A Chapter 7 Bankruptcy filing may provide you with the opportunity to legally relieve yourself from unsecured debts (such as credit card debts, medical debts, personal loans or certain bank loans). In most cases, you can keep your home, car, and other personal belongings. During your free phone and office initial consultation, we will further consult you about your specific situation. If you are being harassed by creditors, the filing of a Chapter 7 or Chapter 13 Petition in Bankruptcy (Automatic Stay Provisions) will, in almost every case, immediately STOP your creditors from calling you, harassing you, suing you, garnishing your wages, freezing your bank account or even communicating with you.

What property is “exempt”?
Although bankruptcy is governed by Federal law, in New York State, the determination of which of your property is “exempt” is controlled by New York State law. The following items are considered “exempt” property for Chapter 7 bankruptcies:
● Real property owned and used as a primary residence, including a house, land, a condominium, cooperative apartment or motor home, up to $50,000 of equity. (Equity is the current value of the property less the monies owed on all mortgages and judgment liens against that property.)
● A cemetery plot.
● Cash, totaling up to $2,500, unless an exemption for real property is claimed. This includes U.S. currency, savings accounts, checking accounts, credit union shares, U.S. savings bonds and the right to receive a federal or state income tax refund.
● Clothing and household goods, such as household furniture, a stove, refrigerator, radio, television, cookware, tableware, sewing machine, books, pets worth up to $450, a family bible, pictures and schoolbooks, other books up to $50, a wedding ring, a watch up to $35 and work tools up to $600.
● Security deposits for rent and utilities.
● A motor vehicle, up to $2,400 of equity over any secured amount owed for the vehicle.
● Proceeds of a life insurance policy, if someone other than the debtor in bankruptcy is the beneficiary. Also, proceeds of a life insurance policy, if the person receiving the proceeds is the debtor in bankruptcy and the policy was taken out on the life of the spouse of the person filing for bankruptcy.
● The right to receive certain awards and benefits: social security, unemployment compensation, public assistance, veteran’s benefits, disability benefits, crime victim’s awards and personal injury awards (up to $7,500 not including pain and suffering and actual monetary loss).
● Property needed for future support, such as alimony and support and wrongful death awards to dependents.
● 90% of wages earned within 60 days of the filing of a petition.
● Pensions, Keogh and 401(k) retirement plans, IRAs and most annuities.
There is a $5,000 limit on the exemptions which may be claimed for the total of cash, household goods, clothing and certain annuities.

If you are filing a joint petition with your spouse, each of you can claim these exemptions. In other words, the amounts of the exemptions are doubled when a married couple files together.

What debt is “dischargeable” in a Chapter 7 bankruptcy?

Most consumer debt is dischargeable in a Chapter 7 bankruptcy, with certain exceptions. Bankruptcy will not normally eliminate the following types of debt:
(1) money owed for child support or alimony, court-ordered fines, and certain taxes;
(2) debts not listed on your bankruptcy petition;
(3) loans you received by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan;
(4) debts resulting from “willful and malicious” harm;
(5) student loans owed to a school or government body, except if the Court determines that payment would constitute an “undue hardship” for you;
(6) mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor);
(7) personal injury debts caused by driving while intoxicated or under the influence of drugs;
(8) debt incurred after you file for Bankruptcy relief; and
(9) if you have co-signors or co-debtors, your Bankruptcy filing will not eliminate your co-debtor’s or co-signor’s obligation to repay that debt (however, if your co-signor or co-debtor is your spouse, and you and your spouse jointly file for Bankruptcy relief, that debt will be eliminated for both of you).