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What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is a form of debt relief intended to help honest individuals get a fresh start by discharging most debt. It is the most common form of bankruptcy. Chapter 7 bankruptcy is sometimes called “liquidation bankruptcy” because certain assets may be liquidated to repay creditors. However, chapter 7 bankruptcy is more commonly known as “fresh start bankruptcy” because the majority of debt discharged when filing chapter 7 is wiped clean without repayment or the liquidation of assets.

Should I File for Bankruptcy?

If you are burdened with extensive debt, filing chapter 7 bankruptcy in NYC may be an ideal form of debt relief. With chapter 7 bankruptcy your unsecured debt, such as personal loans, medical bills, or credit card debt is discharged, or wiped clean, giving you a fresh start towards a bright financial future. Chapter 7 bankruptcy is especially helpful if you are being harassed by collections agencies, having your wages garnished, or have a judgment issued against you.

Is filing for Bankruptcy a Bad Idea?

No. For some people, bankruptcy can be a very good thing. Bankruptcy protection is an important tool for the stability of our economy and the well-being of hard-working individuals who become overwhelmed with debt. When clients file for Chapter 7 bankruptcy protection, they are taking productive steps to overcome difficult times.
Unfortunately, there is a stigma associated with bankruptcy that prevents many responsible adults from seeking debt relief through this legal channel. Much of the stigma associated with bankruptcy is founded on myths and falsehoods. If you are drowning in seemingly insurmountable debt, filing for Chapter 7 bankruptcy may be the most responsible, effective, and prudent strategy for resolving your financial situation.
Filing for bankruptcy may not always be your best option, but for many individuals, filing for chapter 7 is their best route. For those people, hiring a bankruptcy attorney to guide them through the process and protect their property from being liquidated is most likely the smartest, safest, and in the long run, the least expensive way to file.

Will filing for Bankruptcy get rid of all my debt?

Chapter 7 discharges (gets rid of) most unsecured debt. This is why it is commonly referred to as “fresh start” bankruptcy. Once you have filed for bankruptcy, the courts will discharge your debt. You are no longer responsible for that debt.

A Chapter 7 filing relieves a person from having to pay for most unsecured debts, such as credit card balances, medical bills, and court judgments.

Certain types of debt such as student loans, some government fines, some taxes, and child and spousal support usually cannot be discharged in a Chapter 7 Bankruptcy filing.

Will I lose my assets if I file chapter 7 bankruptcy?

Filing for Chapter 7 Bankruptcy will cause the liquidation of nonexempt assets by the United States Trustee. The bankruptcy trustee will evaluate and sell off the debtor’s nonexempt assets to pay off creditors. An experienced bankruptcy attorney can help you claim exemptions on the majority, if not all of your assets during the liquidation process. This can protect a person’s car and home, and other important possessions.

  • Cash, U.S. savings bonds and tax refunds up to $13,900 (exemptions double if filing jointly)
  • Household furniture up to $13,400
  • All wearing apparel up to $13,400
  • Appliances and household goods up to $13,400
  • Equity in a motor vehicle up to $4,000
  • Equity in a house, condo, or co-op up to $170,825.00 ($341,650.00 for spouses filing jointly)
  • Most pensions and retirement plans


There are several more exemptions in New York and some valuables can be exempted using multiple exemptions, increasing the amount of protection.  One example would be a married couple filing jointly could potentially protect $32,800 of equity in a car.  Just because something is not completely protected does not mean that you will lose it.  You can often buy items back from a trustee and in many cases a trustee will abandon items that are not worth selling.

How much does bankruptcy cost in NYC?

How much your Bankruptcy costs depends on several factors: filing fees, fees for mandated education courses, fees for acquiring the necessary information for filing (such as credit reports) and preparation/representation fees.

Currently, filing for Chapter 7 bankruptcy in NYC costs $335.

Additional fees for completing a mandatory credit counseling course and a debtor education course add to the overall cost of filing for chapter 7 bankruptcy in NYC. Debtor Education and Credit Counseling courses cost between $0 to $500, depending on where the course is taken. Some chapter 7 filers take free online courses, however some bankruptcy attorneys in NYC are known to charge unsuspecting clients up to $500 by including the courses in their overall fee. At the law offices of William Waldner, clients are offered various options for taking these courses, most of which range between $15 to $25 per course.

