How does a Chapter 7 Bankruptcy work in New York?
Filing bankruptcy gives financially stressed people a fresh start. In a Chapter 7 bankruptcy all credit card and other unsecured debts are wiped out giving you a chance at a clean slate financially and a new life overall.
After your bankruptcy your credit can be repaired within only a couple of years. There is an ongoing rumor that people that file for bankruptcy will have poor credit for 10 years. In fact consumers usually start receiving credit card offers within months of their bankruptcy discharge, and many will even qualify for a mortgage within only a few years.
Typically, when you file for Chapter 7 Bankruptcy the following things are true: First is that you can no longer afford to pay your debt, and the second is that you have no significant assets that could be sold in order to pay you creditors (most of our clients are allowed to keep their homes, cars and other valuables in a Chapter 7). By taking responsibility for your financial situation you are also telling the court that you had every intention of paying this debt back, but that your financial situation spun out of control and now you are unable to pay back your debts.
OK, so what does it take to qualify for a Chapter 7 bankruptcy discharge then? You will typically need to meet 3 criteria. First, you have moderate to low income or circumstances making your income inadequate to pay your debt off, second, you have debt, and third, you have not received another bankruptcy discharge recently (8 years from a prior chapter 7 filing date and typically 6 years from a previous chapter 13 filing date.).
The first criterion is your income level. This is determined by your household situation like cost of living, location, tax deductions, etc. The median income for your area is determined by statistics from the US Census Bureau. Theses statistics on median income level are used as a guideline for your case, but they are not set in stone. You may still qualify for Chapter 7 if you are making more than the median income for your area depending on your particular living situation.
For example let’s say you are living in Midtown Manhattan, single, and have no children. In this situation you could be earning over $47,000 annually and still qualify for Chapter 7. Or, a married couple in Manhattan with two dependants could be earning well over $105,000 and qualify for Chapter 7 protection.
When it comes to income each case is different, but IF your income is determined to be too high for a Chapter 7 you can still file a Chapter 13 bankruptcy, or even convert your Chapter 7 to a Chapter 13 during the filing process if needed and advised by your attorney.**
There is no set amount of debt that is necessary to qualify for a Chapter 7 Bankruptcy filing. Hypothetically, you could file a Chapter 7 owing only $1. However, this would not make sense because the court filing fees are $306.
Please note, in a Chapter 7 bankruptcy if you have substantial assets they can usually be “exempted” or kept out of your case. In some cases I guide my client’s through pre-bankruptcy exemption planning in order to keep everything out of a Chapter 7 Bankruptcy estate. IF the value of your possessions is higher than this threshold then items may be sold to satisfy your creditors, but a qualified attorney will explore all possible exemptions and will use different laws to protect different assets based on your particular situation.**
**IMPORTANT SIDE NOTE: For these reasons it is of the utmost importance to work with a reputable attorney, not a bankruptcy mill or petition preparation service. A reputable attorney in your area should be known by the bankruptcy court, should have a near 100% track record of chapter 7 bankruptcy discharges, and should easily be able to convert your Chapter 7 to a Chapter 13 or visa versa. Petition preparer services and bankruptcy mills are typically unfamiliar with all the different ways a consumer can be protected, as well as the intricacies of converting filings. They may not always have the best reputation with the courts. In New York the bankruptcy attorney you choose will have a big impact on your case.
Remember when you file for bankruptcy you are protected from the calls and collections actions of your creditors. Your bankruptcy attorney will start taking the creditors calls right away, and you can legally direct any and all future communications to your attorney, so you can feel like you’re getting a fresh start from your financial stress on day one.
If you live in New York, are considering bankruptcy relief and have creditors calling you day and night, please contact the Law Office of William Waldner for a free bankruptcy consultation. We only practice Bankruptcy Law and are always here to help.
Call 212-244-2882 to arrange a free bankruptcy consultation today. Mention this blog post when scheduling by referencing the promotional code: BC7212 to receive the required 3 bureau credit report, and required credit counseling course, both at no cost with a signed retainer agreement.
This article is intended for educational purposes only. By reading this article no attorney-client relationship has been created.