Filing for Chapter 7 Bankruptcy in Brooklyn, NY – FAQ[yoast-breadcrumb]
Filing for Chapter 7 Bankruptcy in Brooklyn, NY – FAQ
Filing for bankruptcy can be a scary and confusing process. But it doesn’t have to be! This article will walk you through the basics of filing Chapter 7 bankruptcy in Brooklyn, NY and answer some frequently asked questions.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy, also known as “liquidation bankruptcy,” is a type of bankruptcy where your assets that are not exempt under the law are sold or “liquidated” to pay your creditors. Any remaining debts are discharged, meaning you are no longer legally required to pay them back.Chapter 7 bankruptcy stays on your credit report for 10 years but can provide much-needed relief if you are facing serious financial hardship. It’s one of the most common types of bankruptcy filed by individuals.
What Are the Benefits of Filing Chapter 7 Bankruptcy?
Some of the main benefits of filing Chapter 7 bankruptcy include:
- Get rid of most unsecured debts like credit cards, medical bills, personal loans etc. These debts can be completely wiped out through the bankruptcy process.
- Stop wage garnishments, lawsuits, repossessions, utility shut offs and other debt collection activities. The automatic stay that goes into effect after filing stops these actions.
- Keep exempt property like your home, car, clothing and household items depending on New York exemption laws.
- Get a fresh financial start. While bankruptcy stays on your credit report for 10 years, you can start rebuilding credit soon after filing.
- Relieve stress and anxiety caused by being overwhelmed with debt. The emotional benefits of a fresh start can be just as important.
What Are the Drawbacks of Filing Chapter 7?
There are also some downsides to consider with Chapter 7 bankruptcy:
- Your bankruptcy will appear on your credit report for 10 years and can make it harder to get approved for credit, loans etc. during that time.
- You may have to give up non-exempt assets like a second home, rental property, expensive jewelry etc. These would get liquidated to pay your creditors.
- Any co-signers on debts would still be liable even if the debt is discharged through your bankruptcy.
- You can only receive a Chapter 7 discharge once every 8 years, so it’s not a solution you can use over and over.
- There are legal fees and court costs involved in filing that can range from $1,500 to $3,000+ in New York.
What Debts Are Discharged in Chapter 7?
Many common unsecured debts are able to be fully discharged in Chapter 7 bankruptcy. These include:
- Credit card debt
- Medical bills
- Personal loans
- Payday loans
- Utility bills
- Old tax debts
Debts that cannot be wiped out through Chapter 7 include student loans, alimony/child support, recent tax debts and debts resulting from fraud. You also cannot discharge secured debts like your home or car loan – you can choose to surrender the property, but any deficiency balance would remain.
What Are the Chapter 7 Eligibility Requirements in New York?
Not everyone qualifies for Chapter 7 relief. To be eligible you must pass the Chapter 7 “means test” which looks at your income and expenses and determines if you have enough disposable income left over to repay some of your debts.If your income falls below the New York median income for your household size, you automatically pass. But even if your income is above the median, you can still qualify by showing high enough expenses.Some other basic requirements include:
- Living in New York for the majority of the last 180 days
- Completing pre-filing credit counseling
- Passing the means test
- Having limited assets or exempt assets only
How Do I File For Chapter 7 Bankruptcy in Brooklyn?
Filing Chapter 7 bankruptcy involves completing forms, collecting documents, getting them filed with the court and attending a meeting with your trustee. Here is an overview of the process:
- Collect Documents: Tax returns, pay stubs, bills, bank statements etc. to fill out your forms.
- Complete the Petition: Fill out forms including the Voluntary Petition, Schedules and Statement of Financial Affairs.
- File Your Case: Submit your bankruptcy paperwork and $338 filing fee to the Eastern District of New York Bankruptcy Court.
- Meeting of Creditors: Attend a short meeting around 30 days after filing where the trustee asks you questions.
- Financial Management Course: Complete a second required course on finances after filing.
- Discharge: Get your discharge 60-90 days after filing assuming there are no issues.
- Rebuilding Credit: Now focus on reestablishing credit by making payments on time, keeping credit card balances low etc.
The entire process takes around 3-6 months from start to finish. Having an experienced Brooklyn bankruptcy attorney guide you through the process can help ensure everything goes smoothly.
Can I File Chapter 7 Bankruptcy Myself in New York?
You can file Chapter 7 bankruptcy yourself without an attorney if you have the time and ability to complete all the required paperwork and forms properly. The court does allow pro se filers.However, working with a bankruptcy lawyer can help avoid costly mistakes and make sure you receive the full benefit and protection that filing is supposed to provide. For example, an attorney can help with things like:
- Determining if you are eligible and which chapter is best
- Valuing your assets properly
- Claiming all exemptions you qualify for
- Avoiding common pitfalls pro se filers encounter
- Dealing with any objections from creditors or the trustee
- Getting debts not dischargeable in Chapter 7 wiped out other ways
So while filing Chapter 7 alone is definitely an option, having a legal professional guide you through the process is highly recommended in most cases. The peace of mind can be worth the expense.
How Much Does It Cost to File Chapter 7 Bankruptcy in Brooklyn?
