Rochester Bankruptcy and Debt Relief

As I have previously written, Chapter 13 bankruptcies involve many different issues.  Once thing that bankruptcy lawyers point out to all debtors entering Chapter 13 bankruptcy is that the debtor has to make payments to the trustee, prior to the confirmation of the plan, and, of course, after the plan is confirmed.  Sometimes, the debtor is unable to make payments, and, rather than asking his/her bankruptcy attorney to seek modification of the plan, does nothing.  Under those circumstances, the Chapter 13 bankruptcy trustee will move to have the bankruptcy dismissed.  Once the motion to dismiss is granted, and creditors resume collections activities, such as foreclosure, can the debtor refile?

The debtor can refile Chapter 13 bankruptcy, if it has been dismissed, at any time.  However, changes to the Bankruptcy Code that were in Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) can limit the relief that the debtor  receives when he/she refiles.  If the Chapter 13 bankruptcy is refiled within one year of the dismissal, the automatic stay is in effect only for 30 days.  This is a critical difference between a refiled Chapter 13 bankruptcy and the original filing.  It means that within 30 days of the filing, the debtor’s attorney must file a motion in bankruptcy court seeking to extend the automatic stay.  If the motion is not made, or granted by the bankruptcy court, creditors can resume collection activity.

In general, before a motion to dismiss is filed, or granted, the debtor should contact his/her bankruptcy lawyer to discuss all available options, including converting Chapter 13 to Chapter 7 bankruptcy, or amending the plan.

If you 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 bankruptcy attorney.

Recently, I read a New York Times article, “Debt Settlers Offer Promises But Little Help“, that confirmed something that I already knew – debt settlement, in most cases, does not work and usually costs a lot more than a Chapter 7 or a Chapter 13 bankruptcy.  Also, most people working with debt settlement companies are likely to find themselves in the worse financial situation after entering debt settlement.  One quote summarizes how debt settlement industry does business:

Consumers who turn to these companies sometimes get help from them, personal finance experts say, but that is not the typical experience. More often, they say, a settlement company collects a large fee, often 15 percent of the total debt, and accomplishes little or nothing on the consumer’s behalf.

While I appreciate the fact that most debtors want to avoid filing bankruptcy, in my opinion, bankruptcy represents an opportunity for a fresh start for most people.  The critical difference between a bankruptcy and a debt settlement, despite what a debt settlement company may claim, is that the creditor does not have to agree to a debt settlement arrangement.  In a bankruptcy, under either Chapter 7 or Chapter 13, the creditor is obligated to follow the Chapter 13 repayment plan or accept results of the Chapter 7 discharge.

At the same time, if a debtor has a only a few debts, may have other alternatives to either filing a bankruptcy or working with a debt settlement company.

I have experience with “workouts” which is a term used to describe a non-bankruptcy negotiated modification of debt.  A workout is an out-of-court agreement between a debtor and his or her creditors for repayment of the debts between them, which is negotiated without all the procedural complications — and perhaps the stigma — of the bankruptcy process.  A typical workout takes form of either “composition”, which is a contract between the debtor and two or more creditors in which the creditors agree to take a partial payment in full satisfaction of their claims. Another option is an “extension”, which  is a contract between the debtor and two or more creditors in which the creditors agree to extend the time for payment of their claims. An agreement may be both a composition and an extension, i.e., an agreement to accept less money over a longer period of time.

There is no requirement that all of the debtor’s creditors agree to a composition or extension, but most of them must voluntarily support it for it to work. Creditors that do not agree to the workout are not affected by it and remain entitled to pursue other remedies to collect the debts owed to them. My role in this process is to negotiate such agreements on behalf of the debtor.

If you are dealing with debt problems in 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.

The creditors’ meeting, otherwise known as 341 meeting, is a procedural step in every Chapter 7 and Chapter 13 bankruptcy.  In a typical 341 meeting, the debtor will be asked questions under oath by the bankruptcy trustee with respect to his or her financial affairs.  Most debtors are apprehensive of the 341 meeting.  While 341 meeting is also designated as the first meeting of the creditors, creditors seldom come to the first meeting, and there isn’t usually a second meeting.  Most of the time, it is a meeting of the debtor and the trustee appointed in the case.

