Chapter 7 Bankruptcy - Rochester Bankruptcy Lawyer

Chapter 7 Bankruptcy is known as a “liquidation” bankruptcy because a Trustee appointed by the court may sell property that you own which is not exempt from debt collection and use the proceeds to pay some or all of your creditors. The truth is, however, that most people who file a Ch. 7 bankruptcy do so because they have high personal debt and little or no equity in any property. New York law generally prevent owners from losing property because it sets limits of what can actually be taken by the Trustee and sold to pay creditors.

In order to make a determination about your property, you will be required to estimate the current market value of all of your belongings, including real estate, vehicles, boats, bank accounts, and your personal possessions. This is the value for which you could sell these items, not the cost to replace them. Some suggestions for getting property values are:

Chapter 7 bankruptcies are also referred to as "fresh start" cases. This is because at the end of your bankruptcy case, often in 5-6 months, you receive a discharge which can make you completely or partially debt free! Once the judge “discharges” the case, you no longer owe some or all of your debts and most creditors are prohibited by law from attempting to collect these debts or from suing you.

Ch. 7 bankruptcy does not discharge all debts. Most commonly discharged debts include medical bills, credit card debt, and personal loans that are owed to businesses such as these:

Debts that you must still pay after bankruptcy may include taxes owed to the IRS or other tax agencies, past due child support payments or alimony, student loans, personal injury judgments, criminal penalties, debts which you have been court-ordered to pay, and debts not disclosed in the bankruptcy.

Other Debts that May be Discharged in a Chapter 7 bankruptcy:

One of the main reasons Rochester residents will file for Chapter 7 bankruptcy is to be able to 'walk away' from underwater mortgages and car loans they can no longer pay. This is known as "avoiding liens" and is one of the biggest benefits of filing for bankruptcy.

An experienced Rochester Chapter 7 Lawyer will also give advice on certain leases and executory contracts that can be avoided and discharged in a Chapter 7 bankruptcy case.

How do you file for a Ch. 7 Bankruptcy in Rochester – Monroe County, New York?

A Chapter 7 bankruptcy can be filed by an individual (a single person, a married couple, or one spouse only), a business partnership in Rochester, or a Rochester - Monroe County corporation or other business entity.

If you have previously received a discharge under a Ch. 7 or Ch. 11 bankruptcy, you cannot file for Chapter 7 until eight years after the filing date of the case in which you received a discharge.

You cannot file a Ch. 7 bankruptcy case until six years after the filing date of a Ch. 13 or Ch. 12 bankruptcy if you received a discharge in one of those chapters. There is an exception to this rule: if you made plan payments in your Chapter 13 or Chapter 12 case equal to all or at least 70% of the “allowed unsecured claims,” you would be eligible to file a Ch. 7 bankruptcy case sooner than six years after the filing date.

Credit Counseling

Rochester and Monroe County residents filing for Chapter 7 bankruptcy must take an approved credit counseling course within 180 days prior to filing their case. There are many approved agencies in the Rochester area, including:

Consumer Credit Counseling Service of Rochester, Inc., 1000 University Avenue, Suite 900
Rochester, NY 14607 - (888) 724-2227

Credit Education Bureau, 110 Webster Avenue   
Rochester, NY 14609 - (585) 256-6076

Disposable Income

For individuals, their income must be below the median income for the State of New York, which is between $45,548 to $82,587 per year, depending on family size. If your income is above the median for New York, individuals or married couples must pass the “Means Test.” (The Means Test is not required for business entities that are filing for Ch. 7 Rochester Bankruptcy.)

The means test looks at your gross personal income (or business income) for the past six months reduced by allowed IRS expenses. This adjusted income figure must be below the median for New York in order for you to qualify to file Chapter 7 bankruptcy.

Even if the result of the means test is that you are over the median, a Monroe County bankruptcy lawyer can tell you whether there are other circumstances which will still allow you to file a Chapter 7 bankruptcy.

"Presumption of Abuse" in Chapter 7 Cases (Individual Debtors)

If the means test shows that you are over the median income for your area, your case is considered to be a "presumption of abuse." It's a shame Congress chose to use this particular language, because it basically means the debtor is trying to abuse the bankruptcy system. While there are definitely dishonest persons trying to cheat the system, the majority of Rochester residents who file for chapter 7 bankruptcies are hardworking, honest people who find themselves in deep financial trouble. These people need the relief granted by bankruptcy, but sometimes their particular financial circumstances put them on the "wrong side" of the means test results and they cannot qualify for a Chapter 7 bankruptcy (based on the means test alone). It is imperative to contact a qualified Rochester  Chapter 7 Lawyer for assistance!

Basics of a Ch. 7 Bankruptcy Case in Rochester, NY:

Your Rochester liquidation bankruptcy attorney will guide you through these steps:

► Preparing the documents for filing: clients will be asked to provide a variety of records including tax returns for the previous 2 years; pay advices for the past 6 months; bank statements; credit card statements; copies of bills; copies of leases and contracts; titles for homes, trailers, and/or vehicles; a social security card; a driver's license or other identification.

► A determination is made by Rochester Bankruptcy Lawyer and the client of which property to list as exempt (protected in the bankruptcy).

► Credit counseling course is completed (for individuals).

► The case commences when the petition is filed; schedules, statements, forms and supporting documents are also filed. The filing fee is paid.

► Creditors receive notice of the bankruptcy filing.

► Claims are filed by creditors (called "Proof of Claim").

► Meeting of creditors is held (also known as the 341 Hearing).

► Objections, amendments, redemptions, etc., are drafted and filed, as necessary. Your Monroe County Chapter 7 Bankruptcy Law Firm will know what needs to be filed and when.

► The Trustee will make determinations of how to treat certain debts and liens.

► Discharge of debts!

Chapter 13 versus Chapter 7 bankruptcy filing in Rochester, New York

You may get more financial help if, instead of filing in Rochester under Chapter 7, if you file for bankruptcy under Ch. 13. For a complete discussion of the benefits of a Rochester Chapter 13 filing, please visit the Rochester Ch. 13 page..

Ch. 7 Bankruptcy Law Firms Serve Rochester and the Surrounding Areas

Serving clients throughout Northwestern New York, including Brighton, Brookdale, Chili Center, Crescent Beach, East Rochester, Fairport, Gates Center, Greece, Henrietta, Irondequoit, North Gates, Pittsford, Rochester, Webster, areas in the vicinity of Greater Rochester International Airport, and other communities in Monroe County.

While the information provided above may be helpful in answering your basic questions about qualifying for a Chapter 7 bankruptcy, it is best to consult a Rochester Bankruptcy Attorney or Rochester Bankruptcy law firm for legal advice about your specific circumstances. Don't rely on your own understanding of bankruptcy laws; trust an experienced Rochester bankruptcy lawyer to review your situation and provide you with the guidance you are seeking.