A New York Chapter 7 bankruptcy is commonly know was a straight bankruptcy or a liquidation. Under the Chapter 7 bankruptcy code, you are given the opportunity to get a “Fresh Start” by wiping out your debt. This is done through the liquidation process during which a Trustee sells your non-exempt assets and uses the proceeds of the sale to pay your creditors. In the majority of cases the Trustee finds that there are no assets to administer and files a report of no assets. Sixty days after the Trustee files this report, the Court can enter your Chapter 7 bankruptcy discharge order and close your bankruptcy case.
Often times, New York bankruptcy filers prefer to file a Chapter 7 bankruptcy because of its ability to eliminate most unsecured debt. Other attractive features of a Chapter 7 bankruptcy include:
- A Chapter 7 bankruptcy is a fairly quick and simple process.
- Once you receive a discharge of a debt in a Chapter 7 bankruptcy case in New York, you are not obligated to pay it back, ever.
- Just like a Chapter 13 bankruptcy case in New York, when you file for a Chapter 7 bankruptcy, you are under the protection of the Automatic Stay. The Automatic Stay prohibits creditors from seeking relief on debt once you have filed bankruptcy.
- Filing for a Chapter 7 bankruptcy may halt wage garnishments and other lawsuits pertaining to debt collection.
- After you receive your Chapter 7 bankruptcy discharge, you can begin rebuilding your credit score almost immediately.
- Although there is risk of potentially losing valuable property when you file for a Chapter 7 bankruptcy, in most cases the Trustee finds that there are no assets to administer.
Drawbacks of a New York Chapter 7 Bankruptcy
- In most cases, filing a Chapter 7 bankruptcy may not eliminate student loans, child support, alimony and most taxes.
- If you own valuable property, filing for a Chapter 7 bankruptcy may result in losing non-exempt property.
- You cannot file a Chapter 7 bankruptcy if you received a discharge on a previous bankruptcy case within a certain time frame.
- If you violated a court order or requested to have your bankruptcy case dismissed in the last 180 days, you may not be eligible to file for a Chapter 7 bankruptcy.
- A Chapter 7 bankruptcy will not protect your co-debtors, meaning that creditors can still seek relief for outstanding debts from your co-debtor.
- Only in some cases can a Chapter 7 bankruptcy prevent foreclosure on your home.