Are you struggling to pay your debts? Do you need help developing a debt repayment plan that works for you? If so, filing Chapter 13 bankruptcy in New York might help you eliminate debts you cannot repay for the fresh start you need after a financial crisis. If you are ready to explore Chapter 13 options, Ascend is ready to help.
In sum, the goal of this article is to be the one stop shop for everything related to Chapter 13 bankruptcy in New York. You will learn the following.
- Chapter 7 vs. Chapter 13 Bankruptcy in New York
- Calculating Chapter 13 Plan Payments in New York
- Means Testing in New York
- New York Credit Counseling and Debtor Education Courses
- New York Bankruptcy Exemptions
- Bankruptcy Courts and Trustees for New York
- Alternatives to Filing Bankruptcy in New York
Chapter 7 vs. Chapter 13 Bankruptcy in New York
There are two basic chapters of bankruptcy available to individuals in New York. Chapter 7 bankruptcy cases are for individuals and couples who cannot afford to pay their debts. Debtors (individuals who file bankruptcy cases) must meet strict income requirements to qualify for debt forgiveness under Chapter 7. Businesses that file under Chapter 7 must cease operations.
During the Chapter 7 process, a Chapter 7 trustee examines your property to determine if any property may be sold at a bankruptcy auction to repay your debts. Also, Chapter 7 cases generally do not help debtors keep their homes or cars if they are behind on the payments or cannot afford the payments.
On the other hand, debtors who file under Chapter 13 can stop foreclosures and repossessions. Chapter 13 bankruptcy cases reorganize debts into an affordable monthly repayment plan. A debtor can repay mortgage arrearage (past due mortgage payments) and car payments over a three to a five-year bankruptcy repayment plan.
The Chapter 13 process also allows debtors to repay back taxes and past due domestic support payments (alimony and child support) over time instead of facing wage garnishments and levies. Chapter 13 cases also protect a debtor’s property from being sold to repay debts.
Calculating Chapter 13 Plan Payments in New York
In most cases, a debtor pays just a fraction of what is owed to unsecured creditors through a Chapter 13 bankruptcy in New York. However, some debts must be paid in full through the Chapter 13 plan. Other factors, such as assets and disposable income, can also impact the amount of a Chapter 13 plan.
When calculating a Chapter 13 plan, you must consider:
- The amount of debts that must be paid in full through the Chapter 13 plan. Car loans, past-due alimony & child support, most tax debt, restitution, and past-due mortgage payments must be paid in full.
- The amount owed to unsecured creditors, such as medical debts, credit card debts, and personal loans. Unsecured creditors receive a percentage of the amount owed to them through the Chapter 13 plan.
- Non-exempt equity in assets. Subtracting the allowed bankruptcy exemptions and valid liens from the market value of an asset calculates the non-exempt equity. Non-exempt equity can increase the amount of your Chapter 13 plan.
- Disposable income takes your income and expenses into account. Your Chapter 13 plan payment must include your disposable income.
If you are interested in a Chapter 13 bankruptcy case in New York, use the Ascend free Chapter 13 calculator to estimate how much your Chapter 13 plan payment would be if you filed bankruptcy in New York. You can also use the shorter version below:
Means Testing in New York
When you file a Chapter 13 case in New York, you must complete a Means Test. The Means Test was created when Congress revised bankruptcy laws in 2005.
Calculating Average Monthly Income (AMI)
The Means Test calculates your average monthly income (AMI). AMI determines your annual median income. Add all income received during the six months before filing bankruptcy and divide by six to calculate AMI. Multiple AMI by 12 to calculate annual median income.
Your median income determines if you must file a 60-month Chapter 13 plan or you can file a 36-month Chapter 13 plan. If your median income exceeds the New York median income level for a household of your size, you must submit a 60-month Chapter 13 plan.
The figures used to measure median income are adjusted every few months. You can view the median income figures for cases filed in New York on or after May 1, 2020 by clicking here or viewing the table below. Please note that the table below ends at 9 individuals. If you have a household greater than 9, each individual would account for an additional $9,000.
|# of People||Annual Income|
Calculating Disposable Income for a Chapter 13 Plan
The Means Test calculates your disposable income. Your disposable income is your AMI less required payroll deductions, allowed retirement contributions, and normal living expenses. Living expenses can include mortgage payments, car payments, food, household supplies, clothing, health care, life insurance, and other normal expenses.
However, some living expenses are limited and are based on the number of people in your household. You can review these expenses on the website for the United States Trustee’s Office. The figures are adjusted periodically, so make sure you review the most current figures available.
If you have special circumstances, such as high health care costs or costs for a disabled dependent, you might want to consult a bankruptcy attorney. You may use these expenses to decrease your disposable income, which could decrease your Chapter 13 payment.
