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Tips for Filing for Bankruptcies in New York

Filing for bankruptcy is a significant legal step that individuals or businesses in New York may consider when facing insurmountable debt. It offers a chance to discharge or restructure debts under the protection of the bankruptcy court. However, the process is governed by federal laws with specific procedures and requirements that must be followed closely to ensure a successful outcome.

In New York, as in other states, there are primarily two types of bankruptcy filings available to individuals: Chapter 7 and Chapter 13. Chapter 7 bankruptcy, often referred to as liquidation bankruptcy, allows for the discharge of most debts, giving the debtor a fresh start. On the other hand, Chapter 13 bankruptcy is a reorganization process that enables the debtor to create a plan to repay creditors over time, typically three to five years.

Understanding the nuances of each chapter, the means test for eligibility, and the implications of bankruptcy on one’s financial future is crucial for New Yorkers contemplating this decision. Seeking guidance from a legal professional who specializes in bankruptcy law can help navigate the complexities and ensure that all documentation is completed accurately and filed timely.

Understanding Bankruptcy in New York

Bankruptcy provides a legal pathway for individuals or businesses in New York struggling with unbearable debt to manage or discharge their obligations. It is imperative to recognize the different types of bankruptcy available and the respective eligibility requirements.

Types of Bankruptcy

Chapter 7: Liquidation

  • Aimed at discharging most debts
  • Involves liquidating non-exempt assets to pay creditors

Chapter 11: Reorganization

  • Utilized primarily by businesses
  • Allows the company to continue operating while restructuring its debts

Chapter 13: Repayment Plan

  • Designed for individuals with a regular income
  • Debtors propose a plan to repay creditors over three to five years

Eligibility Requirements

Chapter 7

  • Means Test: Applicants must pass a means test comparing their income to the median income in New York.

Chapter 11

  • No income restrictions
  • Both individuals and business entities may file

Chapter 13

  • Secured debts must be less than $1,257,850*
  • Unsecured debts must be less than $419,275*

**All figures are accurate as of the year 2023 and are subject to adjustments for inflation. Eligibility requirements can be complex and seeking guidance from a bankruptcy attorney is advised for accurate assessment.

Steps to Filing for Bankruptcy

Filing for bankruptcy in New York involves a structured process designed to assist individuals or businesses in managing or eliminating insurmountable debts. It requires careful attention to legal mandates and deadlines. This is why many chose to use an attorney, like Macco & Corey P.C.

Credit Counseling

The first step in the bankruptcy filing process is Credit Counseling. Within 180 days before submitting a bankruptcy petition, an individual must complete an approved credit counseling course. This session can be conducted online or over the phone, and it aims to evaluate financial situations and explore alternatives to bankruptcy.

Filing Your Petition

The core step is Filing Your Petition. The individual or their attorney must prepare and file a formal petition with the bankruptcy court, which includes detailed financial information such as assets, liabilities, income, expenditures, and a statement of financial affairs.

  • Key Forms and Documents:
    • Voluntary Petition
    • Schedules of Assets and Liabilities
    • Schedule of Current Income and Expenditures
    • Statement of Financial Affairs

Meeting of Creditors

The Meeting of Creditors, also known as the 341 meeting, allows creditors to question the debtor about their finances and the bankruptcy forms submitted. This meeting typically occurs 20-40 days after filing the petition.

  • The Debtor is Required to Provide:
    • Proof of identity and Social Security number
    • Financial documents requested by the trustee

Debt Discharge Process

Lastly, the Debt Discharge Process marks the completion of most bankruptcy cases. For Chapter 7, this can occur within 60 to 90 days post-341 meeting. For Chapter 13, discharge occurs after the payment plan is completed.

  • Outcomes:
    • Chapter 7: Elimination of most unsecured debts.
    • Chapter 13: Completion of a three- to five-year repayment plan.