The court filing fee to file Chapter 7 bankruptcy is $338. On top of that, attorney fees in Brooklyn typically range from $1,500 – $3,000+. Factors that affect the cost include how complex your case is, your income level, assets, debts and more.You may be able to file for free under a fee waiver if you earn less than 150% of the poverty level based on your household size. This would waive the $338 court fee.Some ways to reduce the overall cost include:
- Finding a low-cost attorney like those at Delancey Street
- Qualifying for a fee waiver if eligible
- Using a legal aid program if they can take your case
- Gathering documents and completing forms yourself to avoid attorney fees
While bankruptcy lawyers do charge for their services, for most the expertise and guidance is well worth the expense. Don’t choose an attorney based on cost alone – make sure they have experience specifically with Chapter 7 cases.
What Can I Expect at the 341 Meeting of Creditors?
The 341 meeting is a short hearing that takes place around 30 days after filing your Chapter 7 petition. You will meet with your assigned trustee and any creditors who wish to attend. The trustee will ask you questions about your bankruptcy forms, assets and debts under oath.This is not a pass/fail test, and the vast majority of 341 meetings are quick and painless. Just be prepared to discuss your financial situation honestly and answer the trustee’s questions directly. Bring photo ID, Social Security card, and any documents the trustee asked for.The two most common questions asked are:
- Do you swear to tell the truth about the information in your bankruptcy paperwork?
- Are there any errors or omissions you need to bring to my attention?
If there are no issues, your 341 meeting will likely last less than 10 minutes. Answer clearly and don’t volunteer extra information. Contact your attorney if you have any concerns!
Can I Keep My Car if I File Chapter 7 Bankruptcy in New York?
In many cases, yes – you can often keep your car in a Chapter 7 bankruptcy in New York. To keep your vehicle, you’ll need to continue making the monthly payments and stay current. Or you can pay the creditor the fair market value and keep the car free and clear.If you have substantial equity in the vehicle (it’s worth more than you owe), the trustee may try to sell it to pay creditors. But you can protect at least $4,000 in vehicle equity under New York exemption laws.You also have the option to voluntarily surrender the vehicle and discharge any remaining loan balance. But this should be a last resort if you need the car and can still afford the payments.Review your options carefully before filing and speak with your attorney about the best approach for your situation. Don’t let fear of losing your car stop you from filing for bankruptcy protection.
What Can Creditors Do Once I File Bankruptcy in New York?
Once your Chapter 7 bankruptcy is filed, an automatic stay goes into effect. This prohibits creditors and debt collectors from taking further action to collect on discharged debts.Specifically, after filing they cannot:
- Call or write demanding payment
- File or continue lawsuits against you
- Garnish your wages
- Repossess your property
- Shut off utility service
Violating the automatic stay can result in penalties against the creditor. If any collection activities continue, notify your bankruptcy attorney immediately to protect your rights.The stay remains in effect until your debts are discharged. Creditors will likely write off the discharged debts instead of trying to collect on them. Be sure to review your credit reports after your discharge and dispute any discharged debts that remain.
How Do I Rebuild My Credit After Chapter 7 Bankruptcy?
The most important step is time. As the years pass after your Chapter 7 discharge, its negative impact on your credit will decrease. But there are proactive steps you can take to rebuild credit including:
- Getting a secured credit card and making small purchases and payments each month
- Becoming an authorized user on a spouse or family member’s account
- Applying for a credit-builder loan from a credit union
- Limiting credit checks by only applying for credit selectively
- Monitoring your credit reports and disputing any errors
- Paying all bills on time going forward
Within a year of diligent credit building, you can potentially raise your scores by 100 points or more. Be patient and persistent and your credit can fully recover over time.
Should I Hire a Bankruptcy Lawyer in Brooklyn?
Hiring a local Brooklyn bankruptcy attorney is highly recommended for most filers. An experienced lawyer guides you through every step, offers personalized advice, protects your rights and does the legwork for you.While it is possible to file on your own, the average person struggles with correctly completing the paperwork and following all procedural rules. Small mistakes can lead to denial of your discharge.And remember – under the law, debt collectors can continue collection efforts until your debts are legally discharged. Having an attorney ensures you get the full “fresh start” bankruptcy is meant to provide.At the end of the day, the risks of filing Chapter 7 bankruptcy without a lawyer usually outweigh the cost savings. Find an affordable Brooklyn attorney you trust to ensure your case goes smoothly.
- Chapter 7 bankruptcy fully discharges many types of unsecured debt to give you a financial fresh start.
- To file in New York, you must pass the means test, complete credit counseling, file paperwork and attend a 341 meeting.
- Work with an experienced Brooklyn bankruptcy lawyer to protect your rights and property and avoid costly mistakes.
- Rebuilding credit takes time after bankruptcy, but is possible with diligent effort.
- The bankruptcy process takes roughly 3-6 months from start to finish.
Filing Chapter 7 bankruptcy provides powerful debt relief, but it’s not something to take lightly. By educating yourself about the requirements, seeking legal advice and understanding the pros and cons, you can make the best decision for your situation in Brooklyn.