Long Island Chapter 7 Bankruptcy Lawyer

Chapter 7 is the most common form of 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 an effective way for many individuals to deal with their current debt predicaments and to press “reset” for their financial future. 

Photo of Chapter 7 Bankruptcy

If you have debt, there are many options available to deal with it. Chapter 7 Bankruptcy could be the legal option that could help with your financial problems.  Continue reading to learn more about Chapter 7 bankruptcy, including the advantages and disadvantages, and to see 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. The attorneys at Macco Law Group have well over 70 years of experience between them. Our partners estimate they have been involved in over 100,000 bankruptcy cases throughout New York State. If you are seriously considering filing for bankruptcy, contact us as soon as possible for a free consultation. We can help develop a strategy to help you 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 attempts to collect or enforce debts. This means that creditors are now prohibited from foreclosing on your home, evicting you from an apartment, garnishing your wages, collecting payments, or turning off your utilities. 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 which time they will examine you, asking questions regarding your assets and liabilities. This allows the chapter 7 trustee to 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. However, in most cases, chapter 7 debtors have assets that are fully exempt, meaning no actual liquidation occurs and creditors receive nothing.  To determine whether your assets are exempt, we encourage you to contact Macco Law Group, LLP for a free consultation.

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 Long Island bankruptcy attorney at Macco Law Group can guide you to take the necessary precautionary measures 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 must relinquish non-exempt property to the trustee, who then liquidates the property. New York state law and federal bankruptcy law determines what property is considered as exempt.  Usually, married couples are allowed to exempt more property than single individuals, particularly if both spouses have an ownership interest in the exempt property.

Common examples of exempt property are:

  • Equity in your primary residence up to a fixed amount of 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 additional public assistance
  • Reasonably necessary clothing and household goods
  • Limited damages awarded for personal injury

For Chapter 7 Bankruptcy, New York state will allow you to select between the state exemption list or federal exemption list. However, you cannot pick and choose exemptions from each list; you must select the system that works better in your favor overall.   Typically, homeowners will fare better under New York’s exemptions since the New York homestead exemption is notably higher than the federal exemption. However, if there is little or no equity in your home, or you do not own real property, the federal wild card exemption provides you with a better opportunity to protect other assets. It is crucial that you choose the exception law that favors your case so you don’t end up losing valuable assets.  In order to determine which exception will work better for you, consult with the Chapter 7 Bankruptcy lawyers at Macco Law Group.

Who Is Eligible For Chapter 7 Bankruptcy?

In order to qualify for Chapter 7 Bankruptcy, you must meet certain eligibility requirements.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, that’s why it is important to know the chapter 7 income limits. If your average monthly income from the previous six months is less, then you automatically qualify for a chapter 7 bankruptcy. Download here the Form-22-A-1
  • Means test. The means test evaluates whether your disposable income is high enough to fund a repayment plan under chapter 13.  Under the means test, the lower your monthly disposable income is, the higher the likelihood you are eligible to file for Chapter 7 bankruptcy. You can download here the form b22a
  • Having not filed for Chapter 7 bankruptcy within the past eight years.

Chapter 7 Bankruptcy NY FAQ

1. What are the types of bankruptcy in New York, and what are the requirements of each?

Individuals in New York may be eligible to file bankruptcy under chapters 7, 11, 12, or 13.

Chapter 7 allows a trustee to liquidate a debtor’s non-exempt assets to raise money to pay off creditors. Individual consumer debtors are subject to eligibility requirements, and spouses can file together. The 2005 Amendments to the Bankruptcy Case have made provisions to prevent abuse and protect consumers. 

Chapter 11 gives the debtor the chance to reorganize their finances using a plan voted on by the debtor’s creditors. This chapter of the Bankruptcy Code generally involves a corporation or partnership and pays creditors over time, and is only used for an individual when such an individual will not qualify for a chapter 13.

Chapter 12 adjusts the debts of a family farmer or fisherman with regular income and is subject to certain debt caps.

Chapter 13 adjusts the debts of an individual and spouses with regular income. However, the total amount of unsecured debt cannot exceed $419,275, and secured debt cannot exceed $1,257,850 as of April 1, 2019.  

What is a bankruptcy petition?