There are two items that the debtor must have at the 341 creditor’s meeting.  The first one is a state issued photo identification card.  For most people, this is going to be their driver’s license.  The second item is the social security card.  If the debtor does not have these documents at the meeting, the trustee cannot go forward with the creditors’ meeting since the trustee must confirm the debtor’s identity.  Occasionally, trustee may permit the use of a W2 forms, annual social security statements, or a payroll check stub that contains debtor’s social security number.

Take the time to locate these documents before you arrive at the location for your creditor’s meeting.  Here in Rochester, bankruptcy trustees usually tell the debtors to have their identification and proof of social security number ready at the beginning of the meeting.  Most bankruptcy attorneys will ask the clients for those documents so they can be handed t the trustee.  I often have seen people anxiously looking through a purse or wallet for a social security card that they just know they have, only to find out that they don’t have it, or that they are too nervous to find.

The 341 meeting is not a test or a trial.  The trustee won’t be asking any trick questions.  Your lawyer is there for support and to make sure that the record created is truthful and accurate.  In order to have a successful 341 meeting all the debtor has to do is to follow these four steps:  (1) tell the truth; (2) listen to the question; (3) let the trustee finish before you start speaking; and (4) answer in as few words as possible.

It is critical for someone who filed bankruptcy to be honest during 341 hearing.  It is just as critical for the debtor to be honest with his/her attorney prior to the hearing, before the petition is prepared out and filed.  If the debtor’s statements during the 341 hearing contradict the petition, and those contradictions were deliberate on the part of the debtor, that means the debtor may have already committed perjury, which is a federal offense.  When the petition is filed, the debtor, by signing his or her petition, swore that the petition was truthful.

There are a number of questions that a trustee is required to ask the debtor at the meeting of creditors.  They are as follows:

1.   State your name and current address for the record.

2.   Please provide your picture ID and Social Security number card for review.

3.   Did you sign the petition, schedules, statements, and related documents and is the signature your own? Did you read the petition, schedules, statements, and related documents before you signed them?

4.   Are you personally familiar with the information contained in the petition, schedules, statements and related documents? To the best of your knowledge, is the information contained in the petition, schedules, statements, and related documents true and correct? Are there any errors or omissions to bring to my attention at this time?

5.   Are all of your assets identified on the schedules? Have you listed all of your creditors on the schedules?

6.   Have you previously filed bankruptcy? (provide trustee with case number and the discharge information to determine discharge eligibility in this case)

7.   What is the address of your current employer?

8.   Is the copy of the tax return you provided a true copy of the most recent tax return you filed?

9.   Do you have a domestic support obligation? To whom? Please provide the claimant’s address and telephone number, but do not state it on the record. Are you current on your post-petition domestic support obligations?

10.   Have you filed all required tax returns for the past four years?

There are also other questions that a trustee may ask you:

1.   Do you own or have any interest whatsoever in any real estate? If owned: When did you purchase the property? How much did the property cost?  What are the mortgages encumbering it?  How did you arrive at the value of the property?

2.   Have you made any transfers of any property or given any property away within the last one year period?

3.   Does anyone hold property belonging to you? If yes: Who holds the property and what is it? What is its value?

4.   Do you have a claim against anyone or any business? If there are large medical debts, are the medical bills from injury? Are you the plaintiff in any lawsuit? What is the status of each case and who is representing you?

5.   Are you entitled to life insurance proceeds or an inheritance as a result of someone’s death?  If you become a beneficiary of any one’s estate within six months of the date your bankruptcy petition was filed, the trustee must be advised within ten days through your counsel of the nature and extent of the property you will receive.

6.   Does anyone owe you money?  Who owes the money and where are they?

7.   Have you made any large payments, over $600, to anyone in the past year?

8.   Were federal income tax returns filed on a timely basis? When was the last return filed? Do you have copies of the federal income tax returns?  At the time of the filing of your petition, were you entitled to a tax refund from the federal or state government ?

