The idea behind Chapter 7, or straight, bankruptcy, is that you give some of what you own, which is then sold off, and the money is spread among your creditors. However, you have always been able to keep certain things even though you file for bankruptcy. The things you get to keep are called exemptions. Exemptions include your household goods, your clothing, a car that is worth $2,400 or less, your pension and other retirement plans (401k's, IRA's), and, if you do not have a house, up to $2,500 in cash. There are other exemptions, and for a full explanation, see our exemptions page.
Qualifying for Chapter 7
When you first come into the office for a Chapter 7 case, we will ask you about your income over the last 6 months. We calculate an average of your income over the last 6 months and compare this average to the median income. For New York, the median income for one person living alone is $40,801. For a family of two, the median income is $50,136. For a family of three, it is $59,377, and for a family of four it is $69,854. For each person in excess of 4, you add $6,300. This means that a family of four can have income of up to $69,854 and still qualify for Chapter 7. This is the median income test.
If your income exceeds these limits, you then to through what is called the means test. The law allows certain deductions from your income, and whether you can file under Chapter 7 depends on how much is left at the end of the test. Surprisingly, it is possible for incomes approaching $100,000 to qualify for Chapter 7.
Credit Counseling
One of the sillier aspects of the new bankruptcy law is the requirement that you go through credit counseling before you can file. If, like most people, you are filing for bankruptcy because of something that happened to you that you could do nothing about, going through credit counseling hardly seems worth the time or expense. However, it is a simple matter to get the counseling, and you can do it either by telephone or by Internet, and we will arrange it for you. It takes about 90 minutes to complete, and once completed, we will receive a certificate of completion which is filed with your papers. There is no test, there is nothing you have to "pass". You just have to go through the counseling.
Due Diligence
In order to prepare your papers properly, we, as your attorneys, have to perform what is called "due diligence" in determining what to put into those papers. For this reason, we might ask you to provide us with many documents. At a minimum we will need your income records for the past six months, your last tax return, all of your bills and documents relating to anything you own. We may also ask you for copies of your utility bills, doctor bills, tuition bills and other bills that you will be paying in the future. We have to be able to verify to the Court, if asked, what assets you have, to whom you owe money, what your income is and what your expenses are.
Signing and Filing Your Petition - Stopping Income Executions and Lifting Restraints
When your papers are finished and both you, the client, and we, your attorneys, are satisfied that they contain all that is required, you will sign them in our office. We then file them with the Court electronically, over the Internet. Once your papers are filed, we will immediately contact anyone who is garnishing your salary or has restrained your bank account and stop the garnishment and restraint. Any lawsuits that have been filed against you will also be stopped. In the event any suits are started after you file, we wills top those as well.
Within a week after the papers are filed, you will receive a notice of your court hearing. We will be there with you. The hearing is before a Case Trustee, not a judge. And it is not in a court room. The Case Trustee is an attorney appointed by the Court to administer your case, to see that everything was done properly. You should be assured that you will get through this hearing without difficulty.
Debtor Education
Once you are finished with Court, you then have to go through a second counseling, again by telephone or over the Internet, which is called Debtor Education. This is a course in financial management, and you will learn many good ideas for managing you money in the future. We will arrange this course for you, which takes about the same time as the first course. You are required to complete this course to get your discharge.
Discharge
The goal of your filing a petition under Chapter 7 is to receive a Discharge, which is a court order declaring that your debts do not have to be paid and that no one can try and collect them from you.
After Your Case is Closed
Once you have received your discharge, the Court closes your case. However, things sometimes happen after the bankruptcy which you should let us know about. Sometimes a creditor will sell a package of debts to another company, and that package will contain your debt and you will hear from the new company. Do not worry. They are not permitted to collect from you, but you need to call us so we can stop any actions they might take.
See our page on Life After Bankruptcy for information on how you can establish credit once again
Free consultations • Conveniently located in Forest Hills near highways and several major bus and subway lines
Allan R. Bloomfield
Attorney at Law
118-21 Queens Blvd. Suite 617
Forest Hills, NY 11375
Phone: 718-544-0500 | Email
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.