Wipe the Debt, Keep the House,
in About Four Months

Your Nassau Chapter 7 case starts when the petition, schedules, and statement of financial affairs are filed with the bankruptcy court. Those documents disclose your assets, liabilities, income, and expenses as of the filing date, and the instant they are docketed the federal automatic stay takes hold.

The stay halts wage garnishment and bank levies, freezes a debt collection lawsuit already moving through Nassau County District Court, and makes it illegal for collectors to keep calling. For most Chapter 7 filers that is the turning point: the phone goes quiet, the paycheck comes home whole, and there is finally room to breathe while the case runs to discharge.

Before filing, you complete a short pre-filing credit counseling session, by phone or online, with a counselor who reviews your finances privately. We gather the documentation for your file first, including proof of income, tax returns, and bank statements, so your creditors and debts are listed correctly on your schedules.

When a foreclosure sale is the emergency rather than unsecured debt, the automatic stay pauses it but does not cure the arrears, so a secured lender not receiving regular post-petition payments can move for relief from the stay. In that situation we will tell you plainly if a repayment plan is the better tool for saving the home.

Closely related to the equity in your assets is the issue of “avoidable transfers.” These can be “preferences,” meaning payments to ordinary creditors made within 90 days of filing, or within one year for “insiders” (relatives or close associates). They can also be “fraudulent transfers,” meaning transfers for less than reasonable value within six years of filing, usually made to relatives or close associates. Avoidable transfers are not always obvious, and a Nassau household paying back a family member or moving property before filing can trigger one without realizing it, which is exactly why we map your recent transactions first.

Chapter 7 wipes out qualifying unsecured debt, but most student loans, recent taxes, and child and spousal support survive. There are narrow exceptions: “undue hardship,” which is extremely difficult to prove, can allow a discharge of student loans, and income tax older than three years, where the return was filed at least two years before the bankruptcy, may be dischargeable. Sales and withholding taxes, as fiduciary taxes, are never dischargeable. Support obligations are generally not dischargeable, with a very narrow exception for a settlement as distinguished from a payment obligation. Certain acts also except debt from discharge, such as fraud, a crime, a malicious injury, or the concealment of assets. To object to a discharge, a creditor or trustee generally must file an adversary proceeding within 60 days after the first Nassau creditors’ meeting, which is a contested proceeding within the bankruptcy case.

The goal in each Chapter 7 case is the “discharge” order, or legal forgiveness of the debt, so you get a “fresh start” and can rebuild your credit. The discharge makes permanent what the automatic stay protected temporarily, so most of your qualifying unsecured debt is now legally forgiven. The usual exceptions apply: most student loans, most taxes, and most child or matrimonial support obligations. Most Nassau clients discharge all of their unsecured debt, though you can voluntarily keep or “reaffirm” certain debts.