Bankruptcy FAQ

Will I lose my house?

Almost certainly not. The New York state homestead exemption protects approximately $204,000 of equity (current figure, varies by county) in a primary residence, doubled to roughly $408,000 for married couples filing jointly. Most New York homeowners have less equity than that and keep the home as a matter of course. In Chapter 13, even debtors who are behind on the mortgage keep the home by curing the arrears through the plan. See our exemptions page for the full breakdown.

Will I lose my car?

Almost always no. New York's motor vehicle exemption protects approximately $5,150 of equity in one vehicle ($4,800 under the federal scheme). For a financed car, the analysis runs to equity above the loan balance, which is usually zero. We typically reaffirm the loan in Chapter 7 (keeping the car and continuing to pay) or pay through the plan in Chapter 13.

Will I lose my retirement accounts?

No. Qualified retirement assets — 401(k), 403(b), 457, traditional pensions, IRAs, Roth IRAs — are fully exempt up to a high statutory cap. Do not withdraw retirement funds to pay creditors before filing. Retirement assets that would be exempt in bankruptcy are often less protected once they have been distributed.

Will my employer find out?

Unlikely. Bankruptcy filings are public records, but employers do not routinely check the bankruptcy docket. Exceptions: jobs that require security clearances, some financial services positions, and certain government positions involve background checks that surface filings. We talk through employment concerns at the consultation.

Can my employer fire me for filing bankruptcy?

No. Section 525 of the Bankruptcy Code prohibits an employer from terminating an employee solely because of a bankruptcy filing. Government employers face additional anti-discrimination protections. Private employers cannot refuse to hire someone based on a discharged bankruptcy alone, though they can consider broader credit history.

Will my spouse have to file too?

Not necessarily. Individuals can file separately even when married. Whether to file jointly depends on the spouses' separate property, debts, and exposure. Joint filing is often more economical for couples with shared debt, but it can hurt the means test for couples with a high-earning spouse. We run the comparison at the consultation.

How much does bankruptcy cost?

Court filing fees:

• Chapter 7: $338
• Chapter 13: $313
• Chapter 11: $1,738 (regular) or $1,738 (Subchapter V)

Plus credit counseling and financial management course fees (typically $25-$50 each). Attorney fees vary by case complexity. Chapter 7 attorney fees in New York typically range from $1,500 to $3,500 for routine consumer cases. Chapter 13 attorney fees are higher and a portion can be paid through the plan rather than up front. Chapter 11 fees are case-specific. We quote an all-in fee at engagement.

How long does the process take?

Chapter 7: roughly four to six months from filing to discharge. Chapter 13: three to five years (the plan period). Chapter 11 / Subchapter V: variable, typically six to twelve months to plan confirmation.

What debts cannot be discharged?

The main non-dischargeable categories:

• Domestic support obligations (child support and most spousal support).
• Most student loans (absent an undue-hardship adversary proceeding).
• Recent income taxes and trust-fund taxes.
• Debts for fraud, embezzlement, or willful and malicious injury.
• Criminal restitution and most government fines.
• Debts not listed on the schedules in some circumstances.

What happens to my credit score?

By the time someone is filing bankruptcy, their score has usually already been damaged by delinquencies and charge-offs. The filing itself rarely lowers the score further, and most clients see scores climb within months of discharge. See rebuilding credit after bankruptcy for the longer answer.

How long does bankruptcy stay on my credit report?

Chapter 7: up to ten years from the petition date. Chapter 13: up to seven years. The impact diminishes sharply over time with good post-bankruptcy credit behavior.

Can I file bankruptcy without a lawyer?

You can. It is rarely a good idea outside the simplest no-asset Chapter 7. The schedules are unforgiving, the look-back periods are long, the exemption choice matters, and an error in the petition can lose property the debtor would otherwise have kept. We have inherited cases from pro se filers and the cleanup is almost always more expensive than getting it right the first time.

What is the automatic stay?

The automatic stay is a federal injunction that takes effect the moment a bankruptcy petition is filed. It halts virtually all collection activity — calls, lawsuits, judgments, garnishments, levies, repossessions, foreclosure sales. Creditors who violate the stay can be sanctioned. See our creditor harassment page for details.

