Chapter 7 Bankruptcy

Liquidate Debt and Get a Fresh Start

Chapter 7 bankruptcy, also known as a “fresh start” bankruptcy, wipes out or liquidates, most of your debts in approximately 4 months (120 days).

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Benefits of a Chapter 7 Bankruptcy

Filing for Chapter 7 bankruptcy will immediately protect you from collection efforts, including wage garnishment. With a few exceptions, your personal debt will be discharged within 4 months (120 days).

A Chapter 7 bankruptcy will require you to liquidate most of your assets to pay back creditors as much as possible. However, there are many exceptions to this requirement. By hiring an experienced New York bankruptcy attorney, you can protect certain assets, including your home, from creditors.

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What Debts Are Eliminated in a Chapter 7 Bankruptcy?

If you qualify, a Chapter 7 bankruptcy will eliminate debts from:

  • credit cards
  • bank loans
  • medical bills
  • auto loans
  • home loans
  • payday loans, and
  • debts to landlords

Chapter 7 bankruptcy does not eliminate debts due to:

  • student loans
  • child support
  • alimony
  • recent taxes, or
  • debts incurred by due to court proceedings including convictions for violent crimes, fraud, or drunk driving, as well speeding tickets, parking tickets, court costs, and certain other debts.

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Do I Qualify for a Chapter 7 Bankruptcy?

To qualify for a Chapter 7 bankruptcy, you must pass a means test and take credit counseling.

The Means Test

The means test is used to determine whether your income is low enough to qualify for Chapter 7 bankruptcy protection. However, you don’t need to be penniless to file for bankruptcy under Chapter 7. If you have high monthly expenses from mortgage and car payments, taxes, and other expenses like student loans, you may still qualify for Chapter 7 bankruptcy protection.

The means test is designed to limit the use of Chapter 7 bankruptcy to people who truly cannot afford to pay their debts. The means test starts with your current monthly income (the average of your monthly income in the six months before you file for bankruptcy), and deducts certain monthly expenses to arrive at your disposable income.

The first step is simple. If your monthly income is less than the median income for a household your size in your state, you pass.

If your income is greater than the median New York income, you may still qualify. Depending on where you live, you can deduct certain expenses, like basic necessities, housing, and transportation, from your monthly income, to determine your disposable income.

But just because you qualify for Chapter 7 bankruptcy doesn’t necessarily mean it’s the best choice for you. That's why it's important that you meet with an experienced New York bankruptcy and debt reduction attorney who can help you decide what's best for you and your family.

Struggling With Financial Hardship?

Contact New York Bankruptcy Attorney Thomas J. Minotti Today

For assistance in determining the best method to reduce your debt, it’s important that you talk to an experienced New York bankruptcy attorney. The Law Offices of Thomas J. Minotti will analyze your financial situation and help you decide on the best way to reduce your debt to give you the financial freedom you need.

If you or your family is struggling with financial hardship, contact the Law Offices of Thomas J. Minotti, Case assessments are free. Discounted rates for military veterans.