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Bankruptcy in New York

In 2011, about 1.5 million bankruptcies were filed. If you are considering bankruptcy, you are not alone. During this economic downturn, bankruptcy has become common. If you live in New York and think that bankruptcy may be a viable option, this article is for you.

Below, we’ll explain 4 things you need to know. We will:

  • Illustrate how filing bankruptcy in New York is different than in other states
  • Show the differences between Chapter 7 and Chapter 13 bankruptcies
  • Guide you in finding and choosing a bankruptcy attorney
  • Get you prepared to work with a lawyer

How New York Bankruptcy Law Differs from the Laws of Other States

Because federal law determines the bankruptcy process and certain exemptions (such as retirement accounts), it’s the state offered exemptions that vary from state to state.

In New York bankruptcy filers can choose between the federal and state exemptions, with the state exemptions being the more generous. If you live in New York, you can choose either federal or state, you can’t pick and choose between the two.

If you own a home, the most important New York state exemption will likely be the real property exemption. The exemption is determined by which county you live in.

  • Note: If you are married and filing your bankruptcy petition with your spouse, you can protect double the exemption.
  • If your property is in Kings, New York, Queens, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester or Putnam counties, an individual can protect up to $150,000 of equity in his or her home.
  • If you live in Dutchess, Albany, Columbia, Orange, Saratoga, or Ulster counties, an individual can protect up to $125,000 of equity is his or her home.
  • If you live in any other New York state county, an individual can protect up to $75,000 of equity is his or her home.

New York provides other exemptions as well for wages, personal property, insurance, and the like.

Filing Chapter 7 or Chapter 13 Bankruptcy in New York

A qualified bankruptcy attorney will determine between filing for Chapter 7 or Chapter 13 bankruptcy for your individual case. The numbers, “7” and “13” refer to sections of the bankruptcy law.

  • Chapters 7 and 13 are similar in that they both stop creditor harassment as soon as your bankruptcy petition is accepted by the court.
  • Chapters 7 and 13 are different in that you must qualify to file under Chapter 7, but not 13; and, Chapter 13 takes much longer to resolve, involves repayment of debts, and does not offer the “automatic” discharge of most unsecured debts.

There are 2 important keys to remember when considering bankruptcy:

  • Consult with a qualified bankruptcy attorney to determine both whether bankruptcy is right for you; and, if so, which Chapter of bankruptcy is in your best interest. Never disqualify yourself.
  • Most people who file bankruptcy don’t lose any assets at all.

How to Find and Select a Bankruptcy Attorney

You likely have several friends and family members who have filed bankruptcy, but you might not know it. If you can’t get a personal referral to a great attorney, then check out attorneys who limit their practice to bankruptcy. It’s challenging enough to keep up with one or two areas of legal practice, trying to do more than that is downright impossible.

How to Prepare to Work with a Bankruptcy Attorney

The best way to work with a bankruptcy attorney is to find an attorney you trust; then, sharpen your pencil. There are a lot of forms to fill out. Start by collecting all of your bills, income statements, and expenses. Your investment in presenting an accurate financial picture will pay off tenfold.

Where to Get Help Filing Bankruptcy

Know that you are not alone. You’re one of over a million people who will file bankruptcy this year. To find out if bankruptcy is the right path for you, consult with a qualified bankruptcy attorney.

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