Rochester Bankruptcy and Debt Relief

Once in a while I am asked whether 401k loans should be used to pay off credit card debt and, therefore, avoid bankruptcy. In my opinion, it is a bad idea.

Filing for bankruptcy under either Chapter 7 or Chapter 13, is a difficult decision, and most of the time debtors will try to do just about anything to avoid filing. However, if you earn $50,000 in gross income, and you are $50,000 in debt, because of interest and other carrying costs, it is unlikely that you will be able to pay off that debt within a reasonable period of time. Thus, a debtor may think that whatever money he has in his 401k will save him from having to file bankruptcy. Unfortunately, for most people, this is unlikely to come true.

Initially, if 401k loan is used to pay off credit card debts, there is now a significant debt owed to the 401k plan. Usually, 401k loans carry lower interest rates than credit cards. However, while having a lower interest rate, 401k loans have to be paid back over a shorter period of time.

If a loan is taken out and not repaid, it is treated as income, and debtor will incur a 10% early withdrawal penalty since it is a distribution from a tax-deferred plan, and also will have to pay income taxes on the unpaid amount.  Unpaid amount of the loan is treated as additional income, and it is likely to increase debtor’s income tax rates as well.

If you quit working or change employers, the loan must be paid back right away. It’s not uncommon for plans to require full repayment of a loan within 60 days of termination of employment. If you can’t repay the loan, it is considered defaulted, and you will be taxed on the outstanding balance, including an early withdrawal penalty if you are not at least age 59 ½.

However, if the debtor decides to file bankruptcy, under either Federal exemptions or New York exemptions, 401k is completely exempt. If you file for bankruptcy, the credit card debt will be gone, and you will be able to retain the money in your 401k plan.

If you are contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

Most of my Chapter 7 bankruptcy clients have a lot of credit card debt that was accumulated over time. That debt may have come from making purchases, incurring services charges and interest, as well as taking cash advances  on credit card. While most of credit card debts are dischargeable in bankruptcy, credit card cash advances may represent a significant problem for potential bankruptcy filer.

According to the Bankruptcy Code, any cash advance, or combination of cash advances from one lender, totaling more than $875, obtained within 70 days of the bankruptcy filing date is presumed to be non-dischargeable. This particular provision is included in Section 523(a)(2)(C)(i)(II). The dollar amount of the cash advance, changes every three years.

This provision was included in the Bankruptcy Code because the Congress was concerned that consumers, who obtained significant cash advances relatively close to time they filed for bankruptcy, knew or should have known that they would be seeking bankruptcy relief, and should not be able to eliminate such debts. Another reason for that provision was to prevent consumers from taking cash advances immediately prior to a bankruptcy filing.

However, in terms of procedural issues associated with cash advances taken out with 70 days prior to the filing, in order to have the court declare that the debt is non-dischargeable, the creditor must file objections in the bankruptcy court. Specifically, the creditor must file an adversary proceeding. Since there are filing fees and other expenses associated with such filings, if the amount of the cash advance is not particularly large, most creditors will not bother filing an adversarial proceeding.

However, since a cash advance may result in an adversary proceeding, I always ask my clients about them and, in appropriate situation, may ask the client to postpone the bankruptcy filing until after the expiration of the 70 day period.

If you are contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

Filing bankruptcy can release a debtor from an expensive cell phone contract and let debtor discharge the early termination penalty. While now almost everyone has a cell phone, the contracts are typically long term and it is easy for a debtor to run up a substantial bill.  Should a typical consumer debtor filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy list their cell phone provider as a creditor for bankruptcy purposes?

If debtor has an outstanding bill on a closed account, then such bill must be included with the rest of the outstanding debts. Any such bill will be eliminated by the Chapter 7 Bankruptcy filing, or paid in Chapter 13 Bankruptcy.

In addition, the bankruptcy filing would enable the debtor to not only eliminate their balance but remove their obligation to pay any early cancellation penalty.  Filing a Chapter 7 Bankruptcy has the effect of terminating any “executory contract” which is one in which the parties are still performing it. Cell phone contracts are executory contracts during the contract period. By including the cell phone provider as a creditor in the bankruptcy petition, the contract is automatically terminated, and any early cancellation penalty becomes a dischargeable debt just like the credit card debts. Some cell phone companies may request a security deposit after the bankruptcy filing, but, in my experience, most providers will not ask for a security deposit.

