What is Chapter 7 Consumer Bankruptcy in New York?

chapter 7 bankruptcy

To learn more about Chapter 7 consumer bankruptcy, reach out to our skilled New York bankruptcy attorneys. Our legal team is equipped with the knowledge and experience required to ensure that you are going through this process correctly.

What is Chapter 7 consumer bankruptcy in New York?

A title within a federal statutory library is The United States Bankruptcy Code. In The Bankruptcy Code, Title 11 of the United States Code is split into several chapters. Chapter 7 is the first chapter and it gives protection from creditors. In order to qualify for the Chapter 7 test, a means test is used to measure the ability of a debtor to afford the repayment of some of his or her debts.

Furthermore, Chapter 7 is labeled as “Liquidation.” In the strong majority 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 available to Chapter 7 debtors, also known 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.

To learn more about Chapter 7 bankruptcy, reach out to our skilled New York bankruptcy attorneys today.

How can Chapter 7 discharge protect me?

Those who are filing 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 refers to the exposure to the enforcement of a money judgment. If a creditor sues 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 entered on the county judgment roll or an electronic docket. The docketed judgment allows the creditor to restrain your bank accounts and your wages.

What are exemptions in bankruptcy?

With an exemption, an individual will have the right 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 instance, 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. Furthermore, assume the creditor obtains a money judgment for $5,000 against a defendant and then restrains and garnishes the defendant’s bank account. In executing 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 left over $500.


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.

Read Our Recent Blog
View More