FAQ'S

Q. How will bankruptcy help me?
A. It may be possible for you to discharge your debts under Chapter 7 or make payments from your disposable income wider a Chapter 13 plan.

Q. How might the new bankruptcy law affect me?
A. Among other things there is now a “means test” to determine your eligibility to file under Chapter 7 of the new bankruptcy law.

Q. What happens if I am not eligible?
A. If you do file you would have to file under Chapter 13 and submit a plan for payment of your debt.

Q. How does the “means test” work to determine whether you can file under Chapter 7?
A. if YOU exceed the applicable state median income then the ‘means test” is applied to see if you qualify for Chapter 7 treatment.

Q. What is the applicable state median income in New York?
A. For one person in household it is S38,7lS; for two persons it is 47,123 and for three persons it is $55,133.

Q. How do you determine whether you should apply the “means test”?
A. You take all of your income for the past six months, including for example salary, rental income, child support, pensions, annuity payments and disability benefits, and excluding social security, and then divide that number by 6. You take that number and multiply it by 12 to see if it is equal to or less than the state median income figure. If it is greater yea apply the “means test” if not you do not apply it.

Q How does the “means test” work?
A.  You apply against your monthly income certain monthly expenses using IRS national standards for certain categories such as Allowable Living Expenses, which includes food, housekeeping, apparel and services, personal care. You apply IRS local standards for housing and utilities and transportation and you can also use other necessary, actual expenses such as childcare, health insurance, etc.

Q.  If there is a surplus of net income, can you still apply for Chapter 7?
A.   That depends on the amount of your debt. If it is less than $24,000, then the surplus cannot exceed $99. If more than $40,000, then the trigger point is $166 per month

Q.  If you exceed the maximum surplus and file anyway what can happen?
A. The trustee can make a motion to dismiss your case or convert it to Chapter 13 on the ground that there is a presumption of abuse of the law. You could defend by showing special circumstances.

Q. What documents must the debtor provide in the bankruptcy?
A. A certificate of credit counseling from an approved budget and credit-counseling agency, tax return for the latest year, statement of income in an approved form, evidence of income like pay stubs received the last 60 days, and before discharge a certificate demonstrating that you have taken a debtor education course.

Q. What should the debtor receive from his attorney?
A. An informational notice prescribed by the court, further notices relating to the submission of truthful statements by the debtor, and that the debtor can represent himself and a contract describing the services.

Q. Once I file for bankruptcy can my creditors still bother me or sue me?
A. Except for certain exceptions there is an automatic stay against further actions by a creditor.

Q. After my case has been started, what happens next?
A. There will be a trustee appointed who will notify you and your attorney of the date for a meeting of creditors, which is called a 341 meeting.

Q. What happens at the meeting?
A. The trustee will ask questions relating to the accuracy of the information contained in the bankruptcy papers filed with the court.

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