When someone can no longer pay off debts, they may consider filing for bankruptcy. That being said, there are different types of bankruptcy. Chapter 7 bankruptcy is when your assets are essentially converted into cash by creditors. Please continue reading and speak with our New York bankruptcy attorney to learn more about whether Chapter 7 bankruptcy is right for you. Here are some of the questions you may have:
How do I qualify for Chapter 7 bankruptcy?
To determine whether you qualify for Chapter 7 bankruptcy, you will have to pass the means test, wherein you will essentially compare your income to with median of a comparable household in your state. As long as your yearly income is lower than the median income, you should qualify. That being said, you should also understand that 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?
You will first file a petition for bankruptcy, wherein you will submit the following information:
- A list of all your assets, such as possessions, real estate, and more
- The monthly cost of living in your home
- A statement regarding your yearly income
- A list of all your debts/liabilities
Once you submit this information and file for Chapter 7 bankruptcy, you will receive an automatic stay, which essentially prevents creditors from conducting all collection activities, such as foreclosures, repossessions, wage garnishments, and more. Once this occurs, your assets will be sent to a court-appointed bankruptcy trustee, who will essentially use your assets to pay off as much of your debt as possible. From here, you, your attorney, the bankruptcy trustee, and certain creditors will attend the Meeting of Creditors, where you will discuss your financial situation and determine the best path forward for all parties. As long as everything checks out, you should receive a bankruptcy discharge from the Bankruptcy Court.
What assets can I keep in Chapter 7 bankruptcy?
Though Chapter 7 bankruptcy is oftentimes known as liquidation bankruptcy, the truth is, you can actually keep quite a bit of your assets. In NYS, you are permitted to retain up to $11,000 in your bank account. You may also keep up to $10,000 in value of household goods, such as clothing, furniture, and more. Television sets and wedding rings are also exempt from bankruptcy. Furthermore, if your car is worth any less than $4,200, you may keep your vehicle as well. Finally, in NYS, each spouse may retain up to $165,000 of equity in their homes from NYC up to Rockland County. That being said, the Homestead Exemption is up to $150,000 for those who live in Orange, and up to Albany County. You can also rest assured that when filing for Chapter 7 bankruptcy, IRAs, pension plans, and 401(k)s are fully exempt, up to $1 million.
Contact our experienced Rockland County, New York firm
The Law Offices of Allen A. Kolber, Esq. effectively represents clients facing Bankruptcy in Rockland County and all of New York State. Our firm understands the stress one can feel when facing a difficult financial future. Our compassionate staff will work to ease your fears and help you make a new start. If you need quality legal support, contact The Law Offices of Allen A. Kolber, Esq.