Chapter 7 Bankruptcy | What to Know

If you are wondering if Chapter 7 bankruptcy is right for you, continue reading to learn more about the process.

How can I qualify for Chapter 7 bankruptcy?

One of the first steps you will take to determine if you qualify for Chapter 7 bankruptcy is taking the means test. You will compare your income with the median of a comparable household in your state. If your yearly income is lower than the median income, you will likely pass the means test and qualify for Chapter 7 bankruptcy. However, in certain cases, you may qualify for Chapter 7 even if your income is above the median income.

How do I file for Chapter 7 bankruptcy?

To file for Chapter 7 bankruptcy, you will first file a petition for bankruptcy. Within your petition, you will submit the following:

  • A list of all of your assets including possessions, real estate, and more
  • A statement regarding your yearly income
  • A list of your debts/liabilities
  • The monthly cost of living in your home

When you have officially filed for Chapter 7 bankruptcy after the above information has been submitted, you will receive an automatic stay. This will prevent creditors from conducting all collection activities including wage garnishments, repossessions, foreclosures, and more. Your assets will then be sent to a court-appointed bankruptcy trustee. The trustee will use your assets to pay off as much of your debt as possible. When this step is complete, with the assistance of your bankruptcy attorney, you will attend the Meeting of Creditors along with the bankruptcy trustee and certain creditors. Within this meeting, your financial situation will be discussed. The focus of this meeting will be to determine the best path for all parties. Finally, you should receive a bankruptcy discharge from the Bankruptcy Court.

Will I lose my assets?

You may be wondering what will happen to your assets through this process, especially considering Chapter 7 bankruptcy is sometimes known as liquidation bankruptcy. However, you can actually keep quite a bit of your assets. You are permitted to retain up to $11,000 in your bank account in New York state. You are also permitted to keep up to $10,000 in value of household goods including furniture and clothing. Television sets and wedding rings are also exempt from bankruptcy. If your car is worth less than $4,200, you may keep your vehicle.

From New York City to Rockland County, each spouse may retain up to $165,000 of equity in their homes. However, for residents of Orange up to Albany County, the Homestead Exemption is up to $150,000. Finally, it is important to know that  IRAs, pension plans, and 401(k)s are fully exempt, up to $1 million.

Contact our experienced New York firm

Bankruptcy, for many people, is a frightening endeavor. Fortunately, with the help of an experienced attorney, it does not have to be. If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options. We will have your back every step of the way.