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Are your debts overwhelming you? Do creditors call you every day and send you threatening letters? If so, filing Chapter 7 bankruptcy in New York might be the best way for you to resolve your problems with debt. 

Ascend helps you by providing free information about Chapter 7 bankruptcy in New York. Our services and information are available free of charge. Click on any of the topics in the table of contents to explore the topic or read through each topic to learn more about the Chapter 7 bankruptcy process.

Understanding Chapter 7 Bankruptcy in New York

Choosing between Chapter 7 and Chapter 13 bankruptcy requires some knowledge about both bankruptcy cases. Each chapter of bankruptcy has pros and cons.

Chapter 7 vs. Chapter 13 Bankruptcy

Chapter 13 bankruptcy cases allow debtors to reorganize their debts into a monthly plan they can afford. Individuals who cannot afford to repay any of their unsecured debts file Chapter 7 bankruptcy

Key facts about a Chapter 7 bankruptcy in New York to know include:

  • Income requirements to file
  • Chapter 7 trustee could liquidate an asset
  • Cost less than filing Chapter 13
  • Receive a bankruptcy discharge in less than six months
  • Appears on credit reports for ten years

Key facts about a Chapter 13 bankruptcy in New York to know include:

  • Protect property from being repossessed or foreclosed
  • Get rid of unsecured debts for a small percentage of what is owed
  • Repayment plans are three to five years
  • More expensive to file than Chapter 7
  • Appears on credit reports for seven years

Below we discuss Chapter 7 bankruptcy in New York in more detail, including the income qualifications for discharging debts in Chapter 7. 

Estimating Chapter 7 Bankruptcy Qualifications for New York

The Bankruptcy Code requires that debtors who file under Chapter 7 meet income requirements to receive a discharge. If you file Chapter 7 and do not meet the income requirements, your discharge can be denied, and you continue to owe all your debts as if you never filed for bankruptcy relief. 

Do I Qualify For Chapter 7 Bankruptcy in New York?

The Means Test is the bankruptcy form used to determine if you qualify for Chapter 7 bankruptcy in New York. There are three figures calculated by the Means Test:

  • Current Monthly Income – Average of your household income for the past six months. Try our average income calculator to estimate your current monthly income.
  • Annual Monthly Income — Multiply your current monthly income by 12.
  • Disposable Income — Current monthly include less allowable monthly living expenses.

The most important figure from the first part of the Means Test is your annual median income. If your annual median income is below the annual median income for a household of your size in New York, you “pass” the Means Test and have a good chance of receiving a bankruptcy discharge under Chapter 7. 

Try our free New York Chapter 7 Calculator below to see if you might meet the income qualifications for a Chapter 7 bankruptcy in New York. 

My Chapter 7 Income Was Over New York’s Median Income. Does That Mean I Don’t Qualify?

No, you could qualify for Chapter 7 if your debts are primarily business debts or your disposable income is less than a certain amount. Bankruptcy laws restrict some of the expenses that you can deduct from current monthly income to calculate disposable income. Some expenses are based on national standards and the number of people in your home.

Ascend has developed an above-median Chapter 7 bankruptcy calculator. If your median income exceeds New York’s median income, message us now to try the calculator and obtain more information. 

What Does Chapter 7 Bankruptcy in New York Cost? Can I Afford It?

Many people worry about paying to file Chapter 7 bankruptcy in New York if they cannot afford to pay their bills. The good news is that it does not cost as much to get rid of your debts as you might think.

The filing fee for a Chapter 7 bankruptcy case is the same for cases filed in all states. You can shop around to find the mandatory bankruptcy courses for as low as $15 to $50. Some people qualify to have the Chapter 7 filing fee and bankruptcy course fees waived.

The most expensive cost of filing Chapter 7 is the bankruptcy attorney fees. We have a New York bankruptcy lawyer fee calculator that estimates the cost of attorneys’ fees in your area. We can help you locate a bankruptcy attorney in your area and set up a free bankruptcy consultation. 

New York Bankruptcy Legal Aid

If you cannot afford to pay a bankruptcy lawyer, you may qualify for legal aid. Some resources you can explore include:

Most bankruptcy lawyers offer free bankruptcy consultations. It cannot hurt to meet with a lawyer, discuss your financial situation, and find out how much it would cost to file Chapter 7 bankruptcy in New York.

Should I File Chapter 7 Bankruptcy in New York?

If you cannot pay your debts, you meet the income requirements, and you do not have assets with a lot of equity, a Chapter 7 bankruptcy filing might be the best way for you to eliminate your debt problem. However, there are a few things you need to consider before filing Chapter 7 bankruptcy in New York.

New York Chapter 7 Bankruptcy Exemptions

A bankruptcy exemption protects your property. By using bankruptcy exemptions, you can get rid of debts and keep your property. 

