Long Island Chapter 7 Bankruptcy Lawyer
The most common form of bankruptcy is Chapter 7 Bankruptcy. Chapter 7 bankruptcy, also often referred to as liquidation bankruptcy, is a type of bankruptcy that can eliminate most unsecured debts. Additionally, unlike other types of bankruptcy, Chapter 7 bankruptcy does not require a debtor to file a repayment plan. Rather, a bankruptcy trustee collects and sells the debtor’s non-exempt assets, utilizing the proceeds to pay creditors a fixed percentage in accordance with the Bankruptcy Code. Filing for Chapter 7 bankruptcy is a means for many individuals to press reset on their current financial predicaments.
Continue reading to learn more about Chapter 7 bankruptcy, including advantages, disadvantages, and whether you are eligible to file. Filing for bankruptcy can be an intimidating and stressful process, but the experienced Long Island bankruptcy attorneys at Macco Law Group, LLP are dedicated to guiding you through this journey. Contact us as soon as possible for your free consultation to discuss a chapter 7 bankruptcy and get back on the road to financial freedom.
How Does Chapter 7 Bankruptcy Work?
As soon as you file for Chapter 7 bankruptcy, the court will place a temporary stay on all creditors attempting to collect or enforce debts. This means that creditors are now prohibited from collecting payments, foreclosing on your home, turning off your utilities, garnishing your wages, or evicting you. Instead, the court appoints a bankruptcy trustee to determine what, if any, assets your creditors would be entitled to collect. As previously mentioned, your trustee is responsible for overseeing your Chapter 7 bankruptcy. The chapter 7 trustee will conduct a creditor meeting at the courthouse where they will examine you, asking questions regarding your assets and liabilities. Thereafter, the chapter 7 trustee will evaluate your assets to determine what, if any portion, is non-exempt, before liquidating those non-exempt assets. The proceeds from these assets will be used to repay your creditors a fixed percentage.
The Chapter 7 process typically takes three (3) months from the time of initial filing. At that time, your debts are discharged while the Trustee continues to liquidate non-exempt assets, if any. Discharged debts are permanently eliminated. However, not all debts can be discharged through bankruptcy, particularly child support, older tax debts, alimony, student loans, court fees and penalties, homeowners association fees, and unsecured debts that you intentionally left off your filing. To avoid inadvertent costly accidents, it is best to consult an experienced bankruptcy lawyer. Your bankruptcy attorney will take the necessary precautionary measure to prevent mistakes and address any potential conflicts that may arise during your bankruptcy case.
What Is The Difference Between Exempt And Non-Exempt Assets In New York?
In a Chapter 7 bankruptcy case, a debtor will relinquish non-exempt property to the trustee that is then liquidated. Exempt property is determined by New York state law and federal law. However, married couples can usually exempt more property in New York, especially if both spouses have an ownership interest in the exempt property.
Common examples of exempt property are:
- Equity in your primary residence or cash, or cash equivalents (stocks, bonds, or other investments)
- Equity in a vehicle
- Pensions, Annuities, 401(k), IRA, and other Retirement Accounts
- Unemployment Compensation, social security, and other public assistance
- Reasonably necessary clothing and household goods
- Limited damages awarded for personal injury
Generally, property deemed as non-exempt include:
- Valuable collections of items, such as stamps or vintage coins
- Costly musical instruments, unless you are a professional musician by trade
- Extra Vehicles or Homes
Some states will allow you to select between their exemption list and the federal exemption list. You can choose between the state exemption list and the federal exemption scheme in the state of New York. However, you cannot select exemptions from each list; you must choose the system that works better in your favor overall.
The majority of people filing for Chapter 7 bankruptcy will fair better under New York’s exemptions, particularly for homeowners, since the New York homestead exemption is notably higher than the federal exemption. Although, the federal wild card exemption is more generous. The wild card exemption allows you to protect any property you would like to keep so long as it is valued less than the exemption amount.
Who Is Eligible For Chapter 7 Bankruptcy?
There are several eligibility requirements that you must meet prior to filing for bankruptcy. These requirements include:
- Income Qualifications
- Average monthly income. The other test compares your average monthly income from the past six months to the median income for the same-sized household in your state. If your average monthly income from the previous six months is less than you pass the test.
- Means test. The means test evaluates whether your disposable income is high enough to make partial payments to unsecured creditors. Under the means test, the lower your monthly disposable income is, the higher the likelihood you are eligible to file for Chapter 7 bankruptcy.
- Having not filed for Chapter 7 bankruptcy within the past eight years.
- Taking a Credit Counseling Course online through an approved Credit Counseling Agency
Contact Macco Law Group, LLP
Bankruptcy is a powerful tool that can help you, like millions of other Americans, regain your financial freedom and independence. Filing for Chapter 7 bankruptcy is your opportunity to eliminate the majority of your debts, prevent your creditors from contacting you, and allowing you to begin building good credit for the future. Macco Law Group, LLP can help you lift the burden of filing for bankruptcy. Contact us for your free, confidential consultation today.