Do I Qualify For Bankruptcy?

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In order to file Chapter 7 bankruptcy you must qualify by passing the means test. The “means test” was designed to limit the use of chapter 7 to only those who truly cannot repay their debts. To qualify, your household income must lower than your states median income, or you must pass the means test formula.

How does the “means test” work?

If your household income is below your states median income then you automatically pass the test and qualify for chapter 7. However, if you make above the median income then additional calculation must be done. The calculation can be done using a particular formula. This formula considers all your expenses and household income for the previous 6 months and determines if you have enough disposable income to repay some of your debts.

What is the median income for New York?

The median income for New York is $49,028.00 annually. Form 22A-1 requires you to list your last six months of your income, if it is lower than $24,514, then you are presumed eligible for Chapter 7 under section 707(b)(2) of the Bankruptcy Code. If you make over this amount, you must continue on to Form 22A-2, which calculates your expense deductions. This is the first step of the means test, which is simple: if your household annual income is lower than the median income for your state, you pass. Period, you’re done. You don’t need to complete the rest of the test; you can file chapter 7.

What if my income is above the median income? What do I do then?

The test can get slightly more complicated if your household income is higher than your state’s median income. The further calculation determines whether you have enough income left over after paying all allowed expenses (disposable income), to pay at least a portion of your unsecured debt (credit card bills).

What is household income?

Household income considers all the income from all persons in the household. This obviously increases your annual income according to the means test calculation. The good thing is that the median income of your state is higher depending on how many people are in the household. This usually includes dependant children and spouses, not roommates. For example, if you are a single parent with 3 dependant children, the median household income limit is increased to $88,642 annually.

What are allowed expense deductions?

Allowable expenses vary depending on what county you live in, each county has different allowed amounts for categories of expenses such as: housing, transportation, and basic necessities. If you live in New York County it’s highly likely that your monthly expenses are higher than someone with similar means that lives in Niagara County. Examples of expenses that are considered are your rent, public transit costs, out of pocket health care costs, and living expenses such as food, clothing, and household supplies.

How do I do the expense deduction calculation?

You can find calculators online to enter your income and expenses to see if you qualify; however, these are not always up to date and accurate. Don’t rely on these calculators, but it can help give you a ballpark of whether or not you would likely qualify. It is always best to speak with an attorney to determine whether or not you qualify for chapter 7.

What if I don’t qualify?

If you don’t qualify that doesn’t mean you can’t file for bankruptcy. It just means you can’t file chapter 7. You may still likely file chapter 13; however, that is a different type of bankruptcy. If you are not sure about what chapter 13 is, please refer to:


Qualifying for chapter 7 is a requirement that can determine if you are eligible to have your debts discharged. This does not always mean that if you do qualify it is in your best interests to file. Sometimes even if you qualify, it may not be best for you to file. It is important to remember that everyone situation is different and to be advised of all your options it makes sense to speak with an experienced bankruptcy attorney.


The above post was written by Joshua C. Sibenik, Esq.


Will I Lose My House or Apartment If I File For Bankruptcy?

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If you, like many others, are dealing with a substantial amount of debt then you might be considering filing for Bankruptcy. A very common question that many of our potential Bankruptcy clients ask us is: What Will Happen to My House? And, Will I Lose My Home If I File For Bankruptcy?

Filing for Chapter 7 Bankruptcy

For purposes of our article we will focus on Chapter 7 Bankruptcy. For more information on Chapter 7 and Chapter 13 Basics you can take a look at our blog post “Bankruptcy 101”

As discussed in the above article, Chapter 7 is a total liquidation of qualifying debts and as part of your Petition, the documents filed with the Bankruptcy Court, you must list your assets; which is where your home can come into play.

So What If I Rent My Home or Apartment?

If you rent your home or apartment bankruptcy should have no effect in regard to your current lease. Technically, your home, condo, or apartment, if it is rented, is not an asset because you do not own it and you do not have the ability to sell or borrow against a rental property.

So What If You Own Your Home?

The short answer is…. Maybe. I know that is not the answer that you were looking for, but there are some factors that we have to consider before determining whether or not you will be able to keep your home and still file for a Chapter 7.