New York is one of the states that gives debtors the choice between federal bankruptcy exemptions and the New York bankruptcy exemption. However, you must live in New York for 730 days or longer to use New York bankruptcy exemptions. 

The bankruptcy exemption amounts for New York are current through April 1, 2021. Exemption amounts are adjusted every three years for inflation. 

While there are many different exemptions, most people who file Chapter 7 are concerned about keeping their home, vehicle, and household goods. Let’s look at those exemptions as an example.

New York bankruptcy exemptions for:

Homestead Exemption 

The bankruptcy exemption for homes varies by county:

• 170,825 is the homestead exemption for properties located in New York, Kings, Queens, Suffolk, Bronx, Nassau, Richmond, Rockland, Putnam, and Westchester counties.

• $142,350 is the homestead exemption for properties located in Albany, Dutchess, Orange, Columbia, Ulster, and Saratoga counties.

• $85,400 is the homestead exemption for properties in all other New York counties.

Motor Vehicle Exemption

The exemption for motor vehicles is $4,425. A vehicle that is modified or equipped for a debtor’s disability is exempt up to $11,025.

Household Goods

Most personal and household goods are exempt without a dollar limit. 

Bankruptcy exemptions are an essential factor in a Chapter 7 bankruptcy case. If an asset has equity that is not exempt, the Chapter 7 trustee can liquidate the property to pay unsecured creditors. 

How Does Chapter 7 Bankruptcy Affect Your Credit?

A Chapter 7 bankruptcy case remains on your credit report for ten years. Filing Chapter 7 bankruptcy in New York temporarily causes a decrease in your credit score. However, you can work to improve your credit score as soon as your Chapter 7 case closes.

Chapter 7 bankruptcy gets rid of most, if not all, unsecured debts. By eliminating these debts, your debt-to-income ratio improves. Creditors stop reporting negative information on your credit report. All of this works in your favor.

Please read our article about life after bankruptcy to learn more about improving credit scores after Chapter 7. 

Pros and Cons of Chapter 7 Bankruptcy

Each person views the pros and cons of Chapter 7 differently. For some individuals, the pros of Chapter 7 outweigh the cons. 

The benefits and disadvantages of filing Chapter 7 include, but might not be limited to:

  • Temporary damages to credit rating
  • Get rid of unsecured debts quickly
  • Surrender secured assets without fear of deficiency judgments
  • Less costly to file than Chapter 13
  • Could lose property with high net equity
  • Must meet income qualifications

One of the most significant advantages of filing Chapter 7 bankruptcy in New York is getting a fresh start free from debts. Chapter 7 allows you to rebuild your finances after a financial hardship. It gives you the breathing room you need to recover from debt problems.

Chapter 7 Bankruptcy Alternatives

For some individuals, Chapter 7 might not be the best alternative for eliminating debts. There could be alternatives such as:

Click on any of the above alternatives to Chapter 7 to get more information. You can also contact us for more information about debt relief options. 

What Else Is Important About the New York Chapter 7 Bankruptcy Process?

The Chapter 7 bankruptcy process in New York has standard requirements that must be followed by all debtors. 

Filing Bankruptcy in New York Process

Typical steps in the Chapter 7 process include:

  • Completing the Means Test 
  • Deciding if you want to file a Chapter 7 bankruptcy
  • Consulting with a bankruptcy lawyer
  • Deciding whether to hire a bankruptcy attorney
  • Completing the bankruptcy credit counseling course
  • Completing the bankruptcy forms
  • Filing the Chapter 7 petition, schedules, and statements
  • The court assigns a New York Chapter 7 trustee
  • Completing the bankruptcy debtor management course
  • Attending the First Meeting of Creditors (341 Meeting) 
  • Case is discharged and closed

If your Chapter 7 case is an asset case, the Chapter 7 trustee liquidates the non-exempt asset and distributes the money to your unsecured creditors. There is nothing that you should need to do once you complete your second bankruptcy course and attend the bankruptcy hearing.

New York Bankruptcy Districts

Because of the size and population of New York, four bankruptcy courts handle bankruptcy cases filed in New York:

Each bankruptcy district covers numerous counties. Your residence determines which bankruptcy court handles your Chapter 7 bankruptcy in New York. 

What New York Chapter 7 Bankruptcy Questions Can We Answer?

Do you have additional questions about Chapter 7 or debt relief options? If so, reach out to us or take the Chapter 7 means test calculator below. Our goal is to provide you with the information you need to take control of your finances. We want to help you take the first step on the road to financial freedom.

Post Author: Ben Tejes

Ben Tejes is a co-founder and CEO of Ascend Finance. Before Ascend, Ben held various executive roles at personal finance companies. Ben specializes in Chapter 13 Bankruptcy, Debt Settlement, Chapter 7 Bankruptcy and debt payoff methods. In his free time, Ben enjoys spending time going on adventures with his wife and three young daughters.

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