A simple will outlines who inherits your assets. At the same time, a revocable trust gives you the ability to manage your assets during life, plan for incapacity, and transfer property without involving the court. Understanding these differences can help you determine which option offers the strongest protection for your family.
Welcome to Aronow Law
Welcome to Aronow Law, P.C., a New York-based law firm focused on bankruptcy, debt defense, foreclosure protection, and consumer rights. We help individuals and families understand their legal options when financial pressure starts to threaten their stability.
Our approach is grounded in strategy, not shortcuts. Every bankruptcy case is evaluated under New York law with a focus on protecting assets, stopping creditor action, and positioning clients for long term financial recovery, not just short term relief.
The Legal Issue Explained
Bankruptcy is a federal legal process governed by the Bankruptcy Code and handled in bankruptcy court. When a bankruptcy petition is filed, a legal bankruptcy estate is created. This estate technically includes most property owned by the filer.
That does not mean property is automatically lost. Bankruptcy law allows people filing for bankruptcy to protect certain assets through exemptions. Exemptions exist to prevent people from being left without housing, transportation, or basic necessities.
Exemptions protect equity, not value. Equity is the difference between what an asset is worth today and what is still owed on it. If equity falls within allowed exemption limits, the bankruptcy court generally cannot force the property to be sold.
In a New York bankruptcy, filers must choose between federal bankruptcy exemptions and New York state exemptions. You cannot mix the two systems. This election affects keeping a car and keeping a house and must be made as part of an overall bankruptcy case strategy.
How This Affects You in Real Life
Two people can file the same type of bankruptcy and have very different outcomes. Small differences in equity, income, or timing often determine whether property is protected or exposed.
Fair market value matters. Trustees rely on supported valuations, such as appraisals or documented market data, not online estimate tools. Loan balances, tax returns, credit reports, and financial records are reviewed closely.
Actions taken within 180 days before filing receive special attention. Property transfers, refinancing, gifts, or unusual payments may be reviewed by the trustee. Waiting too long to file a chapter can reduce leverage and eliminate options.
Filing for bankruptcy triggers an automatic stay. The stay stops most collection actions, including foreclosure, repossession, lawsuits, wage garnishment, and bank restraints. However, long term protection depends on how secured debts are handled and whether the bankruptcy is structured correctly from the beginning.
Options Available Under New York Law
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is often called straight bankruptcy. It is designed to eliminate unsecured debt such as credit cards, medical bills, and personal loans. Many unsecured creditors receive little or nothing, and the filer may receive a discharge within a few months.
Not everyone qualifies for Chapter 7. Eligibility depends on income and the Means Test under bankruptcy law. If income exceeds the state median, a budget test applies. Certain income, such as Social Security or specific disability benefits, may be excluded. If a filer does not qualify, Chapter 13 bankruptcy may be required.
You may be able to keep your car and house in a Chapter 7 bankruptcy if:
- Equity falls within applicable exemption limits
- The property qualifies under the chosen exemption system
- Secured payments are current or otherwise properly addressed
New York’s homestead exemption applies only to a primary residence, including houses, condos, and co-ops. It does not protect second homes or investment property. Married filers who file jointly may be able to double exemptions if both are on the deed.
If a Chapter 7 bankruptcy case includes non-exempt equity, the trustee may sell the property and distribute proceeds to unsecured creditors. In limited cases where equity only slightly exceeds exemption limits, trustees may allow the property to be retained if the excess value is paid into the bankruptcy estate.
Keeping a Car in Chapter 7
If you have a car loan and want to keep the vehicle in Chapter 7, you generally must remain current on payments. Several legal options may apply:
- Reaffirmation
A reaffirmation agreement keeps the loan in place after bankruptcy. You remain legally responsible for the debt. If payments later fall behind, the lender may repossess the car and pursue any remaining balance. - Keeping the car without reaffirming
Sometimes called a ride-through. You keep the car as long as payments are made. The lender may repossess if payments stop, but cannot sue for unpaid amounts. Payments are usually not reported to the credit report. - Redemption
In limited situations, you may pay the fair market value of the car in a lump sum and eliminate the remaining loan balance. Bankruptcy court approval is required. - Voluntary surrender
You may return the car to the lender. Any remaining balance becomes unsecured debt and may be discharged when you are receiving a discharge.
If a car loan has a co-signer, the co-signer remains responsible unless they also file for bankruptcy.
Chapter 7 does not provide a way to catch up missed mortgage or car payments. If you are behind and want to keep the property, Chapter 13 may be the only viable option.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a reorganization process. It allows individuals with regular income to repay debt through monthly payments over three to five years.
Chapter 13 bankruptcy is commonly used to:
- Stop foreclosure and pay mortgage arrears over time
- Keep a car even when payments are behind
- Protect equity that cannot be exempted in Chapter 7
Mortgage arrears are paid through a court-approved plan while regular mortgage payments resume after the bankruptcy petition is filed. Creditors must accept payments approved by the bankruptcy court.
There is no fixed limit on car equity in Chapter 13. However, higher equity can increase the amount that must be paid to unsecured creditors through the plan. Plans must be feasible, meaning income must support required monthly payments.
In some New York bankruptcy courts, loss mitigation programs may be available. These programs can allow homeowners to apply for loan modifications during a bankruptcy case. Availability depends on the court and does not guarantee approval.
Key Legal Considerations in New York
Secured creditors retain their liens unless the debt is addressed. Bankruptcy does not automatically eliminate mortgages or car loans.
Car exemptions protect equity, not the loan itself. Missed payments can still result in repossession unless handled through reaffirmation or a Chapter 13 plan.
Certain property received within 180 days after filing, such as inheritances or settlement proceeds, may become part of the bankruptcy estate if not exempt.
Every bankruptcy case requires attending a meeting of creditors. This meeting is typically brief but mandatory before receiving a discharge.
Bankruptcy relief is not unlimited. Time restrictions apply between discharges in different cases.
Common Mistakes People Make
- Waiting too long to file a chapter
- Assuming exemptions override secured creditor rights
- Filing a bankruptcy petition without analyzing equity, income, and timing
- Relying on non-lawyer advice instead of a bankruptcy attorney
These mistakes often reduce leverage and increase the risk of losing property.
How Aronow Law Handles These Cases
At Aronow Law, bankruptcy is treated as a legal strategy, not a form submission. Planning begins before anything is filed. Equity, income, exemptions, timing, and creditor behavior are reviewed first.
Cases are prepared with litigation readiness in mind. Trustees, unsecured creditors, and lenders are anticipated, not reacted to. This approach reflects real practice in New York bankruptcy court and aligns with the firm’s broader consumer protection work under the FDCPA and FCRA.
The goal is not simply receiving a discharge, but protecting stability and positioning clients for long term recovery.
Schedule your FREE 30-minute consultation with attorney Darren Aronow today.
Frequently Asked Questions
1. Can I keep my house in a New York bankruptcy?
Often yes. The answer depends on equity, income, exemptions, and whether you file Chapter 7 or Chapter 13.
2. Can bankruptcy help with keeping a car?
Yes. Keeping a car depends on equity, payment status, and how the loan is handled.
3. What happens to unsecured debt in bankruptcy?
Unsecured debt is often discharged, meaning unsecured creditors can no longer collect.
4. Will I have to go before a judge?
Most cases only require attending a meeting of creditors, not a formal court hearing.
5. When does a bankruptcy end?
A bankruptcy case typically concludes after all requirements are met and a discharge is issued.
