Overview of the Bankruptcy Process in Brooklyn
The bankruptcy process is complex which is why it’s so important to have a bankruptcy lawyer to provide guidance at every stage. The information below is a general overview of the steps involved in a bankruptcy proceeding.
Credit Counseling Course
Before you file for Chapter 7 or Chapter 13 bankruptcy, you must complete a pre-approved credit counseling class via phone or online. A certificate of completion must be filed with the court.
File Bankruptcy Petition
The Brooklyn Bankruptcy Center can file your bankruptcy petition with the bankruptcy court in the district where you live. The petition requests bankruptcy relief and asks that your debts be discharged. We will also file additional documents including:
- Schedule of current income and expenditures
- Schedule of assets including all personal property and real property
- Schedule of liabilities including all secured and unsecured debts
- Statement of Financial Affairs
- Statement of Intention for Secured Debts (Chapter 7 only)
- Statement of Current Monthly Income and Means Test Calculation
- Chapter 13 Plan (Chapter 13 only)
When the petition is filed, the court grants you an automatic stay. An automatic stay is a mechanism that can prevent creditors from taking certain actions against you regarding the debts that you owe. This gives you some breathing room while your bankruptcy is pending.
Assignment of Trustee
A bankruptcy trustee is assigned to your case who is responsible for making sure you qualify for bankruptcy and that the interests of your creditors are met. In a Chapter 7 bankruptcy, the trustee determines if you currently own any assets that could be liquidated to pay off any portion of your debt. In a Chapter 13, the trustee will make sure you are able to make payments under the proposed repayment plan.
341 Meeting of Creditors
Approximately three to five weeks after the bankruptcy petition is filed, you must attend a creditor’s meeting with your attorney and the trustee. Your creditors are invited to appear but rarely do so. At this meeting, the trustee will ask you questions related to your bankruptcy documents under oath.
In a Chapter 7 case, the meeting of creditors is conducted either at the Brooklyn Bankruptcy Court in the historic Post Office Building at 271 Cadman Plaza East in downtown Brooklyn or at an office building located at 80 Broad Street in Downtown Manhattan.
Debtor Education Course
60 days after the creditor’s meeting, you must complete a financial management course via phone or online. You must file a certificate of completion with the court.
The trustee and creditors have 60 days from the time of the 341 creditor’s meeting to challenge your right to discharge your debts. If there are no objections raised, it generally takes 3-6 months (in a Chapter 7 filing) to release you from your personal liability to your debts.
Bankruptcy will remain on your credit report for up to 10 years. The good news is, you now have the opportunity to rebuild your credit.
Steps Specific to a Chapter 7 filing:
Complete a means test – You will need to pass a means test that compares your income level and disposable income to that of other New York wage earners
Complete a voluntary reaffirmation agreement – If you want to continue making payments on certain secured debts such as your home or vehicle, you need to reaffirm the debt by signing a reaffirmation agreement.
Liquidation of nonexempt property – If you have assets that can be liquidated to pay debt, or nonexempt property, the trustee managing your case may make the decision whether or not to seize the property. At this time, you can use exemptions to keep assets up to a certain value.
Steps Specific to a Chapter 13 Filing
Submit a proposed repayment plan
Confirmation Hearing – One month after the 341 Meeting of Creditors, you will need to
attend a hearing before a bankruptcy judge who will either confirm or deny the repayment plan. If your plan is confirmed and you make good on it, the balance (if any) on the dischargeable debts you owe will be eliminated at the end of your term.