Legally reviewed by Allen A. Kolber, Esq. - The Law Offices of Allen A. Kolber, Esq., P.C.
Key Takeaways
- Needing bankruptcy and qualifying for it are separate questions with separate answers.
- A prior case carries a waiting period, measured from filing date to filing date.
- Those periods bar the discharge, not the filing itself.
- Claiming New York’s exemptions takes 730 days of domicile, far longer than the 180 days needed to file here.
Filing for bankruptcy is an important decision that should not be taken lightly. All things should be considered before making the decision to do so. Not to mention, the reality of the situation can be overwhelming. Learn more about filing for bankruptcy today by contacting our Rockland County bankruptcy attorney.
What Does It Mean to File for Bankruptcy?
Bankruptcy is a legal process through which people or businesses seek relief from their debts that they cannot pay back. Most of the time, people with debt they cannot pay back initiate filing for bankruptcy.
Signs You Are Eligible for Bankruptcy
Some of the most common signs a person is ready to file for bankruptcy are as follows:
- Being denied additional credit
- Pawning belongings
- Checks are being bounced
- Receiving collection calls from creditors
- Spending more than 20 percent of your net income on credit card bills
- Hiding purchases from loved ones
- You pay for necessities like groceries with a credit card
- Using savings or retirement accounts to pay monthly expenses
- Bills are overdue
- Credit cards are being declined
- A co-signer is needed to obtain a loan
- You are dependent on family and friends financially
- You are more concerned with month-to-month payments than overall big expenses
- You are financing or leasing a car for six or more years to get a lower monthly payment
- You have more than two major credit cards
- You have no emergency fund money
- You do not understand your debts
- You get charged high-interest rates when you borrow money
The following are only signs that bankruptcy is something you should be thinking about. Contact our Suffern Bankruptcy Attorney so we can get a greater understanding of your situation.
Needing Bankruptcy and Qualifying for It are Different Matters
If the signs above indicate that your financial situation has reached the point where filing is worth considering, you should know that this doesn’t necessarily mean the law will allow you to file. Ultimately, that is determined by a separate set of tests with fixed answers. As such, you should check your eligibility before getting attached to a plan.
Whether You Have Filed Before, and When
First and foremost, if you have a prior bankruptcy filing, there is a mandatory waiting period associated with your next case. These are measured from filing date to filing date, rather than a discharge. The waiting periods are as follows:
- Chapter 7 after a Chapter 7: eight years
- Chapter 13 after a Chapter 7: four years
- Chapter 7 after a Chapter 13: six years, unless the earlier plan paid unsecured creditors in full or close to it
- Chapter 13 after a Chapter 13: two years
However, what these waiting periods bar is the discharge of debt, not the filing itself. As such, you can file inside the window and receive protection under the automatic stay, but you will not have your debts wiped out. While some use it as a strategy, most end up with a costly surprise.
Where You Have Been Living
It’s important to understand that there are two separate clocks that run when you file for bankruptcy. In New York, your home or principal place of business must have been in the state for the greater part of the 180-day period before you file.
Claiming exemptions under New York law, however, is a longer process. Your domicile must have been in the state for a full 730 days before filing. If you moved more recently than that, you’ll need to use the exemptions of the state where you lived during the 180-day period before that two-year window. If that leaves you with no exemptions to claim, you may choose to pursue federal exemptions instead. As such, anyone who has relocated in the past two years should raise this question early.
The Chapter-Specific Tests
Chapter 7 requires passing the means test, which compares your income to the New York median for a household your size. Chapter 13 requires regular income, filed tax returns, and debts below the ceilings set for it. Both figures move, so confirm the ones in force when you file. Everyone also has to complete credit counseling from an approved provider before the petition goes in.
Who Can File At All
Individuals, married couples who file jointly, corporations, partnerships, and other business entities can all be debtors. The question is rarely whether you are permitted to file, but rather which chapter fits. As such, a filing that is blocked in one chapter is typically available in another chapter.
Misconceptions About Bankruptcy
Unfortunately, there are a number of misconceptions regarding bankruptcy that result in those who could benefit from it avoiding the process. Some of the most common myths about bankruptcy, and the truth, include:
- You will lose your home: When you file, you are granted protection under the automatic stay, which puts an immediate hold on all collection efforts, including foreclosure. As such, this allows you to catch up on or restructure your payments. However, this protection is not permanent and may be lifted, so retaining your home ultimately depends on how you proceed, rather than simply filing.
- If you are married, both spouses have to file: If one spouse is in debt and the other is not, only the one with the debt has to file.
- You will not be able to get credit moving forward: your credit will be hurt for a period of time, but you will be able to get some.
- You could go to jail: False. Bankruptcy is 100% legal and is often the best path to get out of debt.
Contact Our Experienced New York Bankruptcy Firm
It’s important to understand that, if you need to pursue bankruptcy, you are not required to navigate this process on your own. At the Law Offices of Allen A. Kolber, Esq., we understand that this can be an overwhelming process. That is why our dedicated team is ready to represent you. Contact us today to schedule a consultation to discuss your options.
