Bankruptcy
All bankruptcy cases are filed in federal bankruptcy court in the area where you live or where your business is located.
At the end of the bankruptcy process, all of your debts are discharged or wiped out, except debts such aschild support, spousal support, student loans (except under extraordinary circumstances), and most tax debts.
2 types of bankruptcy:
1. Liquidation bankruptcy (also called Chapter 7 bankruptcy)
Used for people or businesses who cannot pay their debts because their expenses are greater than their income.
Wipes out certain debt and give you a fresh start.
In an individual liquidation bankruptcy, the court will discharge certain debts that you owe, which means that the debts do not have to be paid. In exchange for the discharge, your nonexempt property (if any) may be sold, and the money used to pay your creditors.
2. Reorganization bankruptcy (usually Chapter 13 bankruptcy)
Reorganization bankruptcy can be used only if you have sufficient income to pay most of your debts over a period of time.
In Chapter 13 bankruptcy, you keep all of your property, but you must make monthly payments over three to five years to repay all or some of your debts.
Reorganization bankruptcy requires that you file a repayment plan that has to get approved by the bankruptcy court.
"Automatic stay:" Once you have filed bankruptcy, your creditors cannot go after your assets by garnishing your wages, repossessing your car, foreclosing on your house, or cutting off your utility services.
Legal Resources
1. Legal Services NYC runs a Bankruptcy Assistance Program, which provides free bankruptcy assistance to low-income residents of New York City. The BAP can be reached via helpline at 646-442-3630.
Hosts weekly “bankruptcy workshops,” in which debtors meet with attorneys to learn about and be assessed for bankruptcy.
Where appropriate, help debtors prepare and file Chapter 7 bankruptcy petitions.
Helps find pro bono (volunteer) attorneys for pro se (self-represented) debtors in the bankruptcy courts.
For people who are "judgment-proof," meaning that they have nothing a creditor can take, LSNYC's BAP assistance will usually be limited to brief advice and a sample "Do Not Call" letter.
2. MFY Low-Income Bankruptcy Project
Individuals needing advice and assistance with bankruptcy can call MFY’s Low-Income Bankruptcy Project’s helpline on Wednesdays, between 2:00 pm and 4:00 pm at 212-417-3799.
3. NYLAG Consumer Protection attorneys provide bankruptcy counseling through a holistic legal assessment of the client’s financial position. NYLAG also helps prepare petitions, offers guidance throughout the process, and attends bankruptcy Court hearings. For civil legal issues, call 212.613.5000 Monday, Wednesday, and Thursday 9:00 am – 3:00 pm