New York City Bankruptcy

Learn What Bankruptcy Really Means

The Ancient Romans dealings in business

The term "bankrupt" comes from the ancient roman term "banc rupta", that is to say "broken bench". Trade was conducted, usually in the open marketplace, when a merchant exchanged goods and service across his bench for roman currency. If he was unable to pay his debts, roman soldiers came and broke his bench, stopping his trade until he could pay his debts and put his financial house in order.

Under Chapter 7 of the modern federal bankruptcy statute, the debtor is free of personal liability for certain specified types of debts. In other words, the debtor is no longer required by law to pay those debts; they are discharged.

However, Congress has passed the Bankruptcy Abuse Prevention & Consumer Protection Act of 2005. The centerpiece of the Act is the "Means Test", making it much harder for debtors to prove they can't pay their debts. If a person in debt has income above a specified level, then that person is not permitted to file for bankruptcy under Chapter 7 and must instead use Chapter 13. In determining the person's income and what he may be able to afford to pay, the court does not look at his actual expenses, but instead will determine his expenses based on living standards established by the IRS.

Chapter 13 is still a viable option for many

In a Chapter 13 bankruptcy you file a plan showing how you will pay off some of your past due and current debts over a period of three to five years. The most important thing about a Chapter 13 bankruptcy is that it will allow you to keep valuable property, like your home or car, even if you are behind on payments.

What are the costs to file in New York?

To file for Chapter 7 its $200, for Chapter 13 its $185. But you still may have to pay creditors and others. For example, bankruptcy does not keep you from paying money owed for child support or alimony, fines, some taxes, debts not listed on your bankruptcy petition, debts resulting from what the law describes as "willful and malicious" harm, mortgages and other liens which are not paid in the bankruptcy case. However, bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor. In addition, you will not be able to get out of paying your student loans owed to a school or government body, unless the court decides that payment would be an undue hardship.