New York Bankruptcy Means Test
Not everyone who wants to file a Chapter 7 in New York is actually eligible to do so under the New York bankruptcy means test. The means test calculation is necessary is to ensure that only folks that truly canât pay even a portion of their debts are able to file bankruptcy under Chapter 7 of the Bankruptcy Code. If youâre below the applicable income limits for New York, you pass the means test, meaning you are eligible to file a Chapter 7 bankruptcy in New York. If your income is higher than what is allowed, you may nevertheless qualify for Chapter 7 after completing part two of the New York means test for bankruptcy.
Data on Median income levels for New York
New York Median Income Standards for Means Test for Cases Filed On or After May 1, 2021
Will I Receive A Discharge In Bankruptcy
Certain types of debt automatically do not get discharged in bankruptcy, like certain taxes, student loans, most government fines and penalties, court restitution orders, domestic support obligations , and debts in connection with divorce decrees, among others.;
For other types of debts, creditors have the right to file a lawsuit in the Bankruptcy Court, called adversary proceedings, against the debtor to determine if these debts are dischargeable. Creditors can sue debtors for a judgment in the court determining that their debts will not be eliminated in bankruptcy.
Here are some examples of debts that could be excepted from discharge with a bankruptcy court order:
- Actual fraud or false representations
- Consumer debts owed to a single creditor above the dollar limits specified in the Bankruptcy Code for luxury goods or services
- Debts for malicious injury of the debtor to another person or entity or property of another person entity
- Money or cash advances above the dollar limit specified in the Bankruptcy Code incurred within the time period specified in the Bankruptcy Code
- Renewals or refinancing of credit obtained under false pretenses
When Is The Right Time To File For Chapter 7 Bankruptcy In New York
A question I contuniously get from clients in my New York office is When is the right time for Bankruptcy in New York.; The question is really a very personal one.; It depends on you, your family, and your life situation at the present time.; If youre like many people out there, you may be struggling to make ends meet.; If youre also like some people out there, youll have at least some small amount of savings put away.; When you begin to realize that youre using your savings and its not doing anything to minimize your debt; that it in fact is simply letting you pay your minimums on your cards and let you float for another month, thats a hint that you may want to consider filing for Chapter 7 Bankruptcy in New York.; The thing I hate to see most is clients going through their IRA accounts and 401 to pay minimums towards cards that they will never repay.; Its a waste of money.; Furthermore, if you find at the end of the month that your credit card payments are causing you to be late on your mortgage payments or car notes, that may be a point where you might want to consider Bankruptcy.; Lastly, if youre income is likely to rise shortly you want to consider filing, as there are certain income limits on when you can file for a Chapter 7 Bankruptcy.
Recommended Reading: Which Of The Following Phrases Best Summarizes Chapter 7 Bankruptcy?
Most Keep Their Property In Chapter 7
Most people are able to keep their property even though they file for bankruptcy. The law provides for exemptions, which are things you get to keep even though you file for bankruptcy. This includes a car, if it is not too valuable; some money in the bank; your household goods and wearing apparel; your retirement benefits and even your house again, if there is not too much value in it.
Chapter 7 Means Test 101
The means test prevents filers with the ability to repay creditors from discharging their debt. The means test assesses the filer’s debt and income from the preceding six months.
If you have a certain amount of income left over every month after paying creditors, you will fail the means test.
Although you can be ineligible for Chapter 7 bankruptcy, Chapter 13 is an option. A Chapter 13 bankruptcy allows the debtor to repay creditors in a five-year repayment plan.
You May Like: What Is Epiq Bankruptcy Solutions Llc
The Chapter 7 Discharge
A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. Because a chapter 7 discharge is subject to many exceptions, debtors should consult competent legal counsel before filing to discuss the scope of the discharge. Generally, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of chapter 7 cases. In most cases, unless a party in interest files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order relatively early in the case generally, 60 to 90 days after the date first set for the meeting of creditors. Fed. R. Bankr. P. 4004.
