Who may file a bankruptcy petition
Any individual person living in New York who is unable to pay his debts or to pay his bills as these fall due may file a New York bankruptcy petition. If a person is married, both the spouses must file a bankruptcy petition together. This is because the income and properties of married people belong to their marriage. Ultimately, it is the income and properties of the marriage that will answer for the debts incurred by either or both of the spouses. Thus, spouses have to file a joint bankruptcy petition.
When an individual person owns a business as a sole proprietor, it is the owner of the business who will file the bankruptcy petition in his name. He will not file the petition in the name of the business. A corporation may also file a bankruptcy petition but it must file the petition in the name of the corporation.
What type of petition may be filed
An individual person or married spouses may file a New York bankruptcy petition under Chapter 7 or Chapter 13. Each petition filed either by an individual or married spouses will be looked over by the court. The court will analyze the documents attached and determine whether the petition filed should be treated as a Chapter 7 case or as a Chapter 13 case. The court will apply the means test as it determines whether the individuals or married spouses’s income is above or below the median income for the state of New York. If the income is below the median, the petition will be treated as a Chapter 7 case, but if the income is above the median then the petition will be treated as a Chapter 13 case.
A creditor who has not been paid may also file an involuntary bankrutuptcy petition against a debtor who fails or refuses to pay what is due to the creditor. In this way, the creditor can ask the court to seize the non-exempt properties of the debtor so that these can be turned into cash and be applied as payment for the unpaid debt.
What needs to be disclosed in a petition
In order to succeed, a New York bankruptcy petition must contain a truthful, accurate and complete disclosure of all sources of income as well as all living expenses, all creditors to whom the petitioner owes money and all debtors who owe money to the petitioner. All the documents required and listed in the schedules must be submitted. Above all, there must be a full disclosure of all non-exempt properties.
Not all properties of the petitioners can be distributed to the creditors. Some properties such as food, clothing, tools of trade, household furniture, income used for necessary expenses and the primary residence of the family cannot be taken and distributed to the creditors as payment of debts. These are exempt from bankruptcy. New York State allows the petitioner to keep certain assets such as a car but only if its value does not exceed a certain amount in value. A petitioner will probably need legal advice as to which properties may be exempt from New York bankruptcy.
Who must be notified of the petition and why
All the creditors of the petitioner must be notified of the bankruptcy proceedings. The creditors can then contest the discharge of the petitioner or, they can file their claim so that they can receive payment for the debts owe to them from the sale of the non-exempt properties.
The petitioner can meet his creditors under the supervision of the trustee and discuss with them his financial status as well as propose to them a plan of payment, this is called the 341 Meeting of the Creditors. The petitioner must turn over to the trustee all non-exempt properties which can be turned into cash. This pool of assets will be used to pay the creditors of the petitioner.
We at the Maxwell Law Firm, PLLC assists clients with debt settlement, foreclosure defense, tax collection defense, filing for chapter 7 and chapter 13 bankruptcy and mortgage home loan modifications . Contact us and speak to our competent and experienced New York Bankruptcy Attorney so that you can get the debt relief you are seeking. Please give us a call at 718-701-0095 to discuss your options.