So I say again that if you’re planning on filing for Bankruptcy, do not go at it alone.  Its dumb.  It doesn’t work in a large percentage of cases I see.  And don’t go to one of those $399 preparation services.  It’s like bringing your taxes to your uncle who taught Math and saying (Do my taxes!).  He doesn’t know how to do your taxes.  They don’t know how to file for Bankruptcy in New York properly.  Finally, Does anyone want to buy a boat?

Look, no one ever thinks they are going to be the ones sitting in a Bankruptcy meeting and having their debts discharged.  Its clearly not a life goal.  But that doesn’t mean that once you are in a situation like this, that you should do everything you can to avoid it, even at your emotional and financial peril.  had clients who weren’t sleeping for months prior to filing.  Clients who refused to use their own checking accounts for fear of having it frozen, or having their wages garnished.  What I’m saying is that Bankruptcy affords you a way out of this financial mess with a very straightforward procedure.  it allows you to restart your financial life, and in all honesty, your entire life, all over again.  So before you fork over your next minimum payment of several hundred dollar to a credit card that you know you’ll never be able to pay Ive off, at least speak to a Bankruptcy attorney as one of your options.

For purposes of Bankruptcy, the Means Test looks at the household income of every person in that household, regardless of whether or not that person is filing.  The caveat here, however, is that while you cannot deduct certain expenses from the Means Test, your spouse can.  And some attorneys don’t even know about this.  In other words, lets say you made 40,000 a year and your spouse made 40,000 a year.  You cannot deduct your gym membership, credit card payments, support to family members for purposes of the means test.  HOWEVER, the spouse that is not filing CAN deduct these expenses and its totally acceptable.

The long and short of it is you shouldn’t automatically think that if your spouses income is included you wont qualify or vice versa.  The Means Test is a complicated (and exciting, yes Im a nerd) formula, which only a lawyer should deal with.

I promise a longer post for the next one, but this is one of the more mundane questions I get and I didn’t want to put you guys to sleep…anymore than I usually do.

Lets be real.  No one necessarily wants to file for Chapter 7 Bankruptcy in Manhattan as a first step.  Its obviously a last resort.  You’ve gotten yourself into a ton of debt and there doesnt seem to be a way out.  But you have to take practical steps if you want to move forward during the process if you don’t want any issues.

What am I babbling about?  Well, under the Bankruptcy Code, you have certain exemptions, meaning you can keep a certain percentage of your stuff when you file for Bankruptcy and the creditor and Trustee cannot get their hands on it.  Some examples include $50,000 in home equity in your home, $2400 from a Bank Account, all of your IRA’s, 401k’s etc.  However, lets say you have some cash in the bank above that $2400 and you really need to get this Bankruptcy filed.  Dont hide it or move the money.  Don’t try and be crafty and put it into someone elses account.  Just let it go.  You heard me.  Let it go.

Lets say you had $100,000 in debt.  Not a crazy figure and I see it everyday in my Brooklyn office.  If I told you I could get rid of $100,000 in debt for $5,000, chances are, you’d kiss me (ethically inappropriate under most circumstances.)  However, the problem is many clients will try and save their very last dime from the Trustee, and thats just not a great way to go about doing things.  If you have $7000 in your bank account because you saved a couple of bucks, protect the $2400 and give the rest to the Trustee during the Bankruptcy filing.  The Trustee will be happy, which means less problems, if any, for the Bankruptcy, and for that amount of money you’ve known gotten rid of about $100,000 in debt.

It seems counterintuitive to us.  Why give up money when we can “protect” it.  I get that.  The problem is the amount your protecting as a percentage of the debt you’re being forgiven is minimal.  The trade off is absolutely amazing.  So my advice is not to mess up this amazing tradeoff but trying to keep every last dollar.  It will only cause problems for you and your attorney in the actual case.  Of course, like anything Bankruptcy related, there are many caveats to discuss, but in general I think you get the idea.

If you own a small business, the Trustee will likely ask you for tax returns for the last few years the business filed, as well as 6 months to one years worth of bank statements.

The first thing you need to ask yourself is:  Does the business have any assets that can be liquidated to pay creditors.  Most individuals do not.  You have an office and a few computers, but you likely dont have 20k servers or John Deere machines.  In that case the Trustee wont care at all about the business and likely wont liquidate a thing.  However, keep the type of business you run in mind.  If you have a dry cleaning business, youre likely to have a bunch of materials that can be sold for some money.  Same goes for a grocery store or a hardware store.  Real estate business is more unlikely (unless you have a considerable amount of comissions going in.)