It is all about the Equity That You Have In Your Home

No Equity? – First off, the Trustee will not require that you sell your home if there is no equity in it. Basically, if the balance due on your mortgage is more than the current fair market value of your home then you have no equity.

Equity in your home? – Having equity in your home is a good thing! This means that the balance due on your mortgage is less than the fair market value of your home. So, technically, if you were to sell your home today you would walk away with some cash. Now, in regards to Chapter 7 Bankruptcy, this could cause a potential issue. Why is that? Because the Trustee sees the equity as a way that you can pay back some of your creditors if you were to sell or borrow against your home. Therefore, the Trustee can force you to sell your home to pay back your debts.

The Homestead Exemption Can Save Your Home!

If it is determined that you do in fact have equity in your home it does not automatically prohibit you from filing for Chapter 7 Bankruptcy, but does potentially give the Trustee the ability to sell your home to pay back your creditors. The Homestead Exemption is very important because it allows a debtor with under a certain amount of equity to file for Chapter 7 and save their home.

How much is the Homestead Exemption and How Do I Know If I Qualify?

If the home in question is your primary residence, federal and state laws may allow you to exempt the equity in your home; thus, preventing the Trustee from selling your home to pay creditors.

In New York, the Homestead Exemption is up to $165,550.00 for the following counties: Kings, New York, Queens, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester, and Putnam; $131,325 for the following counties: Dutchess, Albany, Columbia, Orange, Saratoga, and Ulster; $82,775 for the remaining counties in the state.


If you are considering Bankruptcy and you worried about saving your home an experienced bankruptcy attorney can help you determine whether or not the Homestead Exemption applies to your situation. Also, if your primary concern is saving your home and the Homestead Exception doesn’t apply to you, our expected team of attorneys can discuss with you alternatives to bankruptcy.



5 Major Myths of Bankruptcy

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Many people do not understand how bankruptcy works and have many misconceptions about the process. Bankruptcy often is looked at as a big scary life-changing event, and as such, comes with embellishment and exaggeration of the truth. Unfortunately, these false facts can scare people away from bankruptcy when they could seriously benefit from the benefits. The following are a list of myths that are commonly accepted as fact by consumers.

  1. I Will Lose Everything I Have.

Many people don’t file for bankruptcy relief because they incorrectly think that they will lose everything they own. This is not true. There are things called exemptions that can cover your things allowing you to keep them. For an example of how exemptions are used to protect a car that you own please refer to:

Exemptions can cover much of the assets you do have, such as household goods, money in savings (up to a certain amount), money in retirement accounts, family photos and videos, religious texts and other books & magazines, as well as a vehicle and home. If the assets you have are not too valuable you will likely be able to retain all of your things.

  1. Everyone Will Know I Filed Bankruptcy.

Although it is true that Bankruptcy is a public legal proceeding, the practical aspect is that it is very private. Unless you are a prominent person, it is highly unlikely that the media will pick up your filing and publicize it. There are simply too many people filing bankruptcy that very few publications have the manpower, space, and interest to publish all the names. For the vast majority of people the public filing of bankruptcy remains private.

  1. It’s Difficult to File Bankruptcy.

In reality filing bankruptcy can be relatively simple. Technically, you can do so on your own without an attorney. However, it is advised that you do not go through the process on your own in case any issues come up. Depending on your particular income and assets, bankruptcy can be straightforward and easy. You will need to provide some documentation like pay stubs, bank statements, tax returns, and liens or titles of assets. Then the bankruptcy petition has to be completed and filed, which is followed by a meeting with the trustee. As a whole, it’s not a complicated process.

  1. Bankruptcy is Too Expensive.

Although it’s true that there are some costs to file bankruptcy, the court understands that people with the need for bankruptcy are insolvent so they make the costs reasonable. Depending on what attorney you choose, the entire process can cost anywhere from $1,400.00 – $2,500.00. If you decide not to retain an attorney, your case can be completed for as little as $400.00. This is no small sum of money, but it is often worth the piece of mind that comes with a bankruptcy discharge.

The costs are broken down into the filing fee ($335.00), debtor education and credit counseling courses (anywhere from $30 – $100 for both courses), credit report ($25-$50), and legal fee, which can range depending on the attorney and your location.

