What Are New York Bankruptcy Laws?

What Are New York Bankruptcy Laws?

What Are New York Bankruptcy Laws?

New York bankruptcy laws protect people who no longer have the financial resources to pay their creditors as agreed. The most common types of personal bankruptcy are Chapter 7 and Chapter 13. Before filing any type of bankruptcy case, you must complete a credit counseling session with a government-approved company. You also must complete a second session before a New York judge will finalize your request for debt relief.


Chapter 7 offers close to total forgiveness of pre-existing debts, excluding New York state and federal taxes, child support, alimony, most student loans, and any monies owed due to the commission of a crime. You must either earn less than New York's annual median income level or prove through a federally-designed formula that you cannot reasonably cover basic costs of living while repaying your creditors.


As of 2013, the annual median income level for a single New York resident was $46,821, according to the United States Census Bureau. Couples could bring in up to $58,106 per year while families of four could qualify for Chapter 7 without special permission as long as their combined annual income did not exceed $81,522. People who do not economically qualify must either partially repay creditors under Chapter 13 or forego bankruptcy as an option.


Filing personal bankruptcy without the assistance of a qualified attorney is usually not a wise idea, according to the website of the United States Bankruptcy Court Southern District of New York. Under federal and New York bankruptcy laws, court personnel cannot give any type of legal advice. Generally, it costs anywhere from $500 to $2,000 to hire a lawyer for Chapter 7 or Chapter 13 cases. A lawyer is probably your best bet if you want to invoke New York bankruptcy laws to protect some of your assets. If you have lived in the state for at least two years, generally you can keep anywhere from $75,000 to $150,000 in real estate value. The exact figure depends upon your marital status as well as your county of residence. Also, you can keep $4,000 of motor vehicle equity; the amount is $10,000 if you are legally considered disabled. Under New York bankruptcy laws, married couples generally can keep anywhere from $8,000 to $20,000 in motor vehicles. All public benefits and most personal injury settlements are safe despite your bankruptcy status; this law also applies to your retirement accounts.