If debtor plans to keep the account, the account must be listed in the bankruptcy petition. Debtors should list the cell phone provider as a potential creditor in the bankruptcy petition, even if no balance is owed. Although the bankruptcy law has the effect of automatically terminating the cell phone contract, virtually all cell phone companies will continue service if the account is current, and will not pay any attention to the bankruptcy filing. The advantage to the debtor is that by including the cell phone company in the petition, even if it is current, is that the contract can later be terminated before the end of the typical two-year period, and the debtor will not be responsible for the early termination penalty.

In addition to the above, debtors should always include their cell phones in Schedule B which lists all of their personal property. Here in Rochester, Chapter 7 trustees have been raising this issue during 341 meetings and asking debtors about the cell phones they owns. Since some of the phones, such as an iPhone, are valuable, trustees can look at them as one more potential asset in the bankruptcy estate.

If you contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

I have previously written how important it is for debtors to provide their bankruptcy attorney with accurate and complete information. Debtors have an absolute obligation under the Bankruptcy Code to disclose their assets, liabilities and income to the bankruptcy court. Once in a while, a debtor may forget a creditor or overlook an old debt. Not every debt appears on the credit report either. When a debt is omitted from the bankruptcy petition, under the Bankruptcy Code, there are several possible solutions.

Initially, if the debtor realizes that a debt was overlooked during the bankruptcy, the debtor is required to file amended schedules and identify the creditor. If this happens, the bankruptcy attorney should be notified and he will amend the schedules.

If a pre-bankruptcy debt is discovered after the bankruptcy case has been closed and discharge granted, there are a couple of possible options. In some situations, it will be necessary to request that the bankruptcy court reopens the bankruptcy case and discharge the debt. In other situations, especially in no asset Chapter 7 Bankruptcy cases, the debt is considered discharged as a matter of law, even though it wasn’t listed in the schedules. Finally, some types of debt, such as student loans, cannot be discharged under most circumstances, and will survive the bankruptcy.

The bankruptcy courts expect the debtor to provide a full and complete disclosure of both assets and liabilities. In Chapter 7 Bankruptcy asset cases and Chapter 13 Bankruptcy cases, an omission matters a great deal since listed creditors receive payments through the bankruptcy court. If a debtor deliberately fails to list a creditor, that debt is likely be declared non-dischargeable and will survived the bankruptcy. Under appropriate circumstances, courts have denied debtor a bankruptcy discharge because of the debtor’s intentional failure to list all debts or revoked already issued discharge.

If you contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

There are times when debtors need to discharge debts owed to their local utilities. However, often the debtor has to come back to the same utility after discharging the debt owed to it in either Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. The utility has to provide services to the debtor, provided that the debtor complies with applicable provisions of the Bankruptcy Code. The following will describe applicable law and practices common in Rochester, New York, area.

In general, the Bankruptcy Code requires utilities to continue to provide service after a bankruptcy filing, since debtors need electricity and heat as much as anyone else. The Bankruptcy Code authorizes utilities to charge a security deposit in exchange for providing their services.

In Rochester, Rochester Gas & Electric (RG& E) is the largest utility company. When RG&E receives a notice that they have been listed as a creditor on a bankruptcy, RG&E will close the existing account and open a new account (with a new account number) for the debtor. RG&E will calculate what is owed on the account as of the date the bankruptcy petition was filed. If RG&E is listed as a creditor in a bankruptcy case, they will request that a debtor provide them with a security deposit. They calculate the amount of the deposit at two months of average utility bills, with the deposit being due within 30 days of after RG&E sends out the security deposit request. The deadline for the deposit cannot be changed. After the debtor has made timely payments for a year, his deposit will be returned.