9.   Do you have a bank account, either checking or savings? If yes: In what banks and what were the balances as of the date you filed your petition?

10.   When you filed your petition, did you have:

a. any cash on hand?
b. any U.S. savings bonds?
c. any other stocks or bonds?
d. any certificates of deposit?
e. a safe deposit box in your name or in anyone else’s name?

11.   Do you own an automobile? If yes: What is the year, make, and value? Do you owe any money on it? Is it insured?

12.   Are you the owner of any cash value life insurance policies? If yes: State the name of the company, face amount of the policy, cash surrender value, if any, and the beneficiaries.

13.   Do you anticipate that you might realize any property, cash or otherwise, as a result of a divorce or separation proceeding?

14.   Have you been engaged in any business during the last six years? If yes: Where and when? What happened to the assets of the business?

As log as you and your bankruptcy lawyer are prepared, your 341 hearing is likely to be completed quickly.  If you are missing documents or if trustee requires additional information, your hearing may be rescheduled to a later date.

If you are dealing with debt problems in 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.

In Chapter 13, a debtor can keep his or her car even if the equity is greater than the allowed exemption amount, as long as the value of equity in excess of the exemption is distributed to creditors through the chapter 13 plan, i.e., satisfying the good-faith test.  Chapter 13 bankruptcy can effectively halt car repossession and will allow the debtor to repay any arrears on the loan over the life of the Chapter 13 plan.  In addition, in a Chapter 13, the amount the debtor will pay may depends on how long ago the car was purchased.  If the  car was purchased in the last 910 days (30 months), the debtor must usually pay the full amount owed, regardless of the car’s current value.   However, under appropriate circumstances, the interest rate on the loan may be reduced by the bankruptcy court.  If the car was purchased more than 30 months ago, the debtor is likely to have to pay the lender the amount representing the car’s present value over the life of the repayment plan.  The amount representing the car’s value is treated as secured debt, and the remainder of the debt is treated as unsecured.  This is particularly significant where the car is upside down, i.e., the amount owed significantly exceeds the car’s value.  Those situations may result in significant savings to the debtor.

If the debtor is leasing a car, he or she has two options.  The debtor can reaffirm the lease and keep the car, while continuing to make payments.  Alternatively , the debtor can reject the lease, return the car, and discharge any debt associated with the lease.

If you are dealing with debt problems in 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.

Chapter 13 has helped many to resolve their debts and save their homes from foreclosure. The following is a short description of a typical process that someone filing Chapter 13 bankruptcy goes through, from the initial meeting and until a discharge is received.

The initial stage of a Chapter 13 bankruptcy usually involves meeting with your bankruptcy attorney and discussing the case. The attorney will typically ask you to prepare a bankruptcy questionnaire, in which you will be asked to list your income and expenses, assets and liabilities, and describe your financial dealings over the past few years. Once the questionnaire is completed, your bankruptcy lawyer will be able to review and identify various exemptions applicable to your assets, determine whether certain of your debts are dischargeable or not, and will try to do bankruptcy planning to preserve as many of your assets as possible.

Your next step will be taking the credit counseling course. Under the bankruptcy law, you must complete the course before your bankruptcy petition can be filed with the bankruptcy court. The course must be taken from an authorized provider and can be done in person, over the telephone or internet. You will also have to provide your bankruptcy attorney with copies of your pay stubs for 60 days preceding the filing, and a copy of your most recent tax return.

Once the above steps are completed, your petition will be prepared and filed with the bankruptcy court. Concurrently with the petition, a copy of your credit counseling certificate and copies of your paystubs will be filed. Once the bankruptcy petition is filed, the automatic stay begins and protects you from all collection activities by your creditors. The automatic stay will last until the end of your bankruptcy case, unless it is lifted by the bankruptcy court.  Your petition will include a repayment plan pursuant to which your disposable income will be used to repay creditors.