  1. I’ll Never Get Credit Again.

Many people believe that if they file bankruptcy that they won’t be able to get good credit again. Bankruptcy is considered “credit suicide” and is the biggest “negative” you can have on your credit report, which remains for 10 years. However, it is essentially rock bottom, which will allow you to move your credit in the right direction, up.

Once your discharge has been granted, you will be able to slowly but consistently build your credit score back up. It is very common for debtors to receive credit card offers shortly after bankruptcy, although they are often from subprime lenders with ridiculously high interest rates. It may take a few years to build your credit again, but with smart budgeting and financial management you can achieve great credit quicker than you would think.

The bankruptcy process may be relatively simple, but everyone’s situation is different; therefore, it is always advisable to speak with an experienced bankruptcy attorney to discuss all the options available to you.


The above post was written by Joshua C. Sibenik, Esq.

Will I Lose My Car If I File Bankruptcy?

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Chapter 7 bankruptcy is often referred to as a “no asset” bankruptcy. However, the bankruptcy laws do allow you to retain certain assets through bankruptcy. Because chapter 7 is a liquidation of assets, the trustee will sell any non-exempt valuable assets to pay creditors. The bankruptcy laws do not allow the sale of assets that are not covered with an available exemption. The basic idea of chapter 7 bankruptcy is that all your dischargeable debts will be forgiven once your non-exempt assets are liquidated. Many times, people think that because they own a car that the trustee will sell it; however, this is not necessarily the case.

What is an exemption?

An exemption is a very valuable tool in bankruptcy. Basically, an exemption is a bankruptcy law that allows you to retain certain assets through the discharge of the bankruptcy. In chapter 7, there are two sets of exemptions to choose from. These sets are the State exemptions and Federal exemptions. You cannot mix and match some state exemptions and some federal exemptions to use.  You have to choose either state or federal for your case. Your assets usually determine which set of exemptions to use. Each set of exemptions are limited to a certain amount.

New York State Vehicle Exemption

The motor vehicle exemption is how you can save your car from its liquidation. For example, using the New York State exemptions, you can exempt up to $4,000.00 worth of equity. According to New York Debtor & Creditor Law § 282(1), if your car is worth more than $4,000.00 and you don’t owe anything on it, then you may be forced to sell it. However, there is also a wildcard exemption that you can use another $1,000.00. A wildcard exemption is an exemption that you can use to apply to any type of property that you have. You may use it to save your car, money in the bank, or any other valuable property you have. You can combine it with any other exemption. If you use it for your car the total equity you can exempt in a car is $5,000.00. There is one limitation with the wildcard exemption, you can only use the wildcard exemption if you haven’t used the Homestead exemption for your home.  If you are disabled and the vehicle is equipped specifically for your disability then you can exempt up to $10,000.00 in equity. If your vehicle is worth significantly more than the available exemption the trustee will likely sell it to pay creditors.

Federal Vehicle Exemption

According to federal bankruptcy law, the motor vehicle exemption amount for a vehicle is $3,675.00. It works the same way that the State exemption, as long as your equity in your car is less than the exemption amount, then you will be able to retain it through the bankruptcy.  There is also a wildcard exemption for the federal exemption $1,225.00.

Changes in Exemptions

State and Federal exemptions change every few years. Usually, the amounts are increased approximately every 3 years. It is best to check with a bankruptcy attorney to see if the amounts have changed. Because everyone’s finances and assets are different, it is best to discuss your case with an experienced bankruptcy attorney.


The above post was written by Joshua C. Sibenik, Esq.

350,000 New Yorkers Settle with Collection Law Firm Mel S. Harris & Associates In A Lawsuit Over Sewer Service

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In 2009, a Bronx resident by the name of Monique Sykes was being harassed by debt collectors and decided to fight back. Eventually, Skykes and 350,000 other New Yorkers, joined the class-action suit against Leucadia Corporation, a collection law firm Mel S. Harris and Associates, and process server Samserv Inc.

After several years of litigation, the case has been settled for 59 million dollars and the defendants have agreed to cease their debt collections efforts and businesses as part of the settlement. 

