Who is Eligible for Chapter 7 Bankruptcy in NYC?

A Chapter 7 Bankruptcy discharge will eliminate your toxic debts and provide a fresh start on your finances, but to be eligible your financial situation needs to meet certain standards.  Your income and bankruptcy history are the primary eligibility factors.  Unless you have been denied a bankruptcy discharge in the last 180 days, have filed for Chapter 7 in the last 8 years, or have done something to defraud your creditors you should be eligible for Chapter 7 bankruptcy protection.

To be eligible for Chapter 7 Bankruptcy in particular you will need to pass the bankruptcy means test unless your income is below the New York median income levels.  Currently for a one person household in New York City the median income is $47,414 or $59,631 for a married couple.  If you make less than this amount you may file for bankruptcy straight away.  Not surprisingly however, many of our clients in Manhattan earn more than this.  If you are earning more than the median income you are required to take the means test. After subtracting allowable expenses, a portion of your priority debt and secured debt arrears, the means test will determine whether you have enough income left over in your monthly budget to repay your debts.

The interesting thing about Chapter 7 Bankruptcy in New York is that many of our clients pass the means test even if they are making well into the six figures because New York City is such an expensive place to live.  The court has decided that there are things you will need in order to survive after your bankruptcy.  The high prices you have to pay for these things in New York City simply leaves less money available in your monthly budget for repaying your outstanding debts.

If you fail the means test the court has determined you actually have enough disposable income in your monthly budget to repay at least a portion of your debt in a 3-5 year payment plan.  In this case filing for Chapter 13 may be the best and only option available to you but will still provide significant relief from your debts and protection for your assets.  A good attorney in New York City will advise you towards the best outcome for your particular financial situation.  This advice may include filing for Chapter 7, filing for Chapter 13, or skillfully converting your Chapter 7 to a Chapter 13 midway through the process.   To get the best bankruptcy result it’s important to work with an experienced bankruptcy law firm.  Bankruptcy is a powerful debt relief tool, but not something to be taken lightly.  Avoid bankruptcy mills that work on volume, or petition preparation services that can’t offer legal advice.

If you are considering bankruptcy, but have questions about Chapter 7 eligibility in New York City contact the Law offices of William Waldner.  Most of our clients are happy to learn that significant debt relief is available even if they are earning more than the New York Median income levels.   As of 11/27/2013 we have a 100% Chapter 7 Bankruptcy discharge record in New York City while providing affordable bankruptcy assistance for all New Yorkers.


This article is intended for educational purposes only.  By reading this article no attorney-client relationship has been created.