If you are reading this, you may have reached your “breaking point” – the event that has made you seek legal counsel. You may be facing seemingly insurmountable levels of debt and are likely receiving angry calls from creditors and collection agencies. No matter how grim your circumstances may seem, however, relief is possible.
Chapter 7 bankruptcy is the section of the U.S. Bankruptcy Code that deals with asset liquidation, which involves the selling of all the filer’s non-exempt assets by a court-appointed trustee. The proceeds of any resulting liquidation are used to compensate creditors, and in return, filers receive a discharge, allowing them to eliminate certain types of debts.
Our Chapter 7 bankruptcy lawyer has over 30 years of legal experience and can provide you with the swift and compassionate assistance you deserve. Our team can efficiently guide you through the Chapter 7 process and secure the debt relief you need for a fresh financial start. We are extensively familiar with how to leverage bankruptcy tools to protect your exempt assets from liquidation and are committed to helping you make the most of your filing.
If your credit card debt totals more than 50% of your annual income, we can help. Schedule a free initial consultation with Richard S. Feinsilver by contacting us online or calling (516) 268-0122.
How Chapter 7 Bankruptcy Works
Before you can file for Chapter 7 bankruptcy, you will first need to complete certain education requirements. You will also need to provide specific documents to the appropriate bankruptcy court.
Anyone seeking Chapter 7 bankruptcy protection must complete an approved Credit Counseling Course before a petition can be filed. The Office of the United States Trustee (an arm of the U.S. Department of Justice, which is responsible for overseeing the administration of bankruptcy cases) has established a list of approved providers. In most cases, the course can be completed at home either online or via telephone. Upon completion of the course, you will receive a certificate of completion which must be included with your bankruptcy petition. We can ensure you select an approved course.
Prior to filing, you are also required to provide the bankruptcy court with a copy of your proof of income for the preceding sixty days and a copy of your latest filed tax return. Proof of filing can generally be confirmed by providing a tax transcript from the IRS. Our team can assist you with securing this proof. If you for some reason you cannot submit these documents, you may still be able to file for bankruptcy relief if you can substantiate the reason that you are unable to do so.
A court order called the automatic stay will immediately go into effect after you file your Chapter 7 bankruptcy petition. The automatic stay prevents creditors from initiating or continuing collection actions against you, meaning it will stop any pending or ongoing foreclosure proceedings, repossession efforts, wage garnishments, or collection lawsuits. This freeze will typically remain in effect until your bankruptcy case has concluded.
In most Chapter 7 bankruptcy cases, you will never actually be required to appear before a judge or visit a courtroom. Each Chapter 7 bankruptcy case is assigned to an Interim Trustee, who will be responsible for administering the case and conducting an examination pursuant to Section 341 of the Bankruptcy Code.
This examination is called the “Meeting of the Creditors” and serves two purposes. First, it is the process under which the court will verify the accuracy of the information contained in your bankruptcy petition. Second, it is the method utilized by the court to determine whether you have any nonexempt assets that can be liquidated to repay a portion of the debt sought to be discharged.
Liquidation can sound scary, but it is not intended to punish you. Generous exemptions can be used to protect equity in your home, your vehicle, clothing, furniture, tools of your trade, and other key assets. We can help you make the most of these assets. Many Chapter 7 filers end up losing little to nothing.
Once liquidation has been completed, you will generally be permitted to discharge any remaining unsecured debts. This includes your credit card debt, medical debt, personal loans, and unpaid utility bills. Our Long Island Chapter 7 bankruptcy lawyer is committed to helping you overcome financial difficulties and can help you secure the relief you need to move forward.
Payment plans are available, and we offer our legal services in English and Spanish. Discuss your case with Richard S. Feinsilver by contacting us online or calling (516) 268-0122.
Determining Eligibility for Chapter 7 Bankruptcy in New York
There are two criteria that determine your eligibility for Chapter 7 bankruptcy in the state of New York: assets and income. With respect to assets, you are allowed to protect certain essential assets from creditors. So long as the value of your exempted assets does not exceed statutory limitations, you will meet this requirement.
With respect to income, most individuals or married couples filing for protection under Chapter 7 will need to pass the New York Means Test. This gauges whether you can afford to at least partially repay your creditors.
Under the Means Test, you must first determine your current average level of income. You will need to tabulate all income sources for the six-month period prior to your filing. If your average income during this period is below the median average for your household size in New York, you pass the Means Test and fulfill the Chapter 7 income requirement.
If your average income during this period is above the median for your household size, you may still qualify for Chapter 7 relief, but you will need to overcome another eligibility hurdle. This will involve calculating your current level of disposable income. You must complete a thorough analysis of your income and expenses based upon the Internal Revenue Service (IRS) guidelines for New York. If you determine that your disposable income is less than $200 per month, you will be eligible for Chapter 7 bankruptcy and can file a petition for relief (so long as you meet all other requirements).
If you can afford to pay at least $200 a month or $12,000 over a five-year period, you are not eligible to file a petition for protection under Chapter 7 bankruptcy. If your net disposable income falls between $145 and $199 per month and this amount allows you to pay at least 25% of your unsecured debts over the next five years, you will also not be eligible for Chapter 7 relief. You can instead file for Chapter 13 bankruptcy, which involves repaying a portion of your debt in monthly installments over three to five years.
Timing can be important when considering Chapter 7 bankruptcy eligibility. Because your current income is only measured based on the preceding six months, you may not initially qualify if you have only recently lost major sources of income. Strategically waiting several months can allow you to become eligible for Chapter 7 relief in certain situations. Our Long Island Chapter 7 bankruptcy attorney can assess your eligibility options and advise how to proceed.
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