Within 45 days of your filing, a meeting of the creditors, also known as 341 hearing, will take place. You will have to come to the bankruptcy court in Rochester, if you reside in Monroe County, and answer the questions posed to you by the bankruptcy trustee. The trustee will typically ask you questions about your financial affairs, your income, expenses, assets and liabilities. You also may have to answer questions from your creditors who have the right to appear at the hearing. You will have to swear under oath that the information you provided in your petition is complete and accurate.  After the hearing the trustee will issue a report to the bankruptcy court stating whether he recommends that your repayment plan be confirmed.

A typical Chapter 13 plan involves using your disposable income to repay all or a portion of your debts to the creditors over the next three to five years.  The plan provides a repayment schedule that you’ll comply with to catch up on your past-due balances while staying current with other payments.  Filing of a Chapter 13 bankruptcy can stop foreclosure and allow you to repay any mortgage arrears over the duration of your plan.  Your plan can include such debts as mortgage and other secured and unsecured loan arrears and any other debts.  You must make your first payment (as part of the repayment plan) within 30 days of filing your petition.  If such payment is not made, the court may dismiss your case.

Within 45 days after the meeting of the creditors, you will have to complete the financial management course. If you will not complete it, you will not become eligible for discharge. The course is designed to help you make the most of your bankruptcy and includes tips on saving, managing money and handling credit.

Within 30 days after the 341 hearing, your confirmation hearing will be scheduled.  On that date, you will appear with your attorney before Hon. John C. Ninfo, United States Bankruptcy Judge for the Western District of New York, who will make the ultimate decision whether to approve your Chapter 13 bankruptcy.

Once the plan has been approved, the trustee will typically enter a wage deduction order pursuant to which, all or a portion of your plan payments will be taken out of your wages and paid directly to the bankruptcy trustee.  The trustee, in turn, will be making the payments to your creditors. You are required to make your final payment under the plan within five years of filing your petition. After doing so, you will receive your bankruptcy discharge and officially be out of Chapter 13 bankruptcy.

You will not be eligible for Chapter 13 bankruptcy protection if you had filed for bankruptcy in the past four years, so make sure you tell your bankruptcy lawyer whether you had past bankruptcy filings.

If you are dealing with debt problems in 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.

The following is a short description of a typical process that someone filing Chapter 7 bankruptcy goes through, from the initial meeting, until a discharge is received.

The initial stage of a Chapter 7 bankruptcy usually involves meeting with your bankruptcy attorney and discussing the case. The attorney will typically ask you to prepare a bankruptcy questionnaire, in which you will be asked to list your income and expenses, assets and liabilities, and describe your financial dealings over the past few years. Once the questionnaire is completed, your bankruptcy lawyer will be able to review and identify various exemptions applicable to your assets, determine whether certain of your debts are dischargeable or not, and will try to do bankruptcy planning to preserve as many of your assets as possible.

Your next step will be taking the credit counseling course. Under the bankruptcy law, you must complete the course before your bankruptcy petition can be filed with the bankruptcy court. The course must be taken from an authorized provider and can be done in person, over the telephone or internet. You will also have to provide your bankruptcy attorney with copies of your pay stubs for 60 days preceding the filing, and a copy of your most recent tax return.

Once the above steps are completed, your petition will be prepared and filed with the bankruptcy court. Concurrently with the petition, a copy of your credit counseling certificate and copies of your paystubs will be filed. Once the bankruptcy petition is filed, the automatic stay begins and protects you from all collection activities by your creditors. The automatic stay will last until the end of your bankruptcy case, unless it is lifted by the bankruptcy court.

Your bankruptcy case will likely last between four and six months, during which time, the following events are likely to take place.

Within 45 days of your filing, a meeting of the creditors, also known as 341 hearing, will take place. You will have to come to the bankruptcy court in Rochester, if you reside in Monroe County, and answer the questions posed to you by the bankruptcy trustee. The trustee will typically ask you questions about your financial affairs, your income, expenses, assets and liabilities. You also may have to answer questions from your creditors who have the right to appear at the hearing. You will have to swear under oath that the information you provided in your petition is complete and accurate.

