Bankruptcy: Frequently Asked Questions

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)

$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

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

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

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)

Student loans (absent undue hardship), most tax debts less than 3 years old, child support, alimony, debts from fraud or DUI judgments, and recent luxury purchases over $800 within 90 days of filing. Everything else, including credit cards, medical bills, and personal loans, is generally dischargeable.

Source: 11 U.S.C. § 523

You must pass the means test, which compares your household income to the New York median for your family size. If your income is below the median, you qualify automatically. If above, a detailed expense analysis determines eligibility. The current median for a single filer in New York is approximately $62,000-$70,000.

Source: 11 U.S.C. § 707(b); Census Bureau median income data

Yes. One spouse can file individually without the other. However, joint debts remain the non-filing spouse's responsibility. In New York, the non-filing spouse's income may still be considered for the means test if you share a household.

Source: 11 U.S.C. § 302

Yes. The automatic stay halts foreclosure proceedings immediately upon filing. Chapter 13 can cure mortgage arrears over a 3-5 year plan while you keep making current payments. Chapter 7 delays foreclosure but does not provide a permanent cure for missed payments.

Source: 11 U.S.C. § 362; 11 U.S.C. § 1322(b)(5)

Chapter 7 typically takes 3-6 months from filing to discharge. Chapter 13 takes 3-5 years because it involves a court-approved repayment plan. Both require a mandatory credit counseling course before filing and a financial management course before discharge.

Source: 11 U.S.C. § 727 (Ch. 7 discharge); 11 U.S.C. § 1328 (Ch. 13 discharge)

New York allows a motor vehicle exemption of up to $4,825 in equity. If your car equity is within that amount, you keep it in Chapter 7. In Chapter 13, you keep the car and can sometimes reduce the loan balance to the vehicle's current value if the loan is more than 910 days old.

Source: N.Y. Debtor & Creditor Law § 282(1)

Cash in bank accounts is part of your bankruptcy estate but may be protected by New York exemptions. You can exempt up to $1,775 in cash or equivalent. Direct-deposited Social Security, disability, and other federal benefits are fully exempt regardless of amount.

Source: N.Y. Debtor & Creditor Law § 283; 42 U.S.C. § 407

Yes. Most money judgments are dischargeable in bankruptcy, and the automatic stay immediately prevents enforcement. The judgment creditor cannot garnish wages, levy accounts, or place liens once you file. Certain judgments from fraud or willful injury are exceptions.

Source: 11 U.S.C. § 362; 11 U.S.C. § 523(a)(4), (6)

The automatic stay is a federal injunction that takes effect the instant your bankruptcy petition is filed. It stops all creditor collection activity, including lawsuits, foreclosures, repossessions, garnishments, and phone calls. Violating creditors face sanctions and damages.

Source: 11 U.S.C. § 362

Income tax debt may be dischargeable if it meets all of these conditions: the tax return was due more than 3 years ago, the return was filed more than 2 years ago, and the IRS assessed the tax more than 240 days ago. Payroll taxes, fraud penalties, and trust fund taxes cannot be discharged.

Source: 11 U.S.C. § 523(a)(1); 11 U.S.C. § 507(a)(8)

8 years between Chapter 7 discharges. 2 years between Chapter 13 discharges. 4 years from a Chapter 7 discharge before filing Chapter 13. 6 years from a Chapter 13 filing before filing Chapter 7, unless the prior plan paid 100% of unsecured claims or 70% under a good-faith plan.

Source: 11 U.S.C. § 727(a)(8)-(9); 11 U.S.C. § 1328(f)

Legally, no. Practically, yes. Bankruptcy involves federal procedural rules, exemption elections, means test calculations, and trustee negotiations. Pro se filers have significantly higher dismissal rates. A single mistake in exemption planning can cost you property worth far more than attorney fees.