a way to get out of debt and have you exhausted all other options? Then bankruptcy might be the solution you seek. It is a legal option that can erase a portion or all of your debts.

Types of Bankruptcy in New York

Bankruptcy is a legal process that helps individuals and businesses get a fresh financial start. It eliminates a portion of or all of their debts or financial liabilities. In New York, to be approved, individuals must prove they have a hardship that prevents them from staying current on their financial obligations. Keep in mind that not all debts qualify. Some liabilities, such as child support arrears, delinquent taxes, alimony, and student loans generally do not qualify for discharge. Consumers who find themselves falling behind in debt can file either Chapter 7, 11 or 13. To determine which option is right for you, you’ll need to assess your goals, assets, and income. You should also consider working with an experienced bankruptcy attorney.

Bankruptcies in New York are under the jurisdiction of the U.S. Bankruptcy Courts for the 4 districts in the state. Your case will be heard at one of the 10 courts in the Northern, Southern, Eastern, or Western districts.

Chapter 7 Bankruptcy

Many people find Chapter 7 to be the right solution for their circumstances because it provides them with the opportunity to start over financially. However, before filing for Chapter 7 bankruptcy, you should thoroughly assess your income and ability to repay what you owe. You should also speak with a bankruptcy attorney in New York who can help you to decide if a liquidation plan is right for you.

Typically, individuals approved for Chapter 7 lack stable income or have experienced a change in circumstances that has resulted in an inability to manage their debts. Though Chapter 7 erases debts, the tradeoff is you may have to give up certain possessions, such as your home, car or some other assets. However, once you file your petition, an automatic stay goes into effect that requires all collection activity against you like foreclosures and garnishments, to stop temporarily. However, the automatic stay does not prevent all collection attempts. For example, if you owe child support or restitution for a criminal case, you are still liable for those payments.

Before filing a Chapter 7 bankruptcy in New York, you must pass a Means Test. In short, your family’s income must be lower than the median income of New York families of the same size. When you file a bankruptcy petition in New York, an automatic stay prevents your creditors from continuing their attempts to collect your debt. However, under local bankruptcy rules, a creditor can request an exemption from the court to continue collecting the debt. Bankruptcy law also requires that you undergo credit counseling before you file. This can typically be completed online, and the Department of Justice maintains a list of approved providers.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is more complex than other types of bankruptcy. It is often used by businesses and certain types of people. It allows petitioners to restructure their debts with a reorganization plan, so they are easier to manage over a determined length of time, usually four to 18 months. The main benefit of Chapter 11 bankruptcy is that it does not require petitioners to sell off or liquidate their assets to pay what they owe. It does allow debtors to negotiate with their creditors a reorganization plan that enables them to stay current on their debts moving forward.

Procedures for filing a Chapter 11 bankruptcy in New York differ slightly depending on whether the filer is an individual or a business. Some of the Filing Requirements include:

  • File petition and pay fee of $1,738
  • List of creditors
  • Certificate of credit counseling and debt repayment plan (individuals only)
  • Summary of assets and liabilities
  • Schedule of income and expenses

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is a debt restructuring or wage earners plan. In New York after you file, the courts will assign a trustee to examine your liabilities and assets and ability to pay bills. Unlike other types of bankruptcy, Chapter 13 involves you restructuring your debt with a three to five-year repayment plan. The flexibility of this repayment plan will depend on what property you want to keep and how steady your income is. It may also give you the opportunity to have some or most of your debts discharged.

The Eastern District of New York court provides a comprehensive checklist for Chapter 13 bankruptcy filings. Some of the requirements include:

  • File petition and pay $313 fee
  • Certificate of credit counseling and debt repayment plan
  • Creditor lists, secured and unsecured
  • Statements of income, expenses, assets, and liabilities
  • Chapter 13 plan

The Bankruptcy Process in New York

There is never an ideal time to declare bankruptcy. However, if you are unable to pay off what you owe within five years, filing for bankruptcy can help you to lessen the negative impact on your situation and help you get back on track.

In New York to begin the filing process, gather all of your financial records, including monthly expenses, debts, assets and annual income. This information is crucial to give the courts an accurate picture of your circumstances. Failure to provide all necessary information can result in your petition being denied.

New York residents can choose to use either the federal exemptions from the U.S. Bankruptcy Code or the state exemptions. However, you cannot mix and match between the two lists. Some of the state exemptions under New York law include:

  • Equity in a vehicle up to $4,550
  • Clothes, furniture, and other household goods
  • Pension and retirement benefits
  • Homestead exemption for your residence (amount of equity permitted varies by county)

New York also offers two exemptions that are only available if you do not claim the homestead exemption. If you meet this qualification, you can claim a wildcard exemption for up to $1,550 in personal property. In addition, you could be eligible for a cash exemption up to $5,700.

At least six months before you file for bankruptcy, eliminate unnecessary spending. Do not run up the balances on your credit accounts. You’ll also need to complete an approved credit counseling course, usually online or over the phone. Credit counseling is necessary to help you learn financial literacy and help you learn better financial habits. Once you complete the course, you’ll receive a certificate of completion to include in your filing. If you don’t have the certificate of completion from the credit counseling course that you took, the courts will reject your bankruptcy petition.

Work With an Experienced New York Lawyer

Hiring a local bankruptcy lawyer in New York during this process can help reduce the costly risks of self-representation in court. An experienced bankruptcy lawyer understands state and federal bankruptcy laws. He or she can help you understand which laws apply to your case, especially which debts that can be discharged or can’t be discharged. An experienced New York attorney can also offer you guidance to improve the outcome of your case.

Keep in mind that there are debt management alternatives and financial resources that may benefit you more than bankruptcy, such as debt consolidation. Though bankruptcy is an attractive solution, it is best as a last resort. Do you need immediate help? Then one of our experienced lawyers in New York can guide you through the entire bankruptcy process. We can even help you connect with an attorney across New York state lines.

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