An extensive credit report is critical when preparing a consumer bankruptcy petition.
Many attorneys try and save money by using a basic 2-bureau credit report. This is risky because simple credit reports leave out important debts that must be included in the paperwork for filing chapter 7 bankruptcy. To ensure clients receive the most helpful credit report for filing bankruptcy, William Waldner provides an ultra-comprehensive 3-bureau credit report as well as a thorough public records search. This report is undoubtedly one of the absolute best when filing for chapter 7, however, it can be very expensive. Mr. Waldner does not charge clients for this service, and individuals who are represented by him receive this extensive credit report free of charge.

The bankruptcy cost associated with representation and preparation depends on whether you file pro se (without an attorney), with an attorney or pay a petition preparer to prepare your paperwork.
If you are looking for the cheapest way to file for bankruptcy, you can file pro se or without an attorney. If you prepare your own paperwork the process is free. If you have a petition preparer your case will not be free. Ironically, individuals who try and save money by filing for bankruptcy by themselves or hiring a “Bankruptcy Petition Preparer” often encounter unforeseen fees, lost assets, and debts that are not discharged by the courts, which cost far more than an attorney’s fee.

Most bankruptcy firms charge flat fees and offer flexible payment plans. However, the cost of hiring a bankruptcy attorney depends on the lawyer. There are low-cost bankruptcy attorneys in NYC who offer exceptional service at affordable prices.

During your free consultation, William Waldner will discuss your case and estimate your fee. His fees for Chapter 7 usually range from $1,000 to $4,000 depending on the complexity of the case. Larger offices often charge up to $10,000 for a consumer Chapter 7 bankruptcy, making William Waldner one of the most affordable bankruptcy attorneys who are reputable and vastly experienced.

How Does Chapter 7 Bankruptcy Work in New York?

In order to file chapter 7, an individual must meet specific qualifications laid out by the state of New York.

Before filing for bankruptcy, you should determine if you are eligible for filing under chapter 7. This is best done during a free consultation with a bankruptcy lawyer, but in summary, the ideal candidate for chapter 7 bankruptcy should:

A means test, which determines your average monthly income, must prove you are at, or under, the median income for New York. Because of the high costs of living, most individuals financially qualify for filing chapter 7.

A Chapter 7 is ideal for individuals struggling with unsecured debt, such as credit cards, medical bills, or personal loans.

Filing for Chapter 7 Bankruptcy will cause the liquidation of nonexempt assets by the United States Trustee. The bankruptcy trustee will evaluate and sell off the debtor’s nonexempt assets to pay off creditors. However, there are exemptions and a bankruptcy attorney can help a client filing for chapter 7 bankruptcy to protect their home, car, and other valuable items from being liquidated.

Chapter 7 Bankruptcy Process:

With a reputable bankruptcy lawyer, filing chapter 7 is a relatively simple process, typically lasting between 3 and 6 months from start to finish. Chapter 7 bankruptcy is not available to everyone.

Bankruptcy is a legal process. As with most legal processes, individuals who do not have adequate experience and knowledge with the specific process should hire legal counsel. That’s why most individuals filing for bankruptcy hire a bankruptcy attorney as their first step. While retaining a lawyer is not necessary to file bankruptcy, it is highly recommended to ensure you file out the correct forms with the correct information. Not doing so can imperil your chances of becoming debt free. Bankruptcy lawyers can also help protect your personal property from being liquidated. In the vast majority of cases, individuals who are represented by bankruptcy lawyers do not lose any of their property.

Before an individual files for chapter 7 bankruptcy they must complete credit counseling from a court approved agency. If you retain William Waldner as your bankruptcy attorney he will connect you with a credit counseling agency.

This is the most complicated step when filing for chapter 7 bankruptcy and the part where having a good bankruptcy lawyer can really help. In order to file for chapter 7 bankruptcy you must prepare a Voluntary Petition, schedules, and numerous other forms that detail you income and expenses, debts, exempt property, creditors, and other information. Those forms must then be filed with the bankruptcy court clerk. Chapter 7 Bankruptcy forms here >>

Once you have filed a voluntary petition with the court an automatic stay is put on your creditors, immediately halting creditors from trying to collect from you.

The stay on collection efforts includes:

  • Evictions
  • Foreclosures
  • Utility shutoffs
  • Lawsuit judgments
  • Wage garnishments
  • Other type of collection efforts.

The court appoints a trustee to oversee your case. The trustee takes control of your nonexempt property and could potentially liquidate it to compensate your credits as much as possible. The trustee will also examine your forms to make sure everything is correct.

The trustee will schedule a creditor’s meeting that you will need to attend. You may be asked questions about your financial situation. Typically creditors don’t bother to attend these meetings.

