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Long Island Chapter 7 Bankruptcy Lawyer

Who Can File Chapter 7 Bankruptcy on Long Island?

If you are a Long Island resident looking to file Chapter 7 bankruptcy, there is a detailed process you must follow to qualify and ultimately complete your Chapter 7 bankruptcy discharge.

To be eligible to file Chapter 7 bankruptcy, you must pass a means test, attend credit counseling and complete a debtor education course. The means test is a state income-based test to determine which type of bankruptcy that a debtor is qualified to file. Most people with minimal disposable income after paying bills monthly qualify for Chapter 7, but it is determined on a case-by-case basis. Chapter 7 is reserved for people who have no means to repay their debts. Our Long Island Bankruptcy attorneys are here to help educate you on the Chapter 7 bankruptcy process.

The Chapter 7 Bankruptcy Process

  1. Call or visit our Long Island bankruptcy attorney’s office
  2. Complete the required credit counseling
  3. File your petition for Chapter 7 bankruptcy
  4. Get assigned to your bankruptcy Trustee
  5. 341 Meeting of creditors with your Bankruptcy Trustee and creditors
  6. Chapter 7 eligibility is confirmed
  7. Non-exempt property is handled
  8. Secured debts are handled through the Bankruptcy Trustee
  9. Complete financial management course
  10. Discharge order is issued to debtor, debtor’s attorney, and all creditors
  11. Chapter 7 bankruptcy case ends

Our Long Island Chapter 7 bankruptcy attorneys can assist and advise with every stage of the bankruptcy process.

Filing Your Chapter 7 Bankruptcy Petition on Long Island

All Long Island Chapter 7 bankruptcy clients must file their petitions in the bankruptcy court closest to their primary residence. If you are a Long Island resident, you will most likely file your petition at the Central Islip Bankruptcy Court, which is part of the Eastern District of N.Y. The following must be filed in bankruptcy court:

  • schedules of assets and liabilities
  • schedules of income and expenditures
  • statements of financial affairs
  • statements of executory contracts and unexpired leases
  • prior and/or current year tax returns or tax transcripts
  • certificate of credit counseling
  • evidence of payment from employers
  • statement of monthly income
  • any interest statements of tuition from federal or state qualified accounts

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Qualifying for Chapter 7: The Means Test

The means test is two parts: Median Income Comparison and calculating disposable income and unsecured debts.

The median income comparison compares your income to the median income of your state - in most cases for our firm it would be Long Island residents filing in New York State -  for your family size. In our Long Island bankruptcy cases, this would be The State of New York. The median income varies from state-to-state and will vary bases on your current location. If your income is above the state median for your family size, this does not disqualify you from filing Chapter 7.

The second part of the means test is the calculation of disposable income and unsecured debts. There are “allowable expenses” determined by the IRS that are deducted from your income to find your disposable income. If it is determined that you can afford to pay off your unsecured debt, then you would be disqualified for Chapter 7 bankruptcy and referred to file Chapter 13 for a repayment plan.

For more information on the Chapter 13 bankruptcy process, please follow this link.

Please be advised that passing the means test does not automatically qualify you for Chapter 7 bankruptcy. If, after reviewing your income and expenses, it is determined you can repay your debts, you will be referred to filing Chapter 13 bankruptcy.

Chapter 7 and the Bankruptcy Trustee

The bankruptcy trustee reviews all your financial statements and documents for verification. The trustee will make sure what you stated your income was is true, tax return earnings, and other documents. A month after filing your bankruptcy petition, you will attend a mandatory 341 meeting of creditors. At this meeting, the trustee will ask you under oath if your statements and documents are accurate and ask you questions related to your debt. Also, the trustee is responsible for all the assets that the debtor cannot protect in the court proceedings. The nonexempt property you have that exceeds the value of state guidelines will be liquidated to pay off your creditors. When you have no assets, the trustee will deem your case as a “no asset” case and nothing given to your creditors. The bankruptcy trustee receives a portion of all liquidated assets and court filing fees.

The Automatic Stay: What it Means for Long Island Bankruptcy Filings

After your Chapter 7 bankruptcy case is filed with the Eastern District of New York Bankruptcy Court, most creditors will stop contacting you to collect payments almost immediately. Under section 362 in the bankruptcy code, the automatic stay is effective as soon as your case is filed. However, in some cases the stay is effective for a short period of time.

The automatic stay can also prevent your utility company from disconnecting your service for at least 20 days. With foreclosure, the automatic stay will temporarily halt proceedings.

In addition, the automatic stay halts all wage garnishments until the stay is lifted.

