When creditor calls and threatening lawsuits become too much, overburdened consumers can seek relief in bankruptcy court—a right guaranteed under federal law. Consumers can file under Chapter 7, the most common recourse, so that most of their debt can be wiped out. A Chapter 13 filing allows debtors to repay creditors over a designated period. New York filers should be aware of key particulars that can affect filing in their state.
Bankruptcy Filings in New York
New York has four districts where you can file your bankruptcy petition: the Northern District, Southern District, Eastern District, and Western District. The office or court where your file is located depends on where you live. Go to the individual court’s website for more information on forms and local rules.
Can Anyone File for Chapter 7 Bankruptcy?
There are eligibility requirements for filing a Chapter 7 bankruptcy. If your income is less than New York’s median income, you must meet the conditions for filing Chapter 7. Even if your average monthly income is equal to or greater than New York’s median income, you can still file for Chapter 7, but you must first pass a stringent means test.
Duration of a Chapter 13 Repayment Plan
A repayment plan under Chapter 13 cannot last more than 60 months, but your average monthly income will determine its duration. If it is less than New York’s median income, a Chapter 13 plan cannot exceed 36 months unless you persuade the court that there is good cause for extending it. Should your average monthly income be greater than or equal to New York’s median income, your Chapter 13 plan will be 60 months long in most cases.
Will I Lose My Property?
In most consumer cases, you are able to keep all of your property, but it depends on the nature of the property and its value. Each state and the federal government has certain exemptions, which means that you can protect your assets from the claims of creditors if they fall within the applicable exemptions. New York has adopted its own exemption laws, but it does permit you to choose between using the state exemptions and those listed under federal law. You cannot mix and match exemptions, however.
Federal and state exemptions include the following items of property:
- Homestead equity
- Household furniture, clothing, and jewelry
- Engagement and wedding rings
- One vehicle
- Burial plot
- Tax-exempt retirement accounts
- Unemployment, workers’ compensation and welfare benefits
- Life insurance proceeds
- Certain amount of wages
New York’s homestead exemption varies depending on which county you live in, from $75,000 to $150,000. It is doubled for married couples filing jointly who own the property together. Compare this with the federal homestead exemption of $21,625, which can also be doubled for married, joint filers. New York also allows a $4,000 motor vehicle exemption; the federal motor vehicle exemption is $3,450. There are other differences in the values of the state and federal exemptions.
Contact an Attorney
Bankruptcy laws in New York are complicated, and each district has its own set of rules. For specific information, please contact a New York bankruptcy lawyer.