Filing for bankruptcy is a huge decision. You need to know when it is time to file, because filing at the right time may be exactly what you need to breathe easy again. If you are considering filing for Chapter 7 bankruptcy, here are some of the questions you may have:
What is Chapter 7 bankruptcy, and how do I know if I qualify?
If you are unable to pay off your debts, filing for Chapter 7 bankruptcy will convert your assets into cash by creditors. In order to know whether you qualify or not, you must be able to pass the means test. Essentially, you will have to compare your income to the median income of a comparable household in your state. If your income is below the median income, you should qualify for Chapter 7 bankruptcy. However, you may still qualify for Chapter 7 bankruptcy if your income is above the median income as well.
What does the Chapter 7 bankruptcy process like?
First, you must file a petition for bankruptcy and provide the following information:
- A list of all your assets, including all of your real estate and possessions
- Your monthly living expenses
- An account of your income
- A list of all your debts
The second you provide this information and have filed for Chapter 7 bankruptcy, the Bankruptcy Court will impose an injunction on all of your creditors called an automatic stay. This will prevent creditors from engaging in lawsuits, wage garnishments, collection calls, collection letters, bank restraints, foreclosures or repossessions. This is a huge sigh of relief for many people. From here, your assets are sent to a court-appointed agent called a bankruptcy trustee, who will assign value to your property and use your assets to pay off as much of your debt as possible. Next, you will attend a Meeting of Creditors, where you, your attorney, the trustee and any creditors who wish to attend will meet and discuss your financial situation. If all goes as planned and you complete the Chapter 7 bankruptcy process, a court will grant you a bankruptcy discharge. The only debts ineligible for discharge are student loans, child support, and most tax debts.
What is exempt from bankruptcy?
In the state of New York, you may keep up to $11,000 in your bank account, you may keep your car if it is worth less than $4,200, and you may keep up to $10,000 in value for household goods, furniture and clothing. Wedding rings and television sets are also exempt. In New York State, each spouse is entitled to $165,000 of equity in his or 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. You may also fully exempt your 401(k) Plans, IRA’s and pension plans, up to $1 million.
Contact our experienced New York firm
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.