Filing bankruptcy in New York is generally the last option, when debtors are facing more debt than the budget will allow. Oftentimes, the interest and fees on credit cards make it impossible to do more than pay the minimum amount or less. Unexpected medical expenses devastate the family budget of many debtors that pay the bills on time. When financial burdens get out of control, debtors file for bankruptcy to have debts forgiven or restructure the payments.
New York Bankruptcy Topics
- Personal Bankruptcy Options
- Keep Your Home: Bankruptcy and Foreclosure
- New York Exemptions to Bankruptcy Liquidation
- Options for Filing Bankruptcy
- Local Bankruptcy Courts and Trustees
Filing bankruptcy in New York follows the U.S. Bankruptcy Code under Title 11. Debtors can file Chapter 13 for payment restructuring, or straight bankruptcy via Chapter 7.
Chapter 7 Bankruptcy
Under Chapter 7 bankruptcy, any applicable assets are sold by the trustee of the court, to satisfy at least part of the total unpaid debts. However, in most cases, the debtor does not have anything worth selling. However, the court requires the debtor to pass a means test to verify legitimate need for bankruptcy. In New York, the average single wage earner makes $46,523, a two-person household make $57,006, and a family of three has $67,991.
Chapter 13 Bankruptcy
For the individuals that have a small business, a home, a family car, or other major asset worth keeping, Chapter 13 bankruptcy is the best option. The court can restructure the payments of all debts, in order to facilitate affordability. Then, as long as the debtor keeps all bills current and pays the trustee the agreed upon amount to satisfy the creditors, all assets remain with the debtor. Unfortunately, if the debt defaults, the bankruptcy is often converted to Chapter 7. In addition, the debtor cannot have more than $1,010,650 in secured debts and $336,900 in unsecured debt. (See more on Filing Chapter 13 in New York).
Filing bankruptcy during foreclosure will keep creditors from calling and sending threatening mail. But, for homeowners, it generally only delays the inevitable. The creditor may petition the court to lift the stay on property, so it can be sold to repay the debt. The better plan is to consult a bankruptcy lawyer as soon as the payments get behind and the next month does not hold the promise of prosperity. The legal advice can help the debtor determine if property is saveable.
In New York, residents filing bankruptcy have a specific list of assets they can claim as exempt from the court proceedings. The list includes, but is not limited to the following assets:
Type of Asset(s)
Details on Applicable Exemption(s)
Real property up to $10,000 and spouses may double to include condo, mobile home or co-op
Disability or illness payments up to $400, annuity contract up to $5,000-with exceptions, life insurance proceeds contractually prohibited from paying creditors of the beneficiary, life insurance payments to the spouse
Alimony, child support, and business partnership assets
Qualifying ERISA and IRA, Keoghs, state employees and police officers, and public retirement
Health aids-including animal with food, domestic animal and food up to $450, Bible and books worth $50 or less, a substitute for homestead of $2500 cash and annuity equal to no more than $5000, personal injury up to $7500-no to include pain and suffering, motor vehicle worth $2400 or less, etc.
Unemployment, workmen’s comp and veteran’s benefits, AFDC, social security, aid to the blind, home relief, compensation for crime victims
90% of unpaid wages and earnings from the sale of milk, 100% for some militia members
Use a Bankruptcy Lawyer
Debtors should hire a bankruptcy lawyer, to make sure all of the proper paperwork is filed, the qualifying exemptions are taken, and debtor interests are represented in court-during the stressful proceedings, and questions are answered. The absence of legal counsel can adversely affect the outcome of the case.
Use a Filing Service
A filing service is limited to preparing the paperwork and filing it with the court. No one is available to answer legal questions or give advice. If a document is forgotten or filled out incorrectly, they are not responsible. Thus, the court can throw out the case and potentially charge the debtor with fraud.
File “Pro Se”
Representing themselves, debtors file pro se to save money. However, it is nothing less than foolhardy, if the debtor is not very familiar with bankruptcy law. The outcome of the proceedings is generally less favorable than the results for debtors with legal representation.
New York Eastern District Court Main Office
118S Theodore Roosevelt
United States Courthouse
225 Cadman Plaza East
Brooklyn, NY 11201-1818
New York Northern District Court Main Office
James M. Hanley Federal Bldg,
100 South Clinton Street
Syracuse, NY 13261-7367
New York Southern District Court Main Office
120 Daniel Patrick Moynihan
United States Courthouse
500 Pearl Street
New York, NY 10007-1312
New York Western District Court Main Office
304 United States Courthouse
68 Court Street
Buffalo, NY 14202-3328