Before your debts are discharged you are required to complete a course on financial management.

The court issues a discharge order, eliminating your unsecured debt. You are no longer responsible for these debts and creditors no longer have any right to seek repayment.

Chapter 7 bankruptcy FAQ

When you file for bankruptcy, it will be public record. A letter declaring your bankruptcy from the courts will be sent to your creditors, and the discharge will go on your credit report, but besides your creditors and future creditors, typically the only people who will find out are the ones you tell. You may feel embarrassed if you have to file bankruptcy, but you shouldn’t, because it is a responsible step in solving your financial problems, and usually, the people you interact with, such as your friends and community members, never find out.

If you are considering filing for bankruptcy, your credit score is probably not great to begin with. But it is a myth that filing for bankruptcy will ruin your credit score and make you unable to secure any loans in the future. On the contrary, the average credit score after chapter 7 discharge is better than the credit score before filing bankruptcy. Before filing bankruptcy, it is unlikely that any creditor would lend you money with all your outstanding debt to other creditors.

After filing you are a better bet to creditors because there is no one else you owe money to. Because of the financial recession started in 2008, many financial responsible people were forced to file bankruptcy. With chapter 7 being more common, lenders are not as wary of lending to someone with a chapter 7 discharge on their credit score as they use to be.

Some debts cannot be discharged by filing chapter 7 bankruptcy. Typically these types of debt include child support or alimony, government fines, student loans and most taxes.

One of the biggest benefits of hiring a bankruptcy lawyer is protecting your property and other assets like your home and car. William Waldner will help you use legal exemptions to keep your stuff out of your case. He will also inform you in advance of any property or possessions that may be at risk of liquidation by the trustee. In his tenure as a bankruptcy lawyer practicing in NYC, he has never represented a client’s case where anything was unwillingly lost.

In NYC the costs of living are so high that most people qualify. Even if you don’t there is no limit on the amount of income you can have in a chapter 13.

Liquidation of assets is a reasonable concern when deciding if filing for bankruptcy is right for you. Under New York law, there are certain assets that are exempt from liquidation when filing for chapter 7. This highlights one of the biggest advantages of hiring a reputable bankruptcy lawyer. A good bankruptcy attorney will be able to protect most of your assets from being liquidated. Most people who are represented when filing for chapter 7 bankruptcy hold on to their house, car, family heirlooms, and other valued items. Learn more by reading: Do I Get to Keep My House and Other Assets in Bankruptcy?

One of the best tips for finding a good bankruptcy lawyer for filing chapter 13 is to hire a law firm or lawyer who specializes in bankruptcy. You want a firm or a bankruptcy lawyer that dedicates its practice solely to the area of law you need help with.

In order to qualify for Chapter 7 Bankruptcy, a debtor must pass the means test. The test is a two-step income and expense analysis that is very complicated to calculate. Our office will evaluate your situation to determine if you qualify for Chapter 7 Bankruptcy Protection. If you do not qualify for Chapter 7 Bankruptcy, we will research other alternatives, such as Chapter 13 Bankruptcy, to help you get the relief you need!

Yes. Once you have retained the legal services of William Waldner, he will file your Bankruptcy Petition and deal with your Creditors so that you don’t have to. Once collection agencies are informed that our office represents you, they are no longer allowed to harass or even contact you. Other collections, such as wage garnishment are also halted once your case is filed. Furthermore, Bankruptcy can stop foreclosures and repossessions of your property.

Yes. But don’t. Not only should you hire a lawyer, but ensure you hire a good bankruptcy attorney. The consequences of representing yourself, hiring a petition preparer, or retaining an inadequate attorney can be devastating if your case is not properly handled. Learn more about the cost of filing bankruptcy here

One of the best tips for finding a good bankruptcy attorney is to hire a law firm or lawyer who specializes in bankruptcy. You want a firm that dedicates its practice solely to the area of law you need help with.

No. It is completely understandable for someone who is struggling with debt to try and file for bankruptcy as cheaply as possible. While Paralegals and “Bankruptcy Petition Preparers” advertise themselves as the less expensive route, the risk they pose to your case and your financial future is not worth it. Absolutely do not use a paralegal or budget bankruptcy petition preparer. Find out why here.

In most cases, with a good bankruptcy lawyer, you can keep your home and still file for chapter 7 bankruptcy. Find out more here.

Cars often qualify as exempt property, allowing you to keep your car and still file for chapter 7. You can learn more by reading: Can I keep my Car in New York Bankruptcy Case?

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