Chapter 7 Consumer Bankruptcy in New York | What to Know

If you are considering bankruptcy, it is important to understand Chapter 7 of consumer bankruptcy. Reach out to our firm today to speak with an experienced Orange County consumer bankruptcy lawyer.

What is Chapter 7 consumer bankruptcy in New York?

In The United States Bankruptcy Code, Title 11 of the United States Code is divided into a number of different chapters. Chapter 7 is the first chapter and it provides protection from creditors. In order to qualify for the Chapter 7 test, a means test is used to estimate the ability of a debtor to afford the repayment of some of his or her debts.

Also, Chapter 7 is referred to as “Liquidation.” In the substantial bulk of Chapter 7 cases filed in the United States Bankruptcy Court in New York, debt is the only thing that is liquidated. This happens because the exemption rights that are open to Chapter 7 debtors, also understood as the title granted to those who file for protection under Chapter 7 of the Bankruptcy Code, are adequately reasonable to cover all of the debtor’s assets.

If you have further questions about Chapter 7 bankruptcy, do not wait to contact our firm today to speak with a skilled Newburgh bankruptcy lawyer.

How can Chapter 7 bankruptcy benefit me?

Individuals that would like to file for bankruptcy are doing so for the discharge of debt. With Chapter 7 discharge, claims against a Chapter 7 debtor are uncollectible because of personal liability. Personal liability means the exposure to the enforcement of a money judgment. If a creditor pursues legal action against you for money owed and the court rules in the creditor’s favor, the signed piece of paper by the judge is recorded by the clerk of court and documented on the county judgment roll or an electronic docket. The docketed judgment permits the creditor to control your bank accounts and your wages.

What are bankruptcy exemptions?

An individual will have the privilege to receive first money from the judicial sale of an asset by creditors outside of bankruptcy or by a trustee for the benefit of creditors in bankruptcy. For example, in New York, the law states that a judgment for a defendant’s right to exempt 90% of earnings for services rendered within 90 days. Also, assume the creditor obtains a money judgment for $5,000 against a defendant and then restrains and garnishes the defendant’s bank account. In conducting the garnishment, the creditor must pay $4,500 (90%) of the account proceeds to the defendant in fulfillment of his or her exemption, and may only keep the leftover $500.

To learn more, reach out to our skilled bankruptcy firm today. Our legal team is on your side.


Michael D. Pinsky, P.C. represents clients in bankruptcy actions and related matters. Please call 845-394-2616 or contact the firm online to schedule a consultation.

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