The automatic stay does not halt proceedings from the following:

  • Certain IRS proceedings: The IRS can still audit you, demand a payment or complete an assessment against you. However, an automatic stay will prevent the IRS from placing a lien or seizing your income and assets.
  • Child support/alimony/ paternity: a lawsuit for paternity, child support, divorce, alimony or modifications of alimony and/or child support will continue during the automatic stay
  • Criminal proceedings: Crimes committed unrelated to debt is not eligible for the automatic stay. Example: If someone wrote bad checks and was convicted of wire fraud and sentenced to community service and restitution, an automatic stay will not cover the community service, but will cover the fees
  • Pension loans: Money can still be withheld from your income to repay a pension loan from your employer.
  • Multiple bankruptcy cases: If you filed for bankruptcy after you filed for bankruptcy in the previous year, then the automatic stay associated with your current filing will terminate after 30 days unless you, your trustee, the United States Trustee or a creditor asks for the automatic stay to continue and shows that your current bankruptcy filing was filed in good faith. However, if a creditor has filed a motion to lift the automatic stay in your previous bankruptcy matter, you will have to overcome a presumption that your current bankruptcy filing was filed in bad faith.

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Long Island Property Exemptions During Chapter 7 Bankruptcy

Exempt Properties During Chapter 7 Bankruptcy

Exempt properties are deemed necessary for living and working a modern life. Bankruptcy protection is designed so a debtor can get back on their feet after bankruptcy, and taking the necessities away will not help.

  • Vehicles up to a certain value
  • Clothing
  • Household appliances
  • Jewelry, up to a certain value
  • Pensions
  • A portion of equity in the debtor's home
  • Tools needed for a profession, up to a certain value
  • A portion of unpaid but earned wages
  • Welfare (public assistance, unemployment and social security benefits)
  • Personal injury settlement money

Non-Exempt Long Island Property

Non-exempt property and/or assets are things that a debtor, unless like exempt property, can live without.

  • Expensive musical instruments, unless the debtor is a professional musician
  • Valuable collections such as stamps, trading cards, coins, etc.
  • Family heirlooms
  • Cash, bank accounts, stocks, bonds, investments, etc.
  • A second vehicle
  • A second home

Secured Long Island Property

Secured property is property that was not discharged in a bankruptcy, but could have been. If the debtor defaults on payments, the creditor/lender has a right to take the property back. With secured property, a debtor does not have a personal liability if the debt is dischargeable, meaning the debtor cannot be sued by the creditor/lender to collect the debt. However, the creditor/lender’s legal claim on the property is collateral. If a debtor defaults on payments, this gives the creditor the right to repossess the property.

If you are current on your payments on any secured property when you file Chapter 7 bankruptcy, there are the following options:

  • Surrender the property and discharge any remaining debt
  • Keep the property and maintain the debt
  • Keep the property by buying it out

The Chapter 7 Discharge

Chapter 7 discharge means the debtor is no longer obligated to pay the debts that were discharged. Any and all collection efforts by creditors that were discharged will cease, and can no longer proceed with any sort of legal action. Discharge can happen at various times, generally 60 days after the 341 meeting with the bankruptcy trustee and your creditors, from filing the petition to discharge, this generally is around 3-5 months. Unless there is any objection to the discharge by a creditor, the bankruptcy court issues the debtor, the debtor’s attorney, and all of the debtor’s creditors a copy of the discharge order. The court also lets the creditors’ know if they attempt to continue collection efforts, they are subject to contempt of court.

Please note, all debts are not discharged. There are non-dischargeable debts, such as child support, student loans, IRS and other government entities that do not go away.

Please be advised, Chapter 7 bankruptcy cases with a debtor can only happen once every eight years. If a debtor files a bankruptcy case within 8 years of filing a previous case, the court will deny a discharge.

Also, a bankruptcy trustee can request the court to revoke your discharge if it is found the discharge was granted fraudulently, a debtor acquired property that was not disclosed in the case, committed impropriety in section 727(a)(6) of the Bankruptcy Code, or fail to provide documents/statements in an audit. Generally, a request to revoke must be charged within one year of the debtor’s discharge.

Chapter 7 Bankruptcy vs Chapter 13 Bankruptcy

Debtors who are deemed to have the income to pay back their debts have no choice but to file Chapter 13. Chapter 13 bankruptcy is a reorganization bankruptcy filing where debtors have a repayment plan based on their income. Chapter 13 last between 3-5 years. The attorney fees are generally higher for a Chapter 13 because of how long the case takes. Also, a Chapter 7 bankruptcy remains on a credit report for 10 years and a Chapter 13 remains on a credit report for 7 years.


Why Should You Contact Our Office To Wipe Out Your Debts and Consider Chapter 7 Bankruptcy?

We have a great deal of experience and have filed thousands of Chapter 7 bankruptcy cases. We are friendly, knowledgeable and affordable and have easy payment plans. We genuinely care about helping you with your situation and will help you succeed every step of the way. In addition, we do not believe that the client should have to fill out long questionnaires. We do virtually all of the work for you! Just follow our simple instructions and you will be successful.

Please give us a call for a free confidential chapter 7 consultation. We would like to assist you in any way possible. You may reach us at (631) BANKRUPT or (631) 549-1111.

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