The Chapter 7 Trustee in Brooklyn or wherever will also want to know how much the business has in the operating account.  Remember, unlike personal bankruptcy itself, listing your business in a Chapter 7 personal Bankruptcy doesnt come with any exmeptions.  If you have 10k in your business account, you cant protect a cent of it (unless its spoken for by other creditors or its their money.)  Keep that in mind.

Also look out for incoming monies.  Just because your business is flat broke now doesnt mean the Trustee wont ask about monies coming in.  If for instance you’re a commission based business, and you have $100 in the bank, but a 20k commission coming in, the Trustee is going to ask about it and want it, so be sure to be cognizant of that before you go see a Bankruptcy Attorney in Brooklyn.

Finally the Trustee will ask if you have partners in the business, as the Trustee cant technically touch the partners share.  If the assets in the business are worth 20k but you have three other partners, the Trustee might not touch the assets given the headaches that would come with it.

The bottom line is dont get scared about filing personal Chapter 7 Bankruptcy in New York City if you own a business.  Just make sure to speak to us about it before you file so that we can guide you about the proper way to file.

Here is what I mean as an example.  If youre someone who makes about $40,000 a year in gross wages (before tax) and you have approximately $20,000 in debt or more, chances are you will NEVER pay off this debt.  If you havent missed a payment, you’re like paying the minimum on many of these cards since it would be implausible that youd be paying the entire amount of the balance and living on 40k a year BEFORE taxes.  If you’re keeping a balance, youre likely paying a rate of anywhere from 10-20%.  If you’ve missed a payment, that percentage likely went up to 30%.  If you do the math, there simply is no way at all that you could possibly make a dent in this debt while continuing to support yourself.  I understand that there are just so many emotions involved in something like this.  Fear, shame, embarrassment.  In any case, you need to realize that when you made these purchases that you had every intent to pay them back (I imagine).  And many of my clients who have finally come to grips with the fact that they need to file have contacted the creditors, but they are simply unwilling to compromise to payment plans that you can afford.

Also, when you settle a debt, you can be taxed on the amount you save as regular income.  So if you settle a 10k debt with a creditor for 5k, you may be responsible for taxes on the 5k you saved as ordinary income.

Look at the end of the day this area of law has more to do with your emotions than anything legal.  We are able to get the vast majority of people through a Chapter 7 case in Staten Island, Brooklyn, Manhattan or anywhere in New York with little or no problem.  But this issue is an emotional one.  Once you come to grips with the fact that there is no way you could possibly pay back this amount of debt you have, the decision can become a much clearer one for you.

What are the most common questions you’ll hear in a New York City Bankruptcy case:

1.  When was the last time you used credit cards.

2.  Whats the most amount youve had in your bank account in the past year.

3. Have you ever owned a business.

4. Is anyone sick or dying and leaving you money.

5. Do you, or have you ever owned any real estate?

6. Do you own a car.

There are plenty more, however, the key, again, is to make sure I prepare my client for that meeting.  If you’re reading this and you’re planning to file for Bankruptcy in New York City, you may think “These are easy questions, no problem.”  The issue is that you generally feel fine at home, but you tend to get nervous at the time of the meeting.  Its normal.  Its somewhat intimidating.  But thats the key to preparing for that meeting.  If we’ve gone over the questions together, you’ll feel much more comfortable on the day of the meeting.  Furthermore, I always tell my clients to show up at least 30 minutes before their meeting time so they can sit in the room and listen to the questions that will be asked.

If you’re prepared for a Chapter 7 Manhattan Bankruptcy meeting, then the trustee will know it, in my opinion, and your case may move smoother along.  Think about it, the trustee has to interview dozens of people a day, many of which are not prepared and are thinking about answers for a long period of time.  If you come in, and already know the typical questions and answer quickly and truthfully, it will lessen the burden on that trustee.  Its what I do for all of my clients and it helps everyone involved in the Chapter 7 bankruptcy process.

Its been some time since we last blogged about Bankruptcy in Murray Hill, Bed Stuy, or anywhere in New York for that matter. Weve been working for the new site for some time. I hope all of you enjoy it. Having said that, here is the next in my series of video blogs surrounding the steps of keeping your home in a Chapter 7 Bankruptcy in New York City. In essence, the video discusses the things you should do if you want to determine if you qualify for filing Chapter 7 Bankruptcy in Manhattan, Brooklyn, or anywhere in New York. Hope you enjoy it.

Brooklyn Chapter 7 Bankruptcy Lawyer discusses keeping your home in Bankruptcy