How Does New York Define Chapter 7 Bankruptcy?

If you would like to learn more about Chapter 7 bankruptcy in New York, keep reading and give us a call to speak with a dedicated Newburgh bankruptcy lawyer. We are on your side.

What is Chapter 7 bankruptcy in New York?

When it comes to Title 11 of the United States Bankruptcy Code, it is essential to note that it is split into various chapters. Chapter 7 is the first chapter and it provides protection from creditors. To be qualified for the Chapter 7 test, a means test is used to estimate the power of a debtor to afford the compensation of some of his or her debts.

Also, Chapter 7 is referred to as “Liquidation.” Keep in mind that in the majority of Chapter 7 cases filed in the United States Bankruptcy Court in New York, debt is the only thing that is liquidated. This is because the exemption rights that are open to Chapter 7 debtors, also understood as the title provided 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 hesitate to reach out to our firm today to speak with a skilled New York bankruptcy lawyer.

What are the benefits 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 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 registered by the clerk of court and reported on the county judgment roll or an electronic docket. The docketed judgment permits the creditor to manage your bank accounts and your wages.

What are bankruptcy exemptions?

An individual will have the privilege 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 example, in New York, the law declares that a judgment for a defendant’s right to exempt 90% of earnings for services rendered within 90 days. Furthermore, think about 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 further questions, it is in your best interest to reach out to our firm today to discuss this further.


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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