When you decide to file for bankruptcy, you must provide all of your financial information to the Court through a bankruptcy petition. A bankruptcy petition is an essential form you’ll need to complete early on in the bankruptcy process. 

The entire packet of documentation you’ll need to complete is also referred to as a petition as well. Your bankruptcy begins once your petition is filed with the clerk of the bankruptcy court.

What are consumer debts, and why are they important in personal bankruptcy cases?

The Bankruptcy Code defines consumer debts as the debt accrued by an individual for personal or household purposes. Certain elements of the Bankruptcy Code are only applicable to individuals with consumer debts. Debts incurred for a business, trade, or profession are not considered to be consumer debt.

What happens if my income is above the median income in New York for a family of my size does that mean I cannot file for chapter 7 bankruptcy?

When your income is above the median income for New York state for a family of your size,it doesn’t necessarily mean that you’re excluded from Chapter 7 bankruptcy. You will have to use the means test results to determine your chapter 7 bankruptcy eligibility. For this, you must subtract your actual expenses from your income to help determine if you have enough money leftover to repay all or part of your debt. 

The means tests are a complicated calculation and that’s why it may be in your best interest to speak with a bankruptcy law professional in order to get an accurate idea if you may be eligible. The experienced NY bankruptcy attorneys at Macco Law can help you get the legal advice you seek with your means test.

Will I lose all of my property if I file for chapter 7 bankruptcy?

Only non-exempt assets can be liquidated in Chapter 7 bankruptcy. After filing for Chapter 7, your property will go into a bankruptcy estate held by the Chapter 7 bankruptcy trustee appointed to your case. However, the chapter 7 trustee is only allowed to liquidate your assets to the extent those assets are non-exempt.

In New York, there is a homestead exemption of $170,825 for each debtor/owner, and 100% of life insurance, retirement annuities, and pension plans, among others. The bankruptcy process can be complicated and that’s why it’s important to seek legal advice from an attorney that understands the intricacies of bankruptcy.

Will I receive a discharge in bankruptcy?

It depends. Certain types of debt automatically do not get discharged in bankruptcy, like certain taxes, student loans, most government fines and penalties, court restitution orders, domestic support obligations (such as alimony, child support, etc.), and debts in connection with divorce decrees, among others. 

For other types of debts, creditors have the right to file a lawsuit in the Bankruptcy Court, called adversary proceedings, against the debtor to determine if these debts are dischargeable. Creditors can sue debtors for a judgment in the court determining that their debts will not be eliminated in bankruptcy.

Here are some examples of debts that could be excepted from discharge with a bankruptcy court order:

  • Actual fraud or false representations
  • Consumer debts owed to a single creditor above the dollar limits specified in the Bankruptcy Code for luxury goods or services
  • Debts for malicious injury of the debtor to another person or entity or property of another person or entity
  • Money or cash advances above the dollar limit specified in the Bankruptcy Code incurred within the time period specified in the Bankruptcy Code
  • Properties
  • Services and extensions
  • Renewals or refinancing of credit obtained under false pretenses

How do I file for bankruptcy in New York?

New York bankruptcy is not an easy process for the debtor and if you find yourself in need of bankruptcy, then it may behoove you to have legal representation monitoring your bankruptcy filing. Here are some of the steps you’ll need to take to have your bankruptcy filed with the court:

  • Collect and submit all of your financial documents
  • Take credit counseling
  • Pay filing fees
  • Mail all necessary documents to your appointed trustee
  • Attend a 341 meeting

How much does it cost to file for bankruptcy in NY?

The total cost of filing bankruptcy will vary depending on how complicated your case is and whether there are any complications with the meeting of creditors or issues raised by the trustee and the Chapter of bankruptcy you file. The current fee to have your Chapter 7 bankruptcy filed with the court is $338. Although hiring a Bankruptcy Chapter 13 Attorney in Long Island would help you get through the process much easier, the filing court fee for it is $313.

What is a meeting of creditors?

The 341 meeting, which it is often called, is one of the most important parts of your bankruptcy case. Section 341 of the United States Bankruptcy Code makes this meeting a mandatory requirement for filing bankruptcy. 

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 could provide you an opportunity to eliminate the majority of your debts, prevent your creditors from contacting you, and allow 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 today for your free, confidential consultation with one of our qualified Long Island Chapter 7 bankruptcy lawyers.