There are lost of technical answers to this question, but basically, for an individual, when you file Bankruptcy you create a financial estate.  That estate is “administered” by a Trustee.  There are very different paths to the same outcome if you file a Chapter “7” or a Chapter “13” Bankruptcy, but the result is the same: you get rid of “unsecured” and maybe other kinds of debt.

It is a mistake to think things like:

Ø    I want to file Bankruptcy on my credit cards;

Ø    I do not want to include certain debt if I file;

Ø    I want to file only on my medical debt.

It is also a mistake to think that:

Ø    I need a certain amount of debt to file Bankruptcy;

Ø    I can’t protect my assets if I file Bankruptcy;

Ø    I have too much debt to file Bankruptcy;

Ø    I will lose my house or my car if I file;

Ø    My credit score will never improve.

Bankruptcy is filed by creating and filing a Petition.  In our firm, a simple Petition is about 60 pages long.  In the Petition you list all of your assets and income for the household; and all of the debts and obligations for that property or person who is filing.

After everything is listed your attorney applies “exemptions” to the property.  Exemptions are creatures of State law in New York.  Quite simply, they are the “things you get to keep” as defined by specific statues and laws.

EXEMPTIONS

We are able to select between New York or Federal law in the application of exemptions to your property.  This can be a complicated area and planning what exemption to apply to what property is one of the most important tasks your attorney performs.

There are many exemptions, but we would like to list a few.  It does not matter if a person files a Chapter 7 or a Chapter 13 Bankruptcy.  These exemptions apply to all cases:

Ø    Homestead exemption:  This is where the homeowner who is on the Deed and living in the property gets to protect $75,000.00 each to $150,000.00 each, depending on the county where you reside of equity in the property.  So, if one person is on the Deed and they live in the house and the home is worth $75,000.00 to $150,000.00 (depending on the county) and is paid off, they get to keep the home and no one can try and take it if they file Bankruptcy.  If two people are on the Deed and reside in the home the house can be paid off and worth $150,000.00 to $300,000.00 (depending on the county where the house is located) and nothing will happen to it if they file a Bankruptcy.  The exemption protects equity (What the property is worth minus what is owed on the property in the form a of a loan).

Ø    Personal property:  The vast majority of people do not have to worry about losing property when they file Bankruptcy.  No one comes to your home and investigates the property you list.  However, it is your obligation to report all property.  The reason most property is not an issue in Bankruptcy is because most people who file Bankruptcy do not own things that are of such a value that it would justify taking the property.  Most people’s furniture, bedroom sets, dining room sets, clothes, etc. are normal consumer items that we list, but since the PERSONAL PROPERTY EXEMPTION IN NEW YORK IS $10,000.00 DOLLARS we have found that it is not worth the trouble by the Trustee appointed to oversee your Bankruptcy to take and sell the property.  The truth is that if we look around the normal home there is rarely property that would justify the appointment of an attorney; auctioneer; a sale by the Court and storage fee’s, etc., that would be required if the Trustee wanted your stuff.  I always ask people “do you have Rolex watches; Antique Stickley furniture; Steinway Pianos that are paid off; valuable art work; Lots of Cash; Comic Book collections; Gold Coin Collections?” and other inquiries.  The truth is that by the time you meet with me it is apparent that people have exhausted their finances and often made some mistakes that they should not have regarding increasing their debt; taking money out of retirement accounts to pay credit cards, or transferring property to family members or other “insiders”.

DON’T:

Ø    Take out a second mortgage without consulting us;

Ø    Transfer property to family members or friends to “protect it”;

Ø    Take money out of your retirement account to pay credit cards.

We hope this basic information helps you.  Our appointments are free and you will speak with an attorney and not a paralegal.  When you come to our office you will see the staff that will actually work on your case.

Our firm provides a written fee agreement and a list of documents that are needed for the filing.  We hope you call us.