The above guidelines were discussed in a decision by the Bankruptcy Court Judge, John C. Ninfo II, which addressed these issues in In re Spencer.  Judge Ninfo decided that:

1) Absent extraordinary circumstances, public utilities, pursuant to Bankruptcy Code Section 366(b) may require a Ch. 7, 11 or 13 residential customer to pay a security deposit equal to the highest two months, without late charges, of the previous twelve months.
2) While a case is still open, if a post-petition utility payment is more than 10 days late, the utility may apply to the court (on two business days notice to debtor and attorney) for an order authorizing termination of service should the debtor fail to pay any two consecutive monthly statements by the due date. The attorney for the debtor can set up a telephone conference and oppose the application if circumstances warrant it.
3) Should a residential customer who has made a two month security deposit be late in paying any statement, the utility may commence “whatever procedures are available to it under applicable state law and regulations to terminate service, so that it will be in a position to terminate service at the earliest permissible time before or after the debtor’s case is closed.

My concern as attorney representing debtors is that it may be difficult for my clients to come up with a substantial deposit. At the same time, I recognize that my clients have to pay for the service they receive, and that they already benefited from discharging their prior utility bills in bankruptcy.

If you contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with aRochester, NY, bankruptcy lawyer.

I am often asked during initial bankruptcy consultations about negative implications and benefits of filing either Chapter 7 or Chapter 13 Bankruptcy. My usual answer is that in most cases, benefits associated with a bankruptcy far outweigh its negative aspects. Debtors who are dealing with significant amounts of debt that they cannot repay should not fear filing. There are many benefits to filing; some readily obvious and some surprising.

Top 3 obvious benefits of filing for bankruptcy

1.    Assuming you are filing Chapter 7 bankruptcy, your bills will be discharged and you will not need to repay them. In Chapter 13 bankruptcy, you will be repaying either all or a portion of your debts through the plan that will be based on your ability to pay. Ultimately, bankruptcy will eliminate most or all of your credit card debt, loans, medical bills and other unsecured debt.

2.    Once you file for bankruptcy, your creditors will stop contacting you. You will no longer receive letters or phone calls from the creditors. Once the bankruptcy is filed, creditors have no right to contact you and can be punished by the bankruptcy court for doing so.

3.    After the bankruptcy is completed, debtors have an opportunity to have a fresh start without paying old bills and concentrate on rebuilding their financial health. They will not need to choose which bills to pay first, or chose between paying for their home or paying credit card debt.

Top 3 surprising benefits:

1.    Debtors get their dignity back.  They are able to sleep better at night knowing that they will not be harassed by creditors and they do not have to worry about the debt they are unable to repay. Once the bankruptcy is filed, there is an immediate sense of relief.

2.    Bankruptcy gives you a chance to rebuild your credit score. Your credit score is greatly affected by such negative items as judgments and late payments. While a bankruptcy will not rebuild your credit right away, it gives you a chance to make future debt payments on time which will lead to a better credit score.

3.    Your life becomes easier.   Concerns about debt can damage personal and business relationships, make work more difficult and can lead to depression. If those concerns are eliminated, debtors can go on with their lives.

Rather than being something negative, a bankruptcy is a solution to problems that otherwise cannot be resolved. It can help and it usually results in both financial and intangible benefits, and can lead to a life free of debt.

If you contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

It is that time of the year again. Starting in the beginning of the year and until April 15, debtors are filing their federal and New York State income tax returns.  For those debtors who are thinking about filing Chapter 7 Bankruptcy, it is usually a good idea to receive and use their income tax refunds prior to filing for bankruptcy. For those debtors who filed for Chapter 7 Bankruptcy during the past year, it maybe the time to provide copies of their income tax returns to the bankruptcy trustee.

Debtors who filed for Chapter 7 Bankruptcy usually learn during their meeting of the creditors whether the bankruptcy trustee will want to see their income tax returns for the past year. The reason that the bankruptcy trustee will want to see the income returns because it will allow him to figure out what portion of the income tax refunds, if any, is the property of the bankruptcy estate.

Tax refunds are probably the largest single type of asset which debtors lose in bankruptcy.   In New York, the tax refund may protected by your cash exemption up to $2,500, if the bankruptcy was filed prior to January 24, 2011, and up to $6,000, if Chapter 7 Bankruptcy was filed after January 24, 2011, and if you are not claiming a homestead exemption.

