How Does The New Subchapter 5 Work
Here is the main thing to know: Like all bankruptcies, it has a magic power called the automatic stay. Filing for bankruptcy stops creditors from collecting from you.
It buys you time, Mr. Keach said.
And time is everything. For example, take a restaurant that was having its best year before the pandemic, but then its revenue disappeared. A Subchapter 5 bankruptcy could help the company by halting creditor collections and allowing owners to renegotiate terms.
What it might allow is, with a couple of exceptions, a built-in moratorium on rent, Mr. Keach said. You could propose a plan where you could literally not pay anything toward old debt for four to six months as long as your projections show that you have positive projected income after that.
In exchange, business owners will need to use their net operating income whats left after the usual expenses like rent, payroll, cost of goods to pay creditors for the next three to five years.
New York Legal Aid Organizations
If hiring a lawyer to help you with your Chapter 7 bankruptcy in New York is simply not something you can afford, you can seek assistance from one of the organizations offering free legal aid in New York. Since the law only entitles people dealing with a criminal matter to free legal representation, New York legal aid organizations assist low-income New Yorkers with a variety of civil matters, including New York bankruptcy matters.
How Do You File For Bankruptcy In New York
Before you file for bankruptcy, you should first take steps to try and correct the underlying financial problem that caused you to take on debt. Bankruptcy can wipe away debt however, it cannot correct cash flow issues. Once you have taken steps to correct your financial issues you should contact an experienced bankruptcy attorney like those at Hayward, Parker & OLeary Esqs. Your attorney can advise you on the benefits and drawbacks of the different forms of bankruptcy. Your attorney can also guide you through each step of the bankruptcy process and verify that all required filings are sufficient. After you speak with your attorney, they may advise you to:
- Withdraw your money from your bank or credit union if you owe money to the bank.
- Stop using your
- Stop taking on debt
- Stop paying off debts that will be wiped clean by bankruptcy
- Stop paying back debts to friends and family because bankruptcy law treats these types of payments with suspicion and may require the payment to be returned and attract additional scrutiny
- Start saving receipts and pay stubs
- Not transfer property out of your name for a token payment. In New York, a bankruptcy trustee can look back and undo fraudulent transfers up to six years prior
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What Is A Bankruptcy Petition
When you decide to file for bankruptcy, you must provide all of your financial information to the Court through a bankruptcy petition. A bankruptcy petition is an essential form youll need to complete early on in the bankruptcy process.
The entire packet of documentation youll need to complete is also referred to as a petition as well. Your bankruptcy begins once your petition is filed with the clerk of the bankruptcy court.
Exceptions To The Discharge Of All Debts
Some debts are not erased. Bankruptcy generally only extinguishes unsecured debts things like credit cards, personal loans, income taxes, overdrafts, etc.
A secured debt, such as a car loan or mortgage, may not be included. Since you have given an asset as collateral, your creditor can recover the amount owing to them. Any shortfall can be dealt with in the bankruptcy.
Some unsecured debts are also not discharged in a bankruptcy, such as student loans where you were last in school less than 7 years from the date of bankruptcy, alimony or child support obligations, fines or penalties imposed by the Court, as well as any debt arising from fraud.
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Exemptions For Pensions And Benefits
The following types of pensions and benefits are exempt from bankruptcy in New York:
- Traditional, simple, and Roth IRAs, as well as Keogh or other qualified retirement plans
- Social Security, disability, unemployment, public assistance, and workers’ compensation
- Benefits paid as reparations to a crime victim, wrongful death payments, and up to $8,550 in personal injury payments
- Crime victim’s compensation, local public assistance, and home relief
Who Qualifies To File Bankruptcy
To be eligible to file bankruptcy in Canada you must be an insolvent person which means you:
You do not need to be a citizen to claim bankruptcy. You can be a permanent resident or even live abroad but have property here.
Get a free consultation to see if you qualify. We will review your debts and budget to help you decide if bankruptcy is the right solution for your situation.
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Debts That Can And Cant Be Discharged In Chapter 7 Bankruptcy
Chapter 7 should dismiss most of the debts you owe, but there are some hard-and-fast debts that cant be discharged in Chapter 7.
The list of non-dischargeable debts includes:
- Child support
- Student loans must prove undue hardship
- HOA fees if you surrender your home or condo
- Any other form of unsecured debt.
Orange County Attorneys Examine Eligibility For Filing Bankruptcy In New York
An individual, married couple, a corporation or partnership can file a Chapter 7 Bankruptcy.
However, only an individual or married couple can file a Chapter 13 Bankruptcy. In order to be eligible for Chapter 13 bankruptcy, an individual or couple must have less than $360,475 in unsecured debt and less than $1,081,400 in secured debt . These amounts for Chapter 13 eligibility increase every three years.
A married person may file for bankruptcy by themselves or jointly with their spouse. A non-filing spouses income must be included in the financial schedules of the bankruptcy petition, whether they file jointly or not. If you filed for bankruptcy and voluntarily dismissed the case, you may not be able to file for bankruptcy again until six months from the dismissal date, depending on the circumstances of the dismissal.