New York Credit Counseling and Debtor Education Courses
When you file Chapter 13 in New York, you must complete two bankruptcy courses as part of the bankruptcy process. The first course is a Credit Counseling Course, which must be completed before you file your Chapter 13 petition. Secondly, is a Debtor Education Course, which cannot be completed until after you file your bankruptcy case.
The United States Trustee’s Office approves agencies and providers for the bankruptcy courses. You must choose a provider that is approved for New York. Most providers offer courses online for a small fee.
New York Bankruptcy Exemptions
New York allows debtors to choose between the federal bankruptcy exemptions in 11 U.S.C. §562 or state-specific bankruptcy exemptions.
The Bankruptcy Code has numerous bankruptcy exemptions that cover a wide range of assets, including your home, household goods, retirement accounts, public benefits, vehicles, and personal property. The NCLC has a list of the federal bankruptcy exemptions on its website. However, the amounts are susceptible to change as they undergo periodic revisions.
A careful analysis of both the federal and state exemptions is necessary to ensure that you are protecting as much of the net equity in your assets as possible. As discussed above, non-exempt equity in assets can increase the amount of your Chapter 13 plan payment.
New York Bankruptcy Exemptions
To claim New York bankruptcy exemptions, you must reside in New York for 730 days or more before filing a bankruptcy case. If you did not reside in New York for the past two years, you may have to use federal bankruptcy exemptions or state bankruptcy exemptions. You must follow the state rules in the state in which you resided for the better part of 180 days before the 730-day residency period.
The New York bankruptcy exemptions experience adjustments every three years. The website for the New York Department of Financial Services lists the current dollar amounts for New York bankruptcy exemptions. April 1, 2021 marks the date for the next adjustment in NY’s bankruptcy exemptions.
Special Rules for New York Homestead Exemptions
Article 52 §5206 sets the homestead exemption amounts for properties in New York. The exemption amounts vary by county. According to the code section and the figures from the NY Department of Financial Services, the homestead amounts for cases filed between April 1, 2018, and March 31, 2021 are:
- 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.
NOTE – Federal bankruptcy exemptions limit the homestead exemption a debtor may claim in a home that has not been owned for at least 1,215 days (approximately 40 months).
Regardless of the state exemption, a debtor cannot claim more than $170,350 as a homestead exemption in their home unless they have owned the home for at least 40 months. An exception applies if the debtor owned a home in the same state, sold the home, and used the proceeds to purchase their current home in the same state.
Bankruptcy Courts and Trustees for New York
Because New York has a large population, four bankruptcy districts compose the state:
- Northern District of New York
- Southern District of New York
- Western District of New York
- Eastern District of New York
Each bankruptcy district in New York covers numerous counties. The courts have several divisions and court locations throughout the district. The courts also have Chapter 13 trustees and judges administer the cases within that district.
It is strongly recommended that if an individual chooses to file bankruptcy without an attorney, the individual carefully reviews the information and resources on the court’s website. Each bankruptcy district has local rules and procedures, in addition to local bankruptcy forms, that debtors are required to know about if they choose to file Chapter 13 without an attorney.
You can find the list of New York Chapter 13 trustees below:
|Eastern||Marianne DeRosa||(516) 622-1340|
|Eastern||Michael J. Macco||(631) 549-7900|
|Northern||Andrea E. Celli||(518) 449-2043|
|Northern||Mark W. Swimelar||(315) 471-1499|
|Southern||Krista M. Preuss||(914) 328-7272|
|Western||Julie A. Philippi||(716) 854-5636|
|Western||George M. Reiber||(585) 427-7225|
Chapter 13 Bankruptcy Alternatives in New York
Chapter 13 bankruptcy in New York is not right for every situation. Some individuals might benefit from debt settlement or debt consolidation. You might find that you can repay your debts by using our Savvy Debt Payoff app.
At Ascend, our goal is to give you the resources, information, and tools you need to help you get out of debt. For that reason, we provide information regarding filing bankruptcy in New York. We also provide information regarding non-bankruptcy debt solutions.
Before filing Chapter 13 bankruptcy in New York, you may want to review our Debt Settlement Guide and Debt Management vs. Debt Settlement article. We also have an article that answers common FAQs about debt settlement. If you still need additional information, compare debt consolidation to debt settlement to help you determine whether Chapter 13 is right for you.
Should I Pursue A Chapter 13 Bankruptcy Case in New York?
Do you still have questions or need additional information? If so, please contact Ascend online or by calling/texting us at 833-272-3631. We are here to help you find the best path that works for you so you can be debt-free.