Chapter 7 Bankruptcy

Ordinarily referred to as “straight bankruptcy,” Chapter 7 is a liquidation proceeding and is the most common type of bankruptcy that is filed in the country today. Depending on your individual financial situation, this may be the type that is ideal for you. Here are several things to keep in mind when it comes to straight bankruptcy. Understanding How It Works: The first step in declaring Chapter 7 bankruptcy is an initial consultation with a well-seasoned NYC bankruptcy attorney. During this interview, your current income, expenses, debts and personal property are assessed to see whether straight bankruptcy is suited to your situation. To ensure accuracy, an NYC bankruptcy attorney needs to see all relevant tax returns, wages and other information to prepare the necessary filings for the court. In the second step, a trustee is appointed to the case. This person will receive all of your property that is non-exempt and will hold an auction to convert these assets into cash that is available for distribution to creditors. You are allowed to keep some of your property, and we have created a list to show what is acceptable in New York.

  • Real property including co-op, condo or mobile home, to $150,000 for the counties of Kings, New York, Queens, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester, and Putnam; $125,000 for the counties of Duchess, Albany, Columbia, Orange, Saratoga, and Ulster; $75,000 for the remaining counties in the state (husband & wife may double).
  • If you do not own a home, or if you have no equity in your home and do not need the homestead exemption, you may exempt $5,000 in cash or deposits in the bank; $10,000 for a couple.
  • Motor vehicle to $4000, $10,000 for disabled person (husband and wife may double)
  • 100% of valid 401(k), 403(b), IRA accounts, and other ERISA qualified retirement savings accounts.
  • Up to $10,000 in household goods.
  • 100% of funds on deposit in a valid college tuition savings program trust fund for a child.
  • A wedding ring, no matter the value (though not an engagement ring)
  • Jewelry, artwork, or antiques up to $1,350.
  • Tools necessary for your trade or business, up to $3,000.
  • Pension, social security, or worker’s compensation benefits.
  • Child support and alimony payments, to the extent necessary for the support of the debtor and his/her children.
  • Up to $7,500 in a recovery of a personal injury action.
  • Domestic animals and 60 days of food up to a value of $1,000.

Furthermore, in New York State, debtors in Bankruptcy are entitled to choose between the Federal Exemptions and the New York State Exemptions. Under the Federal Exemptions, a debtor would be able to protect:

  • Up to $21,625 in equity per debtor, in the home, condo or mobile home that you live in; this amount doubles to $43,250 for married couples who own the property jointly.
  • $3,425 in equity in a vehicle.
  • Valid 401(k), 403(b), IRA accounts, and other ERISA qualified retirement savings accounts up to $1,095,000 per debtor.
  • Household goods, valued at up to $550 per item, with a maximum total value of $11,525.
  • Jewelry up to $1,450.
  • Tools necessary for your trade or business, up to $2,175.
  • Pension, social security, or worker’s compensation benefits.
  • Child support and alimony payments, to the extent necessary for the support of the debtor and his/her children.
  • Up to $21,625 except for pain and suffering or for pecuniary loss in a recovery of a personal injury action.
  • So-called “wildcard” exemption, which allows a debtor to protect up to $1,150 of any property AND any unused portion of homestead up to $10,825 per debtor.

Once a debtor files for bankruptcy, the debtor’s estate is protected by the “automatic stay”, which bars creditors from trying to collect debts without the permission of the bankruptcy court. This provides immediate protection against foreclosure, repossession of your car, eviction from your apartment, garnishment of your wages or bank accounts, cut off your electricity, or other measures creditors may take to try to recover monies owed. Approximately 30 to 45 days after your initial filing, you will have a meeting of creditors with your appointed bankruptcy trustee. At this meeting you will have to answer questions under oath regarding the information in your bankruptcy petition.  About 60 days after your initial meeting of creditors, you will receive a discharge of indebtedness that releases you from all personal liability. The Law Office of Julio E. Portilla, P.C., is devoted to your case and personally handles it in its entirety. For more information on how we can help you, feel free to contact us today.