The grounds for denying an individual debtor a discharge in a chapter 7 case are narrow and are construed against the moving party. Among other reasons, the court may deny the debtor a discharge if it finds that the debtor: failed to keep or produce adequate books or financial records; failed to explain satisfactorily any loss of assets; committed a bankruptcy crime such as perjury; failed to obey a lawful order of the bankruptcy court; fraudulently transferred, concealed, or destroyed property that would have become property of the estate; or failed to complete an approved instructional course concerning financial management. 11 U.S.C. §;727; Fed. R. Bankr. P. 4005.
Chapter 7 Looming Over You Get Professional Legal Help Today
You don’t need to face creditors all by yourself. Filing for bankruptcy may be one of the most significant financial decisions you’ll ever make.
An attorney can answer your questions about Chapter 7 and help you make more informed decisions, saving you time and money in the process. Find a local bankruptcy attorney today.
Recommended Reading: What Is Epiq Bankruptcy Solutions Llc
How To File Chapter 7 Bankruptcy
The most important factor in filing Chapter 7 bankruptcy is;finding an experienced bankruptcy attorney. Once you decide on an attorney, you can refer creditors to your lawyers office. Filing the petition will trigger an automatic stay, which means creditors cant pursue lawsuits, garnish your wages or contact you about your debts. Heres a potential timetable:
If youre qualified, it will take 4-6 months to complete the bankruptcy process.
Here are the steps you must take when filing for bankruptcy:
How Chapter 7 Works
A chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets. In addition to the petition, the debtor must also file with the court: schedules of assets and liabilities; a schedule of current income and expenditures; a statement of financial affairs; and a schedule of executory contracts and unexpired leases. Fed. R. Bankr. P. 1007. Debtors must also provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case . 11 U.S.C. §;521. Individual debtors with primarily consumer debts have additional document filing requirements. They must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts. Id. A husband and wife may file a joint petition or individual petitions. 11 U.S.C. §;302. Even if filing jointly, a husband and wife are subject to all the document filing requirements of individual debtors.
Also Check: What Is A Bankruptcy Petition Preparer
Will Bankruptcy Hurt My Credit Score Or Rating
Some creditors will actually consider you a better risk after Bankruptcy than someone who did not file Bankruptcy, because
- Your discharge frees you from old debts, improving your ability to pay new debts
- You cant get another discharge for several years.
Your Bankruptcy could appear on your credit report for up to ten years. It may be more difficult for you to obtain new credit as long as your credit report shows your Bankruptcy filing.
However, being credit worthy is like beauty, it is in the eye of the beholder. Some lenders and merchants will be less reluctant than others to extend new credit to you. In fact, from the point of view of many creditors, after you file Bankruptcy, you are a better risk for a new loan than someone who did not file Bankruptcy. This is because your discharge relieves you from the responsibility of paying old debts, which will improve your ability to pay new debts, and after receiving a discharge you will have to wait several years before obtaining another one. Department stores and gasoline companies are often the first lenders and merchants who extend new credit to people who have filed Bankruptcy. As you incur and repay new debt, you will build a new, and more favorable, credit history.
How Does Bankruptcy Work
Bankruptcy is a method to eliminate or at least reduce your debt when bills pile up beyond your ability to repay them. It should be viewed as a last resort to be considered only when all other potential courses of action to get back on track have been exhausted.
Individuals filing for bankruptcy mostly use either Chapter 7 or Chapter 13. The biggest difference between the two is what happens to your property:
- Chapter 7, which is known as liquidation bankruptcy, involves selling some or all of your property to pay off your debts. This is often the choice if you don’t own a home and have a limited income.
- Chapter 13, also known as a reorganization bankruptcy, gives you the chance to keep your property if you successfully complete a court-mandated repayment plan that lasts between three and five years.
Depending on where you live and your marital status, some of your property may be exempt from being sold when you file Chapter 7 because of state-specific and federal exemptions. With exemptions, whether they be your home equity, retirement accounts or even personal possessions such as jewelry, you receive the allowed exemption amounts, and the rest of the proceeds will be used to pay off debts. You can read more about potential exemptions, and check out this chart for a quick rundown on the two types:
- Child support or alimony
- Student loans
Also Check: Who Is Epiq Corporate Restructuring Llc
Take Bankruptcy Course 2
You took a credit counseling course before your Chapter 7 bankruptcy in New York was filed in order to be eligible to be a debtor in bankruptcy. Now that your case has been filed, you have to take bankruptcy course 2 in order to be eligible to receive your bankruptcy discharge. This course focuses on financial management tools and aims to help folks filing bankruptcy in New York take full advantage of their fresh start, while managing their finances responsibly.