If the bankruptcy trustee is satisfied with your information, this is likely to be the only trip you will have to make to the bankruptcy court. If your petition is incomplete, and trustee has additional questions or needs additional documents, your hearing may be postponed to another date.

If the bankruptcy trustee identifies any non-exempt assets, he can sell them to raise money to pay your creditors. In many Chapter 7 cases, filers do not have any non-exempt assets. If such non-exempt assets are identified, you have the option of either letting the trustee take those assets or paying trustee the value of those assets in order to keep them.

If you have such assets as a home or a car, and you still owe money on either a mortgage or a car loan, you will have an opportunity to sign a reaffirmation agreement in order to keep those assets. A reaffirmation agreement is an agreement renewing your liability on the debt with the lender. You will agree to continue making payments so you will keep whatever property you don’t want to give up. You will have to be current on any such debts or will have to make them current in order for a creditor to let you sign a reaffirmation agreement.

Within 45 days after the meeting of the creditors, you will have to complete the financial management course. If you will not complete it, you will not become eligible for discharge. The course is designed to help you make the most of your bankruptcy and includes tips on saving, managing money and handling credit.

Typically within 2 months of the meeting of creditors, you will receive the bankruptcy discharge. The discharge is basically an order of the bankruptcy court relieving you of your responsibility to pay debts that were discharged in the bankruptcy. After you receive your discharge, your bankruptcy is completed.

Once you complete a Chapter 7 bankruptcy, you cannot file a Chapter 7 again for the next eight years.

If you are dealing with debt problems in 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.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) included significant changes to the prior bankruptcy law, specifically, a financial test which allowed bankruptcy courts to determine who could qualify for Chapter 7 bankruptcy and who could not. This test is commonly called the “Means Test.” If you fail the Means Test, you may still file for bankruptcy protection, however, you would be limited to filing under Chapter 13 of the Bankruptcy Code, and would have to repay all or a portion of your debt over time.

The Means Test is a two-part test that compares your income and expenses.

The first part of the Means Test compares your current monthly income to the median monthly income in your state for a family the size as yours. For the cases filed after March 15, 2009, this table is found here. If your income is less than the median income, you qualify for a Chapter 7 bankruptcy, and do not need to complete the second part of the Means Test. For New York State, the median income numbers are:

One Earner      Two People          Three People            Four People*

$46,523           $57,006                $67,991                    $83,036

* Add $6,900 for every individual in excess of four.

If your income is higher than the median income, it doesn’t necessarily mean that you can’t file for Chapter 7 bankruptcy, but it requires you to proceed to the second step in the test which is more complex.

The second part of the Means Test contains two-parts. First, you subtract your allowed monthly living expenses (determined by IRS guidelines) from your monthly income to come up with your monthly “disposable income.” If your projected disposable income over the next five years totals less than $6,000 ($100/month), you pass the Means Test and can file under Chapter 7.

If your projected disposable income over the next five years is greater than $10,000, you fail the Means Test and will not be allowed to file Chapter 7.

If your projected disposable income is between $6,000 and $10,000, yet another calculation is required. This calculation compares your disposable income over the next five years to a percentage of your unsecured debt to determine whether any significant repayment to your creditors is possible. If your disposable income over that five years is greater than 25% of your unsecured, non-priority debts, you fail the Means Test and cannot file under Chapter 7. If your disposable income over a five year period is less than 25% of your unsecured, non-priority debts, you pass the Means Test and can filed Chapter 7 bankruptcy.

If you qualify under the Means Test, it does not require you to file under Chapter 7. There may additional reasons why you should not file under Chapter 7, and instead choose to file under Chapter 13. Any decision to file for Chapter 7 bankruptcy should be made only after considering alternatives and consulting with a knowledgeable bankruptcy lawyer.

If you don’t pass the Means Test, you may still file bankruptcy but are limited to using Chapter 13 bankruptcy which is a 3 to 5 year debt repayment plan. In a Chapter 13 bankruptcy, your payment plan is based upon what you can afford to pay your creditors, not on what your creditors want you to pay.

