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Introduction

This document explains the key elements of the Chapter 7 bankruptcy process, including the requirements of the bankruptcy laws enacted by the federal government in 2011. Even before declaring bankruptcy, there are several steps that must be taken. Some steps are optional, but others, such as credit counseling, are required

Likewise, after the Chapter 7 bankruptcy petition is filed, the debtor has several obligations to fulfill Attending the Section 341 meeting of creditors and a pre-discharge bankruptcy education course are two of those requirements After a person receives his or her discharge, the case may remain open for several months, and in some circumstances, even years, as the case trustee works to liquidate Chapter 7 bankruptcy assets and distribute payment to creditors Although the bankruptcy process is different from case to case, the purpose of this document is to explain the main events that will happen in a normal Chapter 7 bankruptcy proceeding

New York Bankruptcy Courts – Location and Contact Information

New York bankruptcy courts are divided into four districts, which are further divided into several divisions. Generally, the debtor’s county of residence will determine which district and division the bankruptcy petition is filed. It may also be determined by the location of the debtors principal place of business or principal assets.

NORTHERN DISTRICT OF NEW YORK

Counties of Jurisdiction: 

Albany Division – Albany, Clinton, Columbia, Essex, Franklin, Fulton, Greene, Montgomery, Rensselaer, St. Lawrence, Saratoga, Schenectady, Schoharie, Ulster, Warren and Washington Counties

Syracuse Division – Cayuga, Cortland, Jefferson, Onondaga, Oswego, Tioga and Tompkins Counties

Utica Division – Broome, Chenango, Delaware, Hamilton, Herkimer, Lewis, Madison, Oneida and Otsego Counties

SOUTHERN DISTRICT OF NEW YORK

Counties of Jurisdiction:

Manhattan Division – Bronx and New York Counties

Poughkeepsie Division – Dutchess, Orange, Putnam and Sullivan Counties

White Plains Division – Rockland and Westchester Counties

EASTERN DISTRICT OF NEW YORK

Counties of Jurisdiction: Kings, Nassau, Queens, Richmond and Suffolk Counties

WESTERN DISTRICT OF NEW YORK

Counties of Jurisdiction:

Rochester Division – Chemung, Livingston, Monroe, Ontario, Schuyler, Seneca, Steuben, Wayne and Yates Counties

Buffalo Division - Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Niagara, Orleans and Wyoming Counties

Chapter 7 has a lasting, long-term effect on a person’s creditworthiness It remains on a person’s credit record for up to ten years After a Chapter 7 petition is filed, a person’s credit score, commonly referred to as a FICO score, may initially drop as much as 2 points. Obtaining loans or other credit at reasonable rates will be very difficult, if not impossible. For these reasons alone, the following bankruptcy alternatives should be considered

Create a Budget

• Creating a budget is a simple way to explore bankruptcy alternatives. A well-prepared budget can help point out unnecessary expenses. To create a budget, track every expense, no matter how minor, for one to two months. At the end of this time period, take some time to analyze the results.
• If expenses are greater than income, identify expenses that can be eliminated or reduced. In addition, think of ways to bring in additional income, such as asking your current employer for a raise or taking on a second job.

Negotiate with Lenders        

• If you are experiencing a temporary setback, such as a layoff or medical illness, and normally pay bills on time, negotiating with creditors is an effective bankruptcy alternative Many creditors are willing to lower monthly payments or extend payment time, as long as they are notified of the situation and reassured that you will be able to meet the terms of the new credit arrangement

Debt Consolidation

• Although debt consolidation is another way to avoid bankruptcy, it should be carefully considered. When debt is consolidated, credit card balances and other loans are combined into one bill. Many times the creditor will require the person receiving a consolidated loan to use his or her house or other assets as collateral. This may jeopardize your ability to keep your house or other assets if a bankruptcy petition is filed at a later date.

Credit Counseling

• Reputable creditor counseling organizations offer free money management advice and budgeting assistance. After reviewing your situation, a good credit counselor can provide specific bankruptcy alternatives for your individual situation. Although credit counseling can be provided online or by phone, the best type of credit counseling is in person.