The course itself only takes about 1 – 2 hours and, as before, can be taken online, over the phone, or in person. If you were happy with the company you used to complete the first bankruptcy course, you should find out if they are approved to offer the financial management course to folks filing bankruptcy in New York as well. If so, you can go through them again for this second course and may even be able to get a discount for taking both classes with them. If not, check out the list of providers approved to offer this course for New York bankruptcy cases published by the Office of the United States Trustee.
Long Island Attorney Explains Chapter 7 Bankruptcy Vs Chapter 13 Bankruptcy
Contact The Law Office of Andrew M. Doktofsky, P.C. at for answers to your questions about which chapter of the Bankruptcy Code is right for you. Attorney Andrew M. Doktofsky will advise you as to your options for filing bankruptcy under Chapter 7 or Chapter 13. Call The Law Office of Andrew M. Doktofsky, P.C. today if you are considering filing for bankruptcy throughout the areas of Suffolk County, Nassau County, and Long Island.
Read Also: How Many Bankruptcies Has Donald Trump
New York Chapter 7 Bankruptcy Information
In a Chapter 7 bankruptcy you wipe out your debts and get a Fresh Start. Chapter 7 bankruptcy is a liquidation where the trustee collects all of your assets and sells any assets which are not exempt. The trustee sells the assets and pays you, the debtor, any amount exempted. The net proceeds of the liquidation are then distributed to your creditors with a commission taken by the trustee overseeing the distribution.
Certain debts cannot be discharged in a Chapter 7 bankruptcy, such as alimony, child support, fraudulent debts, certain taxes, student loans, and certain items charged. In most Chapter 7 cases, the debtor has large credit card debt and other unsecured bills and very few assets. In the vast majority of cases a Chapter 7 ;bankruptcy is able to completely eliminate all of these debts.
Reaffirmation agreements can be set aside during the earlier of 60 days after the agreement is filed with the Court, or upon the Courts issuance of an Order of Discharge.
Which One Should I Choose
Chapter 7 is, by far, the more popular form because its cheaper, quicker and effective at relieving responsibility for debt if you qualify! And thats a big if. You must pass a means test, meaning your disposable income is under the median income in your state. If you dont qualify for Chapter 7, you can always fall back on Chapter 13.
Don’t Miss: How To File Bankruptcy In Wisconsin
Dealing With Your Car
Unless you happen to live in New York City, chances are you need your car to get around, whether that’s to and from work, school, the grocery store or wherever. Filing bankruptcy in New York gives you the opportunity to deal with your car in a way that makes sense for you. If youâre struggling to make the payment every month and/or the balance owing on the car loan far exceeds the actual value of your vehicle, it may make sense to give the vehicle back to the bank.
If you like your car and the loan makes sense both in terms of your ability to make the monthly payments and the balance left owing, you can keep everything the way it is by entering into reaffirmation agreement. Since this means that youâll continue to be responsible for the full balance left on the loan, you should only do this if the car is in decent condition and you can make the payment every month without problem.
If you own your car outright, then everything stays the same as long as the available exemption is high enough to cover its full value.
S In A New York Bankruptcy
We all know that seeing the forest helps us recognize the trees, so it’s probably a good time to consider the significant steps you’ll take during your bankruptcy journey. Think of this checklist as a roadmap of sorts, but you can also use it to track your progress. The good news? You’ve already made headway on the first two items!
Now Its Possible To File For Bankruptcy Even If You Cant Afford
Jul 18, 2021 Then, the attorney will quote them a fee to guide them through the Chapter 7 case. The cost can range from $1,200 to $2,000, according to;
If you file bankruptcy without an attorney, you may qualify for a for a bankruptcy court fee waiver. When you file bankruptcy on your own, you should also allow;
A. To open a Chapter 7 bankruptcy case, you need to file these forms and deal with the filing fee today, If you are o business/;