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Mail Documents To Your Trustee
You will receive the name and contact information for your bankruptcy trustee a few days after your bankruptcy case is filed. The trustee’s job is to administer your case, make sure that youâre not hiding anything, and review the circumstances surrounding your case to determine whether your creditors are entitled to a disbursement. Even though your tax returns are not actually filed with the court, you must provide a copy of your most recent federal income tax return to the bankruptcy trustee
Additionally, some trustees mail out a letter requesting certain other documents, such as paycheck stubs and bank account statements. Keep an eye out for any such request from your trustee and make sure you follow the instructions provided with respect to how and when to submit everything to the trustee’s office.
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 shouldnt, 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.
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Debtors Interest In A Multi
The debtors interest in the LLC is personal property and, as such. is an asset that the debtors Trustee can liquidate. if he can nd a buyer. It is not uncommon for a Trustee to sell an interest in a multi-member LLC to one of the other members. The purchaser of said interest clearly is entitled to the debtors economic interest in the LLC. but it appears that under New York law the purchaser only becomes entitled to participate in LLC management decisions if a majority of the other members authorize it.
The Chapter 7 Trustee can also seek:
- A dissolution of the LLC pursuant to the provisions of the LLC. but unless the Operating Agreement provides otherwise.New York law requires that a majority of all members approve such an action. Unless the debtor held at least a 51% membership interest, the Trustee will be unable to employ this strategy without the consent of some of the other members.
- A judicial dissolution of the LLC. although this remedy is typically reserved for situations where the LLCs management has become so dysfunctional or its business purpose so thwarted that it is no longer practicable to operate the business. Since a Trustees desire to reduce the debtors LLC interest to cash is probably inconsistent with the goals of the other members wanting to continue the business operations. this remedy can potentially bear fruit for a Trustee. although the LLC would need to have a positive net worth for it to be worthwhile for the Trustee to pursue.
What Are Consumer Debts And Why Are They Important In Personal Bankruptcy Cases
The Bankruptcy Code defines consumer debts as the debt accrued by an individual for personal or household purposes. Certain elements of the Bankruptcy Code are only applicable to individuals with consumer debts. Debts incurred for a business, trade, or profession are not considered to be consumer debt.
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What Can Chapter 7 Do
- Stop debt collection harassment.
- Suspend the lien on a vehicle or other property. In some cases even force the creditor to return the property even after the repossession.
- Suspend a foreclosure to allow you to catch up on your payments.
- Avoid or reestablish the termination of your public services due to non-payment of previous bills.
- Eliminate the legal obligation to pay all or most of your debts, that is, the discharge of debts.
- Reinstate your drivers license if you have been suspended for failing to pay court-ordered damages after an accident. Unless it involves a DUI case.
How Much Does It Cost To File Personal Bankruptcy
In New York, it costs $306 to file for bankruptcy under chapter 7 and $281 to file for bankruptcy under chapter 13, whether for one person or a married couple. However, the court may allow you to pay this filing fee in installments if you cannot pay all at once. Personal bankruptcy attorneys generally charge from $1,500-$5,000.
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Confirming New York Bankruptcy Exemptions
Unless indicated otherwise, all references are to the New York Code Civil Practice Law and Rules , and New York’s laws on the New York State Senate website.
You should be aware that additional exemptions exist and New York’s exemption amounts adjust every three years . While you can read the statutes on the New York State Senate website, you’ll find the most recent figures on New York’s Department of Financial Services website or by consulting with a local bankruptcy lawyer.
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.
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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.
Laws Governing Bankruptcy In Canada
Federal bankruptcy laws are set out in the Bankruptcy & Insolvency Act.
The BIA defines three types of insolvency proceedings available to individuals seeking a resolution to their debts:
- personal bankruptcy,
- consumer proposal,
- and a Division I proposal.
Bankruptcy can only be filed with a Licensed Insolvency Trustee. The role of the bankruptcy trustee is to ensure that the rules and laws around the bankruptcy process are applied fairly to both the debtor and creditors.
Bankruptcy legislation is what provides immediate protection from creditor actions, known as an automatic stay of proceedings. It is the stay that ensures collection agencies and creditors stop calling and allows your trustee to stop a wage garnishment.
Provincial laws also impact your bankruptcy, including legislation that defines what assets are exempt from seizure when you declare bankruptcy.
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New York Credit Counseling And Debtor Education Courses
When you file Chapter 13 in New York, you must complete two bankruptcy courses as part of the bankruptcy process. The first course is a Credit Counseling Course, which must be completed before you file your Chapter 13 petition. Secondly, is a Debtor Education Course, which cannot be completed until after you file your bankruptcy case.
The United States Trustees Office approves agencies and providers for the bankruptcy courses. You must choose a provider that is approved for New York. Most providers offer courses online for a small fee.
The list of approved providers for New York Credit Counseling Courses and New York Debtor Education Courses is on the USTs website.
What Happens If My Income Is Above The Median Income In New York For A Family Of My Size Does That Mean I Cannot File Chapter 7 Bankruptcy
When your income is above the median income for New York state for a family of your size, the means test results will determine your chapter 7 bankruptcy eligibility.
Just because your income is above the median doesnt mean that youre excluded from Chapter 7. You can subtract actual expenses to help determine whether you have enough income left over after you pay your expenses and to repay all or part of your debt.
The means tests is a complicated calculation and thats why it may be in your best interest to speak with a bankruptcy law professional. The experienced bankruptcy law attorneys at Macco Law can help you get the legal advice you seek with your means test.
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