The above is a short summary of the Means Test. There are other factors that may have an effect on the Means Test.

If you are dealing with debt problems in 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.

If you are filing Chapter 7 bankruptcy in New York, your property becomes a part of bankruptcy estate, which will be administered by the bankruptcy court. In Chapter 7, certain property is exempt and you can keep it. Federal bankruptcy exemptions are not available in the State of New York.

Under New York law, you can exempt or protect certain property from creditors when you file bankruptcy. After filing for bankruptcy, this property is safe. There are some limits on certain exemptions such as equity that you have in a home or in a vehicle. The difference between the cost of the item and the amount owed on the item is the definition of equity. If the item, such as home or vehicle, secured by a loan and payments made on time, the equity is protected by your exemptions. A debtor must generally pay the trustee the value of the non-exempt property to keep the property. If you choose to keep the property, continual timely payments ensure protection of the property through bankruptcy.

The following lists most important New York exemptions applicable in Chapter 7 Bankruptcy cases:

Homestead

Real property, including mobile home, condominium, or co-op, up to $50,000 per filer.

Personal Property

Clothing, furniture, refrigerator, TV, radio, sewing machine, security deposits with landlord or utility company, tableware, cooking utensils and crockery, stoves with fuel to last 60 days, health aids (including service animals with food), church pew or seat, wedding ring, bible, schoolbooks, pictures; books up to $50; domestic animals with food to last 60 days and up to $450; watch to $35; spendthrift trust fund principal; 90% of trust fund income if not created by debtor; college tuition savings program trust fund; recovery for injury to exempt property up to 1 year after receiving. Exemptions cannot exceed a total of $5,000 including tools of trade and limited annuity.

Burial plot up to 1/4 acre without a structure on it.

Savings and loan savings up to $600.

Motor vehicle up to $2,400; lost future earnings recoveries needed for support; personal injury recoveries up to 1 year after receipt; wrongful death recoveries for a person you depended upon for support.

IN LIEU OF Homestead exemption, the lesser of the following: up to $2,500 cash or up to $5,000 after exemptions for personal property taken

Wages

90% of earned but unpaid wages received within 60 days of filing for bankruptcy; 90% of earnings from milk sales to milk dealers; 100% for a noncommissioned private, officer or musician in the U.S. or N.Y. state armed forces.

Pensions

Tax exempt retirement accounts; Traditional and Roth IRAs up to $1,095,000 per person.

ERISA-qualified plans, Keoghs and IRAs needed for support.

Public Benefits

Unemployment benefits; veterans’ benefits; Social Security; aid to blind, aged, and disabled; crime victims’ compensation; home relief, local public assistance; public assistance; worker’s compensation.

Tools of Trade

Professional furniture, books, instruments, farm machinery, team and food for 60 days, up to $600 total; arms, swords, uniforms, equipment, horse, emblem and medal of a military member.

Alimony and Child Support

Alimony and child support.

Insurance

Annuity contract benefits due to the debtor if he or she paid for the contract up to $5,000, if purchased within 6 months of filing for bankruptcy and not tax-deferred.

Life insurance proceeds left at death if policy prohibits use to pay creditors.

Disability or illness benefits up to $400 per month; life insurance proceeds, dividends, interest, loan, cash, or surrender value if beneficiary is not the debtor or if the debtor’s spouse has taken out the policy.

Miscellaneous

Business partnership property.

To keep non-exempt property, a debtor must generally pay the trustee the value of the non-exempt property.

The exemptions are also relevant if you are filing a Chapter 13 bankruptcy since your bankruptcy has to pass the “good faith” test. The good faith test involves making sure that unsecured creditors will be paid at least as much under Chapter 13 bankruptcy, as if a Chapter 7 bankruptcy had been filed. Generally, this involves valuing of all the nonexempt property the debtor owns.

If you are dealing with debt problems in 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.

Under Title 11 of the United States Bankruptcy Code, an individual, corporation or partnership, can obtain relief from certain debts under the law.

