Bankruptcy
Bankruptcy is a tool, not a verdict. Used at the right time and with the right preparation, it stops collection actions, discharges qualifying debt, and lets a person or a business start over. Used reactively, it leaves money and protections on the table.
What We Handle
Chapter 7
Chapter 7 wipes out qualifying unsecured debt (credit cards, medical bills, most personal loans, deficiency balances) in roughly 90 to 120 days from filing. The trade-off is that the trustee can sell non-exempt assets to pay creditors. In practice, most consumer Chapter 7 cases in the Southern and Eastern Districts of New York are no-asset cases because exemptions cover everything the debtor owns.
New York filers can choose between federal exemptions under 11 USC 522(d) or state exemptions under Debtor and Creditor Law 282-284 plus CPLR 5205 and 5206. The right choice depends on what the client owns. The means test under 11 USC 707(b) determines who is eligible to file Chapter 7 in the first place; above-median-income debtors face a presumption of abuse that often pushes them into Chapter 13 instead.
Chapter 13
Chapter 13 reorganizes debt into a three-to-five-year repayment plan, with the unpaid balance discharged at the end. It is the right tool when the debtor has regular income, wants to keep secured property they are behind on (a house in foreclosure, a car about to be repossessed), or has too much income to qualify for Chapter 7.
Chapter 13 also offers tools that Chapter 7 does not: cure of mortgage arrears over the life of the plan, lien stripping on wholly underwater junior mortgages under 11 USC 1322(b)(2) (limited by Nobelman v. American Savings Bank, 508 U.S. 324 (1993)), and the ability to pay non-dischargeable priority taxes through the plan.
Subchapter V (Small Business Reorganization)
Subchapter V, added by the Small Business Reorganization Act of 2019, gives qualifying small businesses (currently those with under $7.5 million in non-contingent debt) a streamlined path through Chapter 11. There is no creditors' committee, no absolute priority rule, and no requirement that an impaired class accept the plan. Cases move faster and cost meaningfully less than traditional Chapter 11.
We represent small business debtors in Subchapter V cases that involve restructuring trade debt, rejecting burdensome leases, retaining ownership while paying creditors over time, and resolving personal guarantee exposure for the principals. For businesses where Subchapter V is not the right fit, we refer to specialist Chapter 11 counsel and stay involved on the litigation side.
Pre-Filing Strategy
What happens in the months before filing often matters more than what happens after. Transfers to family members within one year of filing can be avoided as fraudulent under 11 USC 548 and Debtor and Creditor Law 273-281. Payments to insiders within one year of filing can be recovered as preferences under 11 USC 547. Recent credit card charges, especially for luxury goods or cash advances, can be challenged as non-dischargeable under 11 USC 523(a)(2).
We counsel clients before they file on what they can and cannot do, how to time the filing relative to anticipated income or expenses, and how to maximize exemption coverage. The clients who walk in with these decisions already made are usually the ones who made them wrong.
Adversary Proceedings
Bankruptcy creates its own litigation forum. Adversary proceedings cover non-dischargeability complaints under 11 USC 523 (for debts based on fraud, intentional torts, or willful and malicious injury), denial of discharge under 11 USC 727 (for debtor misconduct), preference and fraudulent transfer recovery actions, and disputes over the validity of liens and security interests.
We represent both debtors and creditors in adversary proceedings. The procedural rules are the Federal Rules of Bankruptcy Procedure (which adopt most of the Federal Rules of Civil Procedure), and the cases are tried in bankruptcy court before the same judge handling the main case.
Common Questions
What is the difference between Chapter 7 and Chapter 13 bankruptcy?
Chapter 7 liquidates non-exempt assets to discharge most debts in roughly 3-6 months. Chapter 13 reorganizes debt into a 3-5 year repayment plan and lets you keep your property. The right chapter depends on your income, assets, and goals.
Source: 11 U.S.C. §§ 701-766 (Ch. 7); 11 U.S.C. §§ 1301-1330 (Ch. 13)
How much does it cost to file for bankruptcy in New York?
$338 for Chapter 7 and $313 for Chapter 13 in court filing fees alone. Attorney fees typically range from $1,500 to $4,000+ depending on complexity. Fee waivers are available if your household income is below 150% of the federal poverty guidelines.
Source: 28 U.S.C. § 1930; Judicial Conference fee schedule
Will I lose my house if I file for bankruptcy?
New York's homestead exemption protects up to $179,975 to $449,925 in home equity depending on the county. If your equity is within the exemption, you keep the home in Chapter 7. Chapter 13 lets you keep the home while catching up on missed mortgage payments over the repayment plan.
Source: N.Y. CPLR § 5206; N.Y. Debtor & Creditor Law § 282
Can bankruptcy stop a wage garnishment?
Yes, immediately. Filing triggers an automatic stay under federal law that halts all garnishments, lawsuits, and collection calls the moment the petition is filed. Creditors who violate the stay can be held in contempt and ordered to pay damages.
Source: 11 U.S.C. § 362
How long does bankruptcy stay on my credit report?
10 years for Chapter 7 and 7 years for Chapter 13 from the filing date. Most people see credit score improvement within 12-18 months of discharge by rebuilding responsibly. Bankruptcy often improves your debt-to-income ratio immediately.
Source: Fair Credit Reporting Act, 15 U.S.C. § 1681c(a)