Sewer Service

At the heart of the lawsuit is what we in the legal world call Sewer Service. Essentially, Sewer Service occurs when a false Affidavit of Service, a document alleging that a defendant was properly served with notice of a lawsuit, is filed with the court. The major issue with Sewer Service is that these false Affidavits are  grounds for the plaintiff to enter a Default Judgment against the defendant.  Under New York Law, a defendant only has a limited time to respond to a lawsuit once they are served and the Affidavit of Service is the legal document that proves when and how a defendant was served with notice of the lawsuit.

Another potential issue with Sewer Service is that a defendant might not be notified of the lawsuit until there is an execution in place such as a wage garnishment, bank levy, lien place on real property, etc..

What To Do If This Happens To You

If you believe that you have been a victim of Sewer Service, or other deceptive collection practices, you should immediately contact an attorney.  There are laws that protect consumers and an attorney will be able to help you decide what your best course of action is.

What is Chapter 13 Bankruptcy? The Basics

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There are two types of consumer bankruptcy, Chapter 7 and Chapter 13. While chapter 7 is a liquidation and discharge, chapter 13 is a re-payment plan. There are reasons a person may choose chapter 13 over chapter 7 and there are reasons a person must choose chapter 13.

Chapter 13 Basics

Chapter 13 is also referred to as a “wage earner’s” plan. It allows individuals who may not qualify for chapter 7 to still obtain relief of bankruptcy, albeit under different circumstances. Under this chapter debtors propose a repayment plan to the court agreeing to make installment payments to creditors over the course of a 3 or 5-year plan. If the debtor’s income is less than the applicable state median, the plan will last 3 years unless the court approves a longer period “for cause.” If the debtor’s income is above the median income, the plan must be for 5 years. In no case, can a chapter 13 plan extend longer than 5 years. During the repayment plan the law prohibits creditors from starting or continuing collection efforts.

Advantages of Chapter 13

  • Save your Home
    • Chapter 13 offers certain advantages over Chapter 7, one of the main advantages is that it offers the debtor the opportunity to retain their home from foreclosure. By filing under this chapter debtors can cease foreclosure proceedings and cure delinquent mortgage payments over time. But it is important to note that they must make all timely payments on their mortgage throughout the course of the plan.
  • Protect 3rd Party debtors –
    • By agreeing to repay the debt, you protect a cosigner on a loan from the creditor attempting to collect against them.
  • One Easy Payment-
    • Finally, under chapter 13 the plan acts like a consolidated loan where the individual makes the payments directly to the trustee who then distributes the payments to creditors.

Chapter 13 eligibility

Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual’s unsecured debts are less than $383,175 and secured debts are less than $1,149,525. These amounts are adjusted periodically to reflect changes in the consumer price index. Only individuals are eligible for chapter 13, not corporations or partnerships.

An individual can’t file chapter 13 if during the preceding 180 days a prior a bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court, the debtor filed to comply with orders of the court, or the bankruptcy was voluntarily dismissed after creditors sought relief from the court to recover property upon which they hold liens.

An individual may not file chapter 13 if they have not completed the required bankruptcy educational courses, one pre-filing and one post-filing.

What do you need to file?

In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must compile the following information:

  1. A list of all creditors and the amounts and nature of their claims;
  2. The source, amount, and frequency of the debtor’s income;
  3. A list of all of debtor debtor’s property; and
  4. A detailed list of the debtor’s monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

What happens once the case is filed?

Once the case is filed, an impartial trustee is appointed to oversee the case. The trustee both evaluates the case and serves as a disbursing agent, collecting payments from the debtor and making distributions to creditors.

Filing the petition “automatically stays,” or stops most collections actions against the debtors or debtor’s property. Filing the petition does not stay all actions, and for certain actions it may be effective for only a short time. Chapter 13 also contains a special automatic stay provision that protects co-debtors as well.

Meeting of Creditors

Between 21 and 50 days after the debtor files the chapter 13 petition, the chapter 13 trustee will hold a meeting of creditors. The debtor must attend the meeting during which the trustee places the debtor under oath, and both the trustee and creditors may ask questions.