Can I file again later?

Yes, with timing limits:

• Chapter 7 to Chapter 7: 8 years between filing dates.
• Chapter 13 to Chapter 13: 2 years between filing dates.
• Chapter 7 to Chapter 13: 4 years from prior Chapter 7 filing to current Chapter 13 filing for a discharge.
• Chapter 13 to Chapter 7: 6 years, with exceptions.

Can I keep some credit cards?

Generally no. All credit cards must be listed in the schedules, and once the issuer receives notice of the bankruptcy, the card is almost always closed. Cards with zero balances are sometimes left open at the issuer's discretion. You will be able to open new accounts after discharge.

What if I am embarrassed about filing?

Bankruptcy is a legal tool, not a moral failing. Roughly one in every 270 American households files bankruptcy each year. The Bankruptcy Code exists precisely because Congress recognized that financial circumstances can outrun any individual's ability to recover without legal protection. Albert has filed cases for doctors, lawyers, executives, small business owners, and W-2 employees of every income level. There is no profile that "should not" file.

Will bankruptcy affect my immigration status or citizenship application?

Filing bankruptcy is not, by itself, a bar to obtaining or maintaining lawful permanent resident status, naturalization, or any visa status. USCIS does not consider a bankruptcy filing as evidence of bad moral character. The relevant inquiries on the N-400 naturalization form ask about delinquent taxes, child support arrears, and similar specific issues — a bankruptcy discharge that resolves those debts can actually help, not hurt. We do recommend reviewing the timing with both an immigration and a bankruptcy attorney if a naturalization interview is pending.

Will I lose my professional license?

In New York, a bankruptcy filing alone is not grounds for loss or suspension of any professional license — including attorney, physician, nurse, real estate broker, insurance broker, or securities license. Section 525(a) of the Bankruptcy Code specifically prohibits state and federal licensing authorities from discriminating against an applicant or licensee solely on the basis of a bankruptcy filing. Licenses can be affected if the underlying conduct that led to the bankruptcy involved fraud or violations of the licensing regime, but the filing itself is not the issue.

What is a "no-asset" case?

In a Chapter 7 no-asset case, the trustee determines after the 341 meeting that there are no non-exempt assets worth administering for the benefit of creditors. The trustee files a "Report of No Distribution" and the case proceeds straight to discharge. The vast majority of consumer Chapter 7 cases in New York are no-asset cases — the New York and federal exemption schemes are generous enough that most filers' property is fully protected.

Do I have to go to court?

For routine consumer Chapter 7 and Chapter 13 cases, the only required appearance is the 341 meeting of creditors, which is currently held by Zoom video conference in both the SDNY and EDNY for most cases. Contested matters (objections to exemptions, motions for relief from stay, adversary proceedings) require additional appearances but are the exception in cases we file. Chapter 11 cases involve more frequent court appearances, though many can also be handled remotely.

What is reaffirmation?

A reaffirmation agreement is a voluntary contract under section 524(c) by which a Chapter 7 debtor agrees to remain personally liable on a secured debt — typically a car loan or mortgage — that would otherwise be discharged. Reaffirmation keeps the account open and reporting to the credit bureaus, but it also removes the debt from the discharge order. We review every proposed reaffirmation carefully and recommend against it when the collateral is underwater or the loan terms are unfavorable.

What about debts I forgot to list?

In a no-asset Chapter 7 case, properly omitted unsecured debts are generally still discharged under the controlling case law in the Second Circuit, provided the omission was not the result of fraud and the creditor would not have received a distribution had it been listed. In asset cases, the analysis is different and unscheduled creditors who are denied participation in the distribution may have surviving claims. The right answer is to schedule every creditor accurately the first time.

What happens to a lawsuit pending against me?

Pending lawsuits against the debtor are stayed by the automatic stay the moment the petition is filed. Most pre-petition lawsuits never resume — if the underlying debt is discharged, the lawsuit becomes moot. The exceptions are claims based on fraud, willful and malicious injury, drunk-driving personal injury, and similar non-dischargeable categories, where the creditor may proceed with the lawsuit (and any judgment) but only as to the non-dischargeable portion.