The trustees’ goal is to see whether or not  a portion of the income tax refund can be pro rated from the beginning of the year to the date of filing bankruptcy. If this prorated portion of the income tax refund is large enough, the trustee may make a demand that a portion fo the refund be turned over to the trustee. If only one spouse is filing for bankruptcy, and they file a joint tax return, Rochester Chapter 7 trustees usually take position that one half of the refund belongs to the trustee, subject to the applicable exemption.

It is important to disclose the tax refund to your lawyer and the bankruptcy trustee, since a bankruptcy trustee can simply write to the Internal Revenue Service and have it send the tax refund directly to the trustee, and a deliberate failure to disclose information can be a basis for a denial of discharge. Some of the Rochester bankruptcy trustees will ask debtors to sign a stipulation at the meeting of the creditors, requiring the debtors to provide copies of their income tax returns as well as a portion or all of the income tax refunds to the trustee. If debtors fail to do so, their bankruptcy discharge may be revoked.

If you contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

As I have written previously, the new exemption law permits New York residents to choose between the New York exemption statutes and the Federal Exemption that are set forth in Section 522(d) of the Bankruptcy Code.

The federal exemptions have never been available to debtors filing Chapter 7 and Chapter 13 Bankruptcy in New York before because New York chose to opt out of the federal exemptions statute in the past.

The federal exemptions have different provisions that may be more favorable for individual debtors than New York’s statutory exemptions. They may allow debtors and their bankruptcy attorneys to protect certain assets that may not be available under New York’s statutory exemptions, provided that debtors do not need to take advantage of their homestead exemption.

The federal exemptions contain a “wild card” exemption that enables consumers to protect a substantial amount of cash, well in excess of New York’s statutory limit.

Specifically, the federal exemptions are as follows:

(1) The debtor’s aggregate interest, not to exceed $21,625 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor.

(2) The debtor’s interest, not to exceed $3,450 in value, in one motor vehicle.

(3) The debtor’s interest, not to exceed $550 in value in any particular item or $11,525 in aggregate value, in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor.

(4) The debtor’s aggregate interest, not to exceed $1,450 in value, in jewelry held primarily for the personal, family, or household use of the debtor or a dependent of the debtor.

(5) The debtor’s aggregate interest in any property, not to exceed in value $1,150 plus up to $10,825 of any unused amount of the exemption provided under paragraph (1) of this subsection.

(6) The debtor’s aggregate interest, not to exceed $2,175 in value, in any implements, professional books, or tools, of the trade of the debtor or the trade of a dependent of the debtor.

(7) Any unmatured life insurance contract owned by the debtor, other than a credit life insurance contract.

(8) The debtor’s aggregate interest, not to exceed in value $11,525 less any amount of property of the estate transferred in the manner specified in section 542(d) of this title, in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract owned by the debtor under which the insured is the debtor or an individual of whom the debtor is a dependent.

(9) Professionally prescribed health aids for the debtor or a dependent of the debtor.

(10) The debtor’s right to receive–

(A) a social security benefit, unemployment compensation, or a local public assistance benefit;

(B) a veterans’ benefit;

(C) a disability, illness, or unemployment benefit;

(D) alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;

(E) a payment under a stock bonus, pension, profitsharing, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor, unless–

(i) such plan or contract was established by or under the auspices of an insider that employed the debtor at the time the debtor’s rights under such plan or contract arose;

(ii) such payment is on account of age or length of service; and

(iii) such plan or contract does not qualify under section 401(a), 403(a), 403(b), or 408 of the Internal Revenue Code of 1986.

(11) The debtor’s right to receive, or property that is traceable to–

(A) an award under a crime victim’s reparation law;

(B) a payment on account of the wrongful death of an individual of whom the debtor was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;

(C) a payment under a life insurance contract that insured the life of an individual of whom the debtor was a dependent on the date of such individual’s death, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;

(D) a payment, not to exceed $21,625, on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is a dependent; or

(E) a payment in compensation of loss of future earnings of the debtor or an individual of whom the debtor is or was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.