Approval of the Plan

A payment plan must be submitted to the court within 14 days of the filing of the original petition.  No later than 45 days after the meeting of creditors, the bankruptcy judge must hold a confirmation hearing and decide whether the plan is feasible and meets the standards set forth in the bankruptcy code.

Once the plan is approved, the individual must then make all the payments under the payment plan. Once all the payments are made, the court will order the discharge and free you from any unpaid debts and possibly other debts


Chapter 13 is a bit more complex and involved than chapter 7, but for those that aren’t eligible for chapter 7, it can be the best way to be relieved from debt that has you feeling buried.



The above post was written by Joshua C. Sibenik, Esq.

Now Offering – Flat Fee Legal Packages!

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Balmer Black is happy to announce that we are now offering flat fee legal services that can be purchased directly though our website!!

Our flat flee services include:

Business Startup Packages A & B:

Included with Business Start Up Package A is:

  • 1 Hour In Person or Online Consultation
  • Choice of entity evaluation consultation
  • One Agreement or Contract Template based on your needs

Included with Business Start Up Package B is:

  • 1 Hour In Person or Online Consultation
  • Formation of your Business Entity
  • 2 Agreement or Contract Templates
  • Unlimited Month of Email Follow Up with an Attorney

Estate Planning:


  • With our Will package you will receive an in person or phone consultation with one of our experienced estate planning attorneys. After your consultation, our attorneys will put together a draft of your Will and forward it to you for review. This gives you an opportunity to carefully review your Will and ask our attorneys any questions that you may have. Upon approval of the draft, you and your attorney will execute a final copy of your Will.

Power of Attorney

  • A Power of Attorney is an important document granting some, a principal, power to act as you. As the “principal,” you give the person whom you choose (your “agent”) the ability to essentially step into your shoes. For example, your agent will have authority to spend your money and sell or dispose of your property during your lifetime. Although, with our custom Power of Attorney, you can limit you Agent’s powers as much, or as little as you wish.

Will and Trust

  • With our Will and Trust package you will receive an in person or phone consultation with one of our experienced estate planning attorneys. During your consultation, you and your attorney will discuss your wishes and the details of your Will and Trust. After your consultation, our attorneys will put together a draft of your Will and Trust and forward it to you for review. This gives you an opportunity to carefully review your Will and Trust and ask our attorneys any questions that you may have. Upon approval of the draft, you and your attorney will execute a final copy of your Will and Trust.

Health Care Proxy

  • A health care proxy is a document that allows you to appoint an agent, of your choice, to make health care decisions on your behalf in the event that you are unable to do so.

General Counsel Services:

  • Our General Counsel Service allows full access to all of our attorneys for a flat fee. We can assist your business with Business Formation, Contract Templates, Deal Negotiation, Litigation Advice, Dispute Mediation, and Tax Matters.


Take a look and let us know what you think!


Is Bankruptcy For Me?

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Often people find themselves in difficult financial positions and wonder, is Bankruptcy my way out? This is a valid question. For some people who have limited income with bills piling up, the answer is yes. However, for some situations bankruptcy isn’t the best answer.

Bankruptcy relief in principle is a second chance for a fresh start. For people who will never have the means to pay back all of their debts, it is a way out. It is the “break glass in case of emergency” for financial trouble. However, many people with a relatively small amount of debt immediately jump to bankruptcy without weighing all of their available options. For example, in almost every situation, someone with under $10,000.00 of debt, bankruptcy is not worth it (except for extreme circumstances). For chapter 7 cases, once you receive a discharge you will not be able to receive another discharge for 8 years. So it’s possible you could file bankruptcy, and immediately after have some life event that causes you to be back in debt. Then you would be forced to wait at least 8 years to file bankruptcy again. The other option to consider is debt settlement.

What is debt settlement?

Debt settlement is negotiating with your creditors to settle your accounts in full for less than what is owed. Basically, you would attempt to convince your creditors that it is in their best interest to accept a lesser amount of what is owed. The effectiveness of settling these debts depends on a multitude of factors, such as, status of the accounts, amount of total debt, type of income, amount of income, and total assets. If your accounts are past due and delinquent, the creditors assume you are considering bankruptcy and are much more willing to accept something rather than having their debt discharged in bankruptcy and getting nothing. However, if you are current on accounts, creditors will be less likely to settle.

