Chapter 7 Bankruptcy

Rockland County Chapter 7 Bankruptcy Attorney

Representing New York consumers facing chapter 7 bankruptcy

It is time that we begin to understand that filing for Bankruptcy protection is not dishonorable.  Sometimes circumstances in life and business lead to serious financial situations.  The Government, understanding that individuals need help to get back on the path of financial stability, has created “The Fresh Start”. They understand that often Bankruptcy is the best, and in many cases, the only way that people will be able to get back on their feet. Contact The Law Offices of Allen A. Kolber, Esq.

What is a Chapter 7 Bankruptcy?

A Chapter 7 Bankruptcy will grant you a discharge of most of your debt, including credit card debt, personal debt, medical bills, foreclosures and automobile repossessions.  Generally, student loans and tax debt are not eliminated. Under a Chapter 7 Bankruptcy, you are allowed to keep certain assets, such as bank accounts, automobiles, pension plans, IRA’s, and your house.

Even though your family income must be less than the average family income in the county in which you live, the average family income is changed approximately every three months by the U.S. government. For example, the average income of a family of 3 living in Rockland County in 2017 is $75,870, for a family of 4 it is $92,000 and up.

As soon as you file a Chapter 7 Bankruptcy, the Bankruptcy Court imposes an injunction on all of your creditors called the “Automatic Stay”.  The Automatic Stay prohibits creditors from any collection activities, including lawsuits, wage garnishments, collection calls, collection letters, bank restraints, foreclosures or repossessions.

Which of my debts will not be eliminated?

“Non-dischargeable” debt under the Bankruptcy laws includes recent income taxes, student loans, alimony, child support, restitution or compensation ordered by a Criminal Court, civil judgments for injuries due to intentional torts or driving while intoxicated, and any debts incurred by fraud.

Will filing Bankruptcy stop a foreclosure?

Yes.  On the day that you file your Bankruptcy Petition, all foreclosure proceedings are immediately stopped.  In fact, if you file a Bankruptcy case even one hour prior to the foreclosure sale, the foreclosure will be deemed null and void.

As soon as you file a Bankruptcy Petition, the Bankruptcy Court imposes an injunction on all of your creditors called the “Automatic Stay”.  The Automatic Stay prohibits your mortgage lender from any collection activities, including foreclosure.  In the average Bankruptcy case, your bank may only proceed with a foreclosure action after making a Motion to the Bankruptcy Court and proving to the Court that you have not complied with the requirements of the Bankruptcy Code as it relates to your mortgage and home.

Can I keep my bank account?

Yes.  In New York State, a Debtor is allowed to retain up to $11,000 in cash or in a bank account.  The Bankruptcy Court will not close your bank account. If you have more than $11,000 for each individual filing Bankruptcy, then a Chapter 7 Bankruptcy Trustee would be allowed to take the remainder of the cash in order to pay your creditors.

Can I keep my pensions, IRA’s and retirement accounts?

Under the Bankruptcy law, IRA’s, pension or profit sharing plans, or other retirement plans protected as IRA’s or 401k’s are exempt from your Bankruptcy case.  Therefore, you can keep unlimited funds in these protected accounts, even though you are filing a Chapter 7 Bankruptcy.

Homestead Exemption

The Homestead Exemption protects the equity in your home, which is the unsecured portion in your home.  Therefore, the value of your home, less the mortgage due on the home, equals the equity in your home.  In New York State, each spouse is entitled to $165,000 of equity in his/her home from New York City up to Rockland County.  For Orange County up to Albany County, the Homestead Exemption is $150,000 for each spouse.

For example, if your home is worth $600,000, and the payoff on your mortgage is $300,000, then you have $300,000 equity in your home.  Under the current Bankruptcy statutes, you and your spouse would be entitled to keep the $330,000 in equity in your home and still discharge all of your remaining debt.

Automobile exemption

$4,200 worth of equity in one vehicle may be exempted from the Bankruptcy case.  Therefore, if you own a car that is valued less than $4,200, the car is exempt and will not be included in the Bankruptcy case.

Household Goods and Furnishings and Clothing

Each debtor is entitled to keep up to $10,000 in value for household goods, furniture and clothing.  Additionally, wedding rings and televisions are exempt.

Life Insurance Policies and Annuities

Most life insurance benefits and annuities are exempt in a Bankruptcy case.  Exceptions to this exemption law may include whole life insurance policies that act as investment vehicles.

Alimony Support and Maintenance Payments

These payments are totally exempt in a Bankruptcy case.  However, lump sum distributions from a former spouse or a spouse’s pension plan, if not designated as support and maintenance,  may be non-exempt in a Bankruptcy case.

401(k) Plans, IRA’s and pension plans

You may fully exempt your 401(k) Plans, IRA’s and pension plans, even up to $1 million.

Worker’s Compensation or Disability Benefits

These payments have an unlimited exemption since they fall under the category of payment for loss of past and future earnings.

Federal Wild Card Exemption

Federal statutes also allow for similar exemptions. However, the Federal Homestead Exemption is limited to $11, 850 per spouse. The other exemptions can be quite a sum higher than the New York State exemption values. Therefore, it is important for your attorney to determine whether you should utilize the New York State exemptions or Federal statute exemptions.

Will the Bankruptcy Court garnish my wages?

No. Neither the Bankruptcy Court nor creditors have a right to garnish your wages while you are under the protection of the Bankruptcy Court.

May I keep my house under a Chapter 7 Bankruptcy?

Yes. For instance, if your home is currently valued less than the full amount of your mortgage (or first mortgage and second mortgage combined), which means that your house has no value as an “asset” to you, and you meet all other requirements of the Chapter 7 Bankruptcy Court, then you may be able to keep your house and discharge all your remaining debt.

Under the new Bankruptcy laws, a family living in New York may also keep up to $330,000 equity in their home, Equity is the value of your home after you pay off your mortgage. Therefore, if your home is worth $600,000 and your mortgage is $300,000. Then you have “equity” in your home valued at $300,000, and with both spouses on the deed, you may keep your home and its equity, and still file a Chapter 7 Bankruptcy and discharge all your credit cards, medical bills, personal loans, etc.

Will the Bankruptcy Trustee come to my house?

In a normal Bankruptcy case, no one will come to your house to examine your personal belongings. However, if your Bankruptcy Trustee has a reasonable suspicion that you have hidden or transferred assets, or have undervalued your possessions, the Trustee may have the right to send an appraiser to your home. Once again, this is a rare and exceptional occurrence, and will only happen if the Bankruptcy Trustee has reasonable grounds to believe that you are attempting to defraud your creditors, or hide your assets.

Will my employer be notified of my Bankruptcy?

No.  The Bankruptcy Court only notifies those creditors that you list on your Bankruptcy Petition, for the purpose of giving those creditors adequate notice that their debt will be discharged in Bankruptcy.  If your employer is not a creditor (you do not owe your employer money), then your employer is not notified of the Bankruptcy Petition.  This is the opposite of a wage garnishment, when a creditor obtains a judgment against you, and is allowed by law to notify your employer and garnish your wages.  Once again, in a Bankruptcy case, all wage garnishments cease immediately once the Bankruptcy Petition is filed.

Contact a Suffern Bankruptcy attorney

If you believe that your financial situation calls for Bankruptcy, it is important to discuss this matter with an effective and experienced attorney. The Law Offices of Allen A. Kolber, Esq. provides quality legal services to clients in New York State who need a helping hand through tough times. If you need to file for Chapter 7 Bankruptcy, contact The Law Offices of Allen A. Kolber, Esq. for a consultation today.

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