When filing for bankruptcy, your property becomes a part of bankruptcy estate, which will be administered by the bankruptcy court. In Chapter 7, certain property is exempt and you can keep it. The New York bankruptcy exemptions are discussed in this post. In Chapter 13, you can keep your property, subject to passing the “good faith” test. When filing, you will be required to list all the property that you own, regardless where that property is located. If you fail to disclose the property, there may be serious consequences, including criminal charges.

Exemptions are used to protect your property. There is always a chance that you may lose some of your property in a Chapter 7, because it is a liquidation type of Bankruptcy. In a Chapter 7 bankruptcy, the trustee (who is appointed to collect and sell all property that is not exempt and to use any proceeds to pay creditors) can sell your non-protected property to pay your debts. In a Chapter 13 bankruptcy, you will have to pay a portion of your income to the trustee in order to keep your non-exempt property. If you are thinking about filing for bankruptcy, it is critical that you discuss these issues with a bankruptcy attorney in advance so that you protect your assets.

As a part of your bankruptcy petition, you will be required to list all your creditors. If a creditor is not listed, you will take a chance of either not having your debt not discharged or having your entire case being dismissed.

Chapter 7 is the liquidation chapter of the Bankruptcy Code and those cases are commonly referred to as “liquidation” cases. Under Chapter 7, a trustee is appointed to collect and sell all property that is not exempt and to use any proceeds to pay creditors. In the case of an individual, the debtor is allowed to claim certain exempt property. Upon the completion of the bankruptcy, the debtor will receive a discharge of the debts. If you are filing bankruptcy for your corporation or partnership, the debts of that entity are discharged, but you may still be personally liable for the debt. It is possible that you may have to file a personal bankruptcy to protect yourself.

Chapter 11 is called the reorganization chapter for either businesses or individuals who have too much debt to file a Chapter 13. The creditors get to vote as to whether or not they will accept the plan to reorganize. It is very costly to file a Chapter 11 and it is very complex.

Chapter 12 is used by individuals, corporations or partnerships who derive their income from family farming. There are certain debt limits that apply. The plan must be proposed to repay the creditors over time and it must be approved by the Court.

Chapter 13 is the debt repayment bankruptcy for individuals but those who are sole proprietors can use this chapter also. It is usually considered if the filer has regular income to fund the plan and if the debt is less than $336,900 in unsecured debts and $1,010,650 unsecured debts. Your plan can only last 60 months.

Almost without any exception, the bankruptcy under Chapter 7 or 13 will stop garnishment or any other collection activities by your creditors.

If you have been sued on a consumer debt, like a credit card or a personal loan, I can usually stop the garnishment with a bankruptcy filing. Creditors have to obey the automatic stay imposed by a bankruptcy filing.

The automatic stay gives the debtor protection from his creditors, subject to the oversight of the bankruptcy judge. The automatic stay prohibits beginning or continuing law suits, collection calls, repossessions, foreclosure sales, and garnishment or levies. The automatic stay remains in effect until a judge lifts the stay at the request of a creditor; the debtor gets a discharge; or the item of property is no longer property of the estate. Anyone who willfully violates the stay, in the case of an individual is liable for actual damages caused by the violation, and sometimes for punitive damages. Some courts confine the right to damages to individual debtors and deny damages for stay violations as to corporate debtors.

There are some limited exceptions. You can’t stop deductions for a child support payments. Child support payments are not dischargeable in bankruptcy, but under some circumstances, a bankruptcy filing may be used to stop the additional payment for overdue support payments but it will not eliminate them altogether. In most cases, you will typically need to file under Chapter 13 in order to address overdue support payments owed through a payment plan. If the debt can’t be discharged (such as child support, maintenance, or other domestic support obligations, or most student loans) the garnishment could resume after your case is concluded, or if the automatic stay is lifted.

For most people, garnishments and executions come as a result of old consumer debts. Creditors’ actions in enforcing such debts tend to make consumers fall behind on their rent or mortgage and car payments. Bankruptcy will allow you to change the order of payments — to allow you to decide who gets paid and who does not.

If you are dealing with debt problems in 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.