Advantages of debt settlement over Bankruptcy

One of the main advantages of debt settlement over bankruptcy is that it will save your credit score. Although, settling your accounts for less than what is owed may not as positively affect your score as if you paid them in full, it is still more beneficial to your score than filing bankruptcy. If you were planning on obtaining a loan in the near future to purchase a home or vehicle, bankruptcy could make that difficult.

Another reason debt settlement may be better than bankruptcy, is that it is easier than bankruptcy. Bankruptcy is an involved process, although your attorney will complete the petition necessary to file, it will still require dedication on your end. You must provide necessary paperwork for the trustee to review. Essentially, it is an in depth look at your financial situation requiring tax returns, bank statements, pay stubs, titles to vehicles or homes, completion of financial management courses, in addition to taking time out of your schedule to appear at the meeting of creditors with your attorney. Although some of these items would help with debt settlement none of these them are required.


Whether or not to file bankruptcy is a question that is different for every person. It is a decision that should be made carefully, weighing all the available options, such as, debt settlement. It is best to speak with an attorney that does both bankruptcy and debt settlement. That way you can be assured they are making the decision that is best for your situation and not just pushing you toward one or the other. An experienced attorney can explain the advantages and disadvantages of debt settlement and bankruptcy specifically tailored to your situation.

The above post was written by Joshua C. Sibenik, Esq.

Major Benefits of Filing For Chapter 7 Bankruptcy

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During this article I will discuss the two main benefits of filing a chapter 7 bankruptcy. Bankruptcy is a serious and involved process, and should not be considered lightly. That being said, it does have two major benefits that may make it worth the time and effort to complete. These two benefits are the automatic stay and the discharge of debts.

Automatic Stay

The automatic stay is an automatic injunction that halts any collection efforts from creditors. The barrage of letters and phone calls from collectors can be extremely stressful, frustrating, and downright maddening. It can have a negative impact on you and your family’s life.

Once a bankruptcy petition is filed with the Bankruptcy court, the automatic stay goes into effect. This injunction demands that any creditors must cease ALL collection efforts. These collection efforts include repossession, wage garnishment, bank attachment, any active lawsuits, in addition to collection calls and letters. This is not an empty protection either; there are actual real consequences for creditors who violate this law in the form of fines, sanctions, or orders for contempt. The automatic stay allows much needed peace of mind for those seeking bankruptcy relief.

Debt Discharge

The other main benefit of filing bankruptcy is the discharge. In a chapter 7 bankruptcy, generally all unsecured debts and some secured debts are discharged or eliminated. Essentially, as long as there are no successful challenges from any creditors and the court doesn’t view any abuse has occurred in your case, the court releases the debtor personal liability on these dischargeable debts.

Unsecured debts are debts like medical bills, credit cards, personal loans (not secured by property), and social security overpayment or other government assistance. It is important to remember that there are certain debts that are non-dischargeable such as any federal or state taxes owed, any fines owed to the government, any obligations for child support or spousal support, student loans, attorney’s fees in child custody and support cases, and any criminal fines or restitution ordered by a court. This list is nonexclusive, meaning it does not include every non-dischargeable debt, only some.

The court ordered discharge offers you a second chance with a fresh start. As a condition of the discharge the court mandates that every debtor complete two separate credit and financial management courses. These courses educate the debtor on how to budget and be financially responsible so they don’t find themselves in the same situation again in the future. The discharge is granted to debtors once the case has concluded. This discharge can be denied or revoked due to fraudulent actions by the debtor, or failure to disclose all assets during the bankruptcy proceeding.


The automatic stay and debt discharge are by far the two major benefits of bankruptcy. Bankruptcy can be extremely beneficial due to these two aspects; however, it is not best for every situation. It is important to speak with a bankruptcy attorney regarding your specific financial situation to help you decide whether bankruptcy is in you and your family’s overall best interests.

The above post was written by Joshua C. Sibenik, Esq.