(12) Retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986.

Here is an example of how a typical debtor may benefit from using Federal exemptions. If debtor owns a motor vehicle that has $6,000.00 in equity, under the New York exemptions, debtor can only protect $4,000.00 of that equity (plus the New York wildcard exemption, if available). However, if debtor uses the Federal Exemptions, debtor can COMBINE the wildcard exemption with the standard Federal auto exemption of $3,450.00, and use an additional $2,550.00 of the wildcard exemption to protect the remaining equity in that vehicle. As long as debtors do not need to use homestead exemption in excess of the Federal Homestead Exemption of $21,625.00, debtors are likely to benefit from the Federal Exemptions.

If you are contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, New York, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

Back in July I have written about a pending bill which would have changed New York’s bankruptcy exemptions and allowed debtors to use the current federal exemptions or the exemptions in New York Law. At the time, it was impossible to predict whether the bill would ever become law.

On December 23, 2010, the bill was signed into law and will become effective in 30 days. This is the biggest change in New York’s bankruptcy exemptions in years, and will make a tremendous impact on the debtors filing both Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.

Homestead Exemption Increases to $75,000 per person for those in Rochester and Western New York

Right now each homeowner can protect only $50,000 worth of equity in a house. However, for those living in Rochester and Western New York Counties, that amount will increase to $75,000. Since a married couple can combine their exemptions, that means that a couple will be able to protect a$150,000 worth of equity in their home.

This will enable almost any typical Rochester middle class family to file bankruptcy to eliminate their credit card debts while protecting their home. In my Rochester, New York, bankruptcy practice, I periodically meet with homeowners who are forced to file for Chapter 13 Bankruptcy instead of Chapter 7 Bankruptcy because they have too much equity in their homes.  Now, almost everyone will be able to seek Chapter 7 Bankruptcy relief and keep and protect their homes.

Amounts for Almost All Other New York’s Exemptions Categories Are Being Increased and New Categories Are Being Added

The new law also increases the exemptions for many other assets such as cars, and adds some new categories like home computers and vehicles for the handicapped.

Comparison of New York’s Old and New, 2011 Bankruptcy Exemption Statutes

The New and Increased Exemptions Will Benefit Future Bankruptcy Debtors

Not only will more consumers be able to file for Chapter 7 Bankruptcy, but it will also help those debtors filing Chapter 13 Bankruptcy since they may be paying substantially less through their monthly Chapter 13 plan. In addition, existing Chapter 13 Bankruptcy debtors may be able to convert their cases to Chapter 7 and eliminate all future monthly payments.

I have attached a copy of the actual bill here.

If you are contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, New York, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

It is not necessary to have a job to file for Chapter 7 Bankruptcy. In fact, the filing of Chapter 7  Bankruptcy is probably one of the few instances in the debtor’s life where it helps the debtor not to be working.

One of the basic requirements of the Chapter 7 Bankruptcy is that the debtor must show that he or she does not sufficient income available to pay their creditors any money under Chapter 13. Whether the debtor has sufficient income that would require him to be in a Chapter 13 Bankruptcy or in a Chapter 7 Bankruptcy is determined though by the “Means Test.”

A simple explanation of the Means Test is as follows. The Means Test takes the debtor’s income for the six month before the filing of a bankruptcy and compares that income to the average income for a person in the debtor’s state with the same family size. As an example, in New York, where I practice, if a single debtor makes $46,320.00 per year or less, he qualifies to be in a Chapter 7 Bakruptcy. So someone who is not working can file under Chapter 7.

The above is only a part of the Means Tests requirements since the amount of income is only a beginning when the means test calculations are done. Other factors and calculations also have to be considered when making a decision under which Chapter of the Bankruptcy Code the debtor should file .

Sometimes, the debtor can benefit from a loss of a job, usually in a situation where he earns more than the median income for his State, after the loss of the job, once a sufficient period of time passes, the debtor’s average monthly income will be reduced and the debtor will qualify for Chapter 7 Bankruptcy.

The only time the debtor needs a job to file for bankruptcy is when he is filing for a Chapter 13 Bankruptcy.

If you are contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, New York, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.