Chapter 7 Bankruptcy Information
In a chapter 7 case all debt is usually discharged, and the debtor usually retains all of his or her property. This is because most consumer debt is dischargeable, and most personal property is exempt. “Exempt Property” is that which is described in New York state law as being unavailable to creditors for the satisfaction of debts, judgments or other claims against the debtor.
Exempt property includes future salary, wages and social security income, security deposits, furniture, furnishings and clothing, pensions, IRAs and 401(k)s and other retirement investment accounts; $2,400 of equity in a motor vehicle and $50,000 of equity in a house, condo, co-op, or mobile home. “Equity” is the difference between what a thing is worth and what you owe on it. Sometimes it is a negative number. If you have a car worth, say $20,000 and you owe $18,000, your $2,000 equity is exempt. If a husband and wife have a house worth $500,000 with a $400,000 mortgage balance, their $100,000 equity is exempt. If they each have a car, they each get an exemption. Property that you lease, like a car or an apartment, is not yours and does not figure in the case. Professional licenses and education certificates are not transferrable
Some property, although not exempt, may not be worth the trustee’s trouble and expense to collect. Small amounts of non-exempt equity in your house or car fall into this category. If you have a personal service business it would usually have no value beyond the value of your services, and would not be saleable. Used store fixtures have little value. There is no legal limit on the amount of debt you can have discharged. And, as long as more than fifty percent of your debt is "consumer" debt, like those from personal use of credit cards, you can have the business debts you owe discharged, too.
By asking you four or five questions I can tell you almost to a certainty whether or not a chapter 7 bankruptcy would work for you.
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