Chapter 7 Consumer Bankruptcy | What to Know

If you have questions or concerns about Chapter 7 consumer bankruptcy, read on and reach out to our skilled Newburgh bankruptcy lawyer today. We are here to help.

How does chapter 7 consumer bankruptcy work in New York?

Title 11 of the United States Bankruptcy Code is split into several different chapters. Chapter 7 is the first chapter and it provides protection from creditors. In order to be eligible for the Chapter 7 test, a means test is utilized to evaluate the power of a debtor to afford the compensation of some of his or her debts.

Additionally, Chapter 7 is known as “Liquidation.” Note that in the bulk of Chapter 7 cases filed in the United States Bankruptcy Court in New York, debt is the only thing that is liquidated. This occurs because the exemption rights that are open to Chapter 7 debtors, also understood as the title given to those who file for protection under Chapter 7 of the Bankruptcy Code, are sufficiently reasonable to protect all of the debtor’s assets.

If you have additional questions about Chapter 7 bankruptcy, it is in your best interest to reach out to our firm today to speak with a skilled New York bankruptcy lawyer.

What are the advantages of Chapter 7 bankruptcy?

People who would like to file for bankruptcy are doing so for the release of debt. With Chapter 7 discharge, claims against a Chapter 7 debtor are uncollectible because of personal liability. Personal liability represents the exposure to the enforcement of a money judgment. If a creditor seeks 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 registered by the clerk of court and reported on the county judgment roll or an electronic docket. The docketed judgment allows the creditor to manage your bank accounts and your wages.

What are bankruptcy exemptions?

An individual will have the right to obtain 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 instance, in New York, the law says that a judgment for a defendant’s right to exempt 90% of earnings for services rendered within 90 days. Additionally, consider the fact that the creditor obtains a money judgment for $5,000 against a defendant and then restrains and garnishes the defendant’s bank account. In fulfilling 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.

If you have additional questions, do not hesitate to reach out to our firm today to learn more.


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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