Chapter 7 is designed for people who are having financial difficulties and are not able to re-pay their debts. Under the changes to the Bankruptcy Code that took effect on October 17, 2005, you can usually qualify for a Chapter 7 if your average gross monthly income for the last six months is below your state’s Median Income, your gross income less certain expenses is below your state’s Median Income, or you can show “special circumstances” that would allow you to qualify for Chapter 7. The filing fee for a Chapter 7 is $338.00, which is paid to the bankruptcy court and is in addition to attorney fees.
Under Chapter 7, you can exempt, or keep, certain of your assets under New York law, or, if you have not lived in New York for the past two years, under the state’s exemption law that applies to your case. You can also elect to follow the federal exemption scheme. Most retirement accounts and pensions are exempt. Secured property, normally your car and house, may not have any net equity, in which case you can keep it as well. The Trustee liquidates most non-exempt property and uses the proceeds to pay your creditors according to priorities of the Bankruptcy Code.
Prior to filing you must gather certain documentation to provide to us so we can your bankruptcy filing. All assets and liabilities must be listed. You must also participate in a mandatory Credit Counseling course prior to the filing. Immediately upon filing, a case number is assigned and creditors are then prohibited from contacting you. About 30 days after filing, a Trustee meeting will occur to discuss your assets and debts, income and expenses. Creditors can but often do not appear at this hearing. Creditors may also object to any discharge of your debt, but this rarely occurs. A financial management course must be completed prior to your final discharge being granted by the court.
Once your Chapter 7 case is over, you receive a discharge. The discharge prevents your creditors from taking any steps to try to collect their unsecured debt. They cannot call you, write you, sue you, or take any steps that could be considered an attempt to collect a debt. If you want to keep property that has a lien on it, you must keep your payments current, and may be required to reaffirm your debt. Some debts cannot be discharged. Typical examples are child support, alimony, and other domestic support obligations, most taxes, student loans, criminal restitution, and debts for death or personal injury caused by operating vehicles while intoxicated with alcohol or drugs.
If you need a bankruptcy attorney in upstate New York, schedule your free phone consultation today and learn about how you can obtain a fresh start.