Bankruptcy 101

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In today’s current economy many people find themselves in large amounts of debt. This can happen through no fault of their own due to a life-changing event such as, job loss, a catastrophic accident causing large medical bills, death of a spouse, etc. Poor management of finances could also cause this debt. If someone is feeling like there is no possible way to repay all their debts, its possible bankruptcy could be their best option. This article will briefly cover the basics of the bankruptcy process.

Who can file Bankruptcy?

Any consumer who is insolvent (too much debt to pay back), may be eligible to file for relief under the U.S. Bankruptcy code subject to the following exceptions:

  1. You received a chapter 7 discharge in the past 8 years, or a chapter 13 discharge in the past 6 years.
  2. A bankruptcy court may also dismiss your case if there is an attempt by the debtor to defraud creditors. Such as transferring assets to friends or           family in an attempt to hide them from creditors.
  3. You cannot file for bankruptcy if you had a chapter 7 or chapter 13 dismissed in the past 180 days for the following reasons:
  • You violated a court order.
  • The court ruled that your filing was fraudulent or was deemed an abuse of the bankruptcy system.
  • Debtor requested the dismissal after a creditor asked for relief from the automatic stay.

Chapter 7 v. Chapter 13
There are two types of consumer Bankruptcy, Chapter 7 and Chapter 13. Chapter 7 is the most common Bankruptcy filed by consumers. Chapter 7 is an opportunity for a “fresh start.” If the debtor qualifies, all of their unsecured debt is wiped away and they are given the option to keep or surrender property that is secured by a lien or mortgage, as long as certain conditions are met.
Chapter 13 on the other hand is reorganization Bankruptcy, which essentially is a repayment plan. The debtor would propose to pay back all or a part of their debts over the course of 3 to 5 years, after the assigned term all debts eligible for discharge will be wiped away.
There are two main reasons people decide to file a chapter 13 over a chapter 7. 1) They simply do not qualify for chapter 7; or 2) The debtor has valuable assets.

There are set strict income limits by state, if the debtor’s income is above those limits you do not qualify for Chapter 7, unless you pass the means test. If your current annual income is higher than the limits set by your state, you must pass the means test to file chapter 7. The means test determines whether you have enough disposable income to repay your debts over the course of a 5 year plan. If you do not pass the means test you will not be eligible to file chapter 7; however, you still may be able to file ch. 13.

Debt education course and financial management course

For both chapters, the court requires that you complete two separate online courses, one pre-filing and one post-filing. You may complete these courses online and file the certificate with the court. If you do not complete these course within the time deadline, your case will be dismissed.

The Automatic Stay

Once you decide which chapter you want to file, next is the automatic stay. Being in a large amount of debt is often very stressful. Not only are you under the stress of attempting to repay the debt, but also you endure various collector’s phone calls and letters. A fundamental benefit of filing bankruptcy is the Automatic Stay. Under bankruptcy law the automatic stay is an automatic injunction that halts actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy. Under section 362 of the United States Bankruptcy Code, the stay begins at the moment the bankruptcy petition is filed. This provides instant peace of mind once the bankruptcy petition is filed with the court.

Meeting of Creditors

After a chapter 7 petition has been filed, the court will appoint a trustee to oversee your case and take control of the estate. The estate consists of all your assets that are not exempt. At that time, the court will schedule the 341 meeting; this meeting will be about 20-40 days after the initial filing of the petition. The debtor must be present. This is an informal meeting with the trustee where all the debtor’s creditors are allowed to be present. 99% of the time none of the debtor’s creditors actually appear. The meeting consists of the trustee placing the debtor under oath and asking questions about the debtor’s property and debts. The process for chapter 13 is slightly different, there is a meeting of creditors, and then there is a confirmation hearing in court where a bankruptcy judge will either approve or reject your proposed plan.
Discharge of debt

For chapter 7, creditors are allowed 60 days from the 341 meeting to convince the court that their debt should not be discharged. Once that time lapses, all of the debtor’s dischargeable debts will be discharged. For chapter 13, once the payment plan has concluded your case will be closed.


It is important to remember that everyone’s situation is different. For many people bankruptcy may not be the best option. After considering all factors, it’s possible that settling debts individually over time could be the best option for you. It is always smart to consult with an attorney that practices bankruptcy and debt settlement, allowing you to consider every factor in your situation without forcing you toward one or the other.