What to Know About Chapter 7 Bankruptcy in New York

When you are facing overwhelming amounts of debt, you can be left with exuberant amounts of stress and frustration. Luckily, you have options to resolve your debt issues. Contact our experienced New York bankruptcy attorneys at the Law Offices of Michael D. Pinsky, P.C. to help you successfully file for Chapter 7 bankruptcy. Contact our firm today to get started on this process. Continue reading to learn more about Chapter 7 bankruptcy:

What is Chapter 7 consumer bankruptcy in New York?

The United States Bankruptcy Code is a title within a large federal statutory library. The Bankruptcy Code, title 11 of the United States Code is divided into various chapters. The first of those chapters provide protection from creditors is Chapter 7. Elligibility for the Chapter 7 test is determined by a formula known as the means test to measure the ability of a debtor to afford the repayment of some of his or her debts.

Chapter 7 is labeled as “Liquidation.” In the overwhelming 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 available to Chapter 7 debtors (the title given to those who file for protection under Chapter 7 of the Bankruptcy Code) are adequately generous to guard all of the debtor’s assets.

What are exemptions in bankruptcy?

An exemption is the right to receive first moneys either from the judicial sale of an asset by creditors outside of bankruptcy, or by a trustee for the benefit of creditors in bankrupcty. As an example, New York State law provides a judgement for a defendant’s right to exempt 90% of earnings for services rendered within 90 days. For this purpose, assume the creditor obtains a money judgement 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 satisfaction of his or her exemption, and may only keep the remaining $500.

What is Chapter 7 discharge and how will it protect me?

The goal of filing for personal bankruptcy relief is the discharge of debt. The Chapter 7 discharge presents claims against a Chapter 7 debtor uncollectible permanently as a matter of personal liability. Personal liability refers to the exposure to the enforcement of a money judgment. When 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 filed by the clerk of court and entered on the county judgement roll or an electronic docket. The docketed judgment allows the creditor to restrain and garnish you bank accounts and your wages.


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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