Your eligibility to file Chapter 7 is determined through a means test that compares your average monthly income over the last six months to the median income for New York. If your income exceeds the median, you might need to file Chapter 13 instead. The state of New York also requires you to complete a pre-bankruptcy credit counseling course administered by an approved agency. Your certificate of completion must be filed with your New York City bankruptcy forms.
While you’re not legally required to have a lawyer help you file, a knowledgeable Chapter 7 Bankruptcy Lawyer can help you best determine how to protect certain assets through federal or state exemptions.
Chapter 13, also known as debt readjustment, allows the debtor to consolidate their debts into one monthly payment. The debtor continues to pay from wages until their debt is reduced after a period of three to five years, which must be outlined in a court-approved payment plan.
While Chapter 13 requires priority claims (like taxes and child support) to be paid in full, unsecured debts (like credit card and medical bills) can often be paid in part, some for as little as ten cents on the dollar. The general rule is that unsecured creditors should be paid as much as they would have received had you filed Chapter 7.
Chapter 13 is the better option for you if you:
- Own your own home
- Are facing foreclosure
- Earn a stable and relatively high income.
It’s wise to consult with a Chapter 13 Bankruptcy Lawyer to discuss whether you can afford to pay an additional payment to reduce your outstanding bills on top of your current monthly expenses.
Chapter 11, also known as reorganization bankruptcy, is mainly the choice of businesses interested in staying operational while keeping creditors at bay and restructuring their debt. While Chapter 11 is available to individuals, it’s not as popular an option as Chapter 7 or 13, which are both simpler and less expensive. In a Chapter 11, debts are repaid under a creditor- and trustee-approved plan. There is no limit to the amount of debt that can be reorganized.
A Chapter 11 Bankruptcy Lawyer can help you determine whether this is a viable financial option for you or for your company.
Before filing any chapter of bankruptcy, you will need to gather all relevant financial documents. Your attorney will then guide you through pre-bankruptcy planning to identify your assets and look for possible exemptions. They’ll work with the court-appointed trustee in your case to ensure your paperwork is accurate and filed correctly. Afterwards, they can devise strategies to assist you as you get back on your feet and work to repair your credit.
New York requires you to attend a 341 Meeting of Creditors around a month after filing. If there are no challenges, your dischargeable debts will be discharged within three to six months. Those who file Chapter 13 will also be required to attend a hearing before a bankruptcy judge, and if your repayment plan is confirmed, your dischargeable debts will be eliminated once you’ve made good on your plan.