Comes the day when you realize the cold reality of the financial straits you’re in. Perhaps the children needed help with their tuition, or your family had to have medical care, or your job went away. Whatever the reasons, you didn’t spend frivolously and you fulfilled your responsibilities. The credit card balances, the mortgage, the car payments, the medical bills, the student loans, are all understandable, but the closing circle of your creditors doesn’t care—they just want to be paid. You weigh your options. They are few:
- Don’t pay – A quick invitation to bill collectors to call and creditors to seek judgments against you.
- Go off grid — Romantic, appealing, but hard to pull off in an era where anyone with the resources to do so can ferret out all your personal information. Besides, if you had the money to successfully vanish and live independently, you’d probably have enough to pay off your debts.
- File for bankruptcy — A cliché, but you know people who’ve done it and they’re still living pretty much the same lives as always, foreheads unbranded. They got through it. And it sounds simple enough: if you can’t pay your bills, you can petition a federal court for help. But not all debt can be discharged through bankruptcy… and there are different types of bankruptcy. All come with a forest of forms and a welter of fees to contend with.
The Costs of Filing for Bankruptcy in New York City
Filing costs depend upon the type of bankruptcy and your income. There are two types of bankruptcy filings: Chapter 7 and Chapter 13. Most personal bankruptcies are filed under Chapter 7.
Chapter 7
With a successful Chapter 7 filing, you can be free of most or your unsecured debits within a few months. And not have to sell off your exempt property. Non-exempt property—if you have any—must be given up. Most people who file for Chapter 7 have no non-exempt property.
Chapter 13
A chapter 13 bankruptcy filing can take up to several years. You’ll have to repay some of your debts and live within a closely monitored budget as determined by the bankruptcy court’s trustee.
New York State employs a means test to determine if you’re eligible for Chapter 7 or not. You’ll need to complete the one specific to your county.
Assuming you’re Chapter 7 eligible, forms and fees are your next hurdle. The Southern District Court for New York, where New York City bankruptcy petitions are filed, offers a full list of bankruptcy filing fees. Here’s a summary of the basic ones:
Pre-Filing Credit Counseling: $50 – $75
A mandatory counseling session of about 90 minutes. A certificate is awarded to you upon completion. Your spouse must also attend, and pay separately if you’re both filing. (If you can’t afford to pay, you can apply for fee waiver or reduction, but before the counseling session.) The bankruptcy court maintains a list of approved credit counselors. Note that credit counselors are not allowed to give legal advice.
Filing Fees
Chapter 7
Fees required for a Chapter 7 filing are $306. These include a $245 filing fee, $46 administrative fee, and a $15 trustee surcharge.
Chapter 13
At $281, slightly less: $235 filing and a$46 administrative fee.
Completing and your own bankruptcy papers: Free
There are over fifty pages of these. They are complex and interrelated. You can obtain them from the bankruptcy court’s Clerk’s office, but the clerk isn’t allowed to help you complete them or to offer you advice, legal or otherwise. You’ll need to compile supporting source documentation. The bankruptcy filing forms require information about your debts, assets, expenses, and income, and what you propose to do about loans secured by property, such as your house or car.
A mistake on any of these forms can return to haunt you: once filed; they’re difficult and expensive to try to amend.
Before attempting this daunting and life-changing process on our own, take advantage of our free consultation. A knowledgeable attorney can help you decide whether bankruptcy is even a viable option for you, given your circumstances—and if so, advise how best to proceed. The Law Office of Stephen B. Kass P.C. has long specialized in bankruptcy and debt matters. Its experienced practitioners have helped many people secure their rights under the law and begin anew. America’s bankruptcy laws were written to protect us all and help us through tough times. A skilled practitioner can help you make them work for you. Contact the Law Office of Stephen B. Kass P.C. today for a free consultation.