Chapter 7 is part of the Bankruptcy code. In this form of Bankruptcy, the consumer asks the court to “discharge” certain unsecured debts. That means from the moment of the court order of discharge you are no longer legally responsible to repay those discharged debts. The creditor can not ever attempt to collect the debt again.
As you might imagine there are certain restrictions to this process. Under the Bankruptcy law debts are either unsecured or secured. Examples of an unsecured debt would be credit card debts and Medical bills. Examples of secured debts would be home loans and car loans. In the Chapter 7 Bankruptcy your unsecured debts are the ones that are discharged.
The Bankruptcy court requires the consumer to provide a detailed list of all assets. Those assets that are not “exempt”, must be turned over to the court to pay the secured debts. What constitutes exempt property that can not be seized by the Bankruptcy court is governed by the Bankruptcy code and New York State Law?
Exempt property includes the following:
- Up to $155,000.00 equity in your home. This includes a house, land, a condominium, cooperative, or motor home.
- A cemetery plot.
- Cash up to 2,500.00 subject to certain restrictions.
- Clothing and house hold goods subject to certain restrictions.
- Security deposits.
- A motor vehicle subject to certain restrictions.
- Proceeds of a life insurance policy subject to certain restrictions.
- Certain types of benefits: social security, unemployment, public assistance, veterans’ benefits, and personal injury awards subject to certain limitations.
- Properties needed for future support, for example alimony and wrongful death awards.
- 90% of wages earned within 60 days of the filing of the petition.
- Pensions, Keogh and 401(k) plans.
There are certain types of debts that are not generally dischargeable.
- Money owed for child support, court ordered fines and taxes.
- Debts not listed in the Bankruptcy petition.
- Loans obtained by providing false information to the lender.
- Debts resulting for willful and malicious harm.
- Student Loans
- Mortgages and other liens not paid in the bankruptcy case.
- Personal Injury debts.
- Debt incurred after you file bankruptcy
The important thing to remember is that all your questions on how to proceed will be answered by one of our attorneys at a free consultation at one of our offices located in Queens, Brooklyn, Bronx, Manhattan, Nassau county, Suffolk County, and Westchester County, so contact us.