What You Need to Know About Bankruptcy in New York

Bankruptcy can be a daunting concept, especially for those facing financial difficulties. In New York, understanding the bankruptcy process, the types of bankruptcy available, and the implications can help individuals make informed decisions. This article outlines essential information about bankruptcy in New York.

Types of Bankruptcy

In New York, individuals primarily file for two types of bankruptcy: Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy

Chapter 7, often referred to as liquidation bankruptcy, allows debtors to discharge most of their unsecured debts, such as credit card balances and medical bills. However, some assets may be sold to pay creditors. New York has specific exemptions that allow debtors to protect certain properties during bankruptcy, such as a primary residence, personal belongings, and retirement accounts.

Chapter 13 Bankruptcy

Chapter 13, also known as reorganization bankruptcy, permits individuals to keep their assets while creating a repayment plan to pay off debts over three to five years. This option is suitable for those with a consistent income who wish to avoid foreclosure and catch up on missed payments.

Eligibility Requirements

Eligibility for filing for bankruptcy in New York depends on several factors. For Chapter 7, debtors must pass the means test, which compares their monthly income to the state's median income for a household of the same size. If their income is below the threshold, they may qualify for Chapter 7. Chapter 13 is available to individuals with regular income, and the unsecured debts must be less than $465,275, while secured debts must be less than $1,395,875, as per federal limits.

Filing Process

The bankruptcy filing process in New York involves several steps:

1. Complete the required bankruptcy forms, including schedules of assets, liabilities, income, and expenses.
2. File the completed forms with the bankruptcy court in the appropriate district.
3. Pay the filing fee or request a fee waiver if necessary.
4. Attend a 341 meeting of creditors, where creditors may ask questions about the bankruptcy filing.

Impact on Credit

Filing for bankruptcy in New York significantly impacts an individual's credit score. Chapter 7 bankruptcy remains on a credit report for ten years, while Chapter 13 stays for seven years. While it can lower credit scores, rebuilding credit is possible through responsible financial practices after bankruptcy.

Consulting an Attorney

Given the complexities of bankruptcy laws and the potential long-term effects on finances, consulting with a qualified bankruptcy attorney in New York is advisable. An attorney can provide personalized guidance, help navigate the process, and assist in making informed decisions about filing.

Conclusion

Bankruptcy can be a viable solution for individuals facing overwhelming debt in New York. Understanding the types of bankruptcy, eligibility requirements, and filing processes is crucial. With the right support and information, individuals can work towards financial recovery and stability.