For residents living in Brooklyn, New York, if they are looking to file for bankruptcy, they must do so at the Bankruptcy Court located in the Eastern District of New York which also happens to be located in Brooklyn. The federal Bankruptcy Courts have exclusive jurisdiction over bankruptcy cases. Accordingly, a bankruptcy petition can only be filed in federal court and not state court. The fundamental purpose of bankruptcy law is to give qualified debtors the opportunity to obtain a fresh start by relieving the debtor of most debts. While pro-se debtors must go to the Bankruptcy Court to file their petition, those debtors who file with an experienced bankruptcy attorney will usually have their petition filed with the court electronically online.
Typically, a debtor’s residency determines the jurisdiction in a bankruptcy case. In other words, you typically need to file a petition in the district in which you reside. In some rare circumstances, a debtor will file for bankruptcy in the federal district that is either the location of their principal place of business, or where the majority of their assets are located. The Bankruptcy Court for the Eastern District of New York is divided into two divisions: Brooklyn and Islip. The Bankruptcy Court for the Brooklyn Division is in Downtown Brooklyn. It covers bankruptcy cases for debtors that live in Brooklyn, Queens and Staten Island. The Islip division covers cases that are filed in Long Island for both Nassau and Suffolk Counties.
Filing for Chapter 7 Bankruptcy in Brooklyn
When a debtor files for Chapter 7 bankruptcy in Brooklyn, an automatic stay goes into effect, and all debt collection activity must stop (including garnishments, frozen bank accounts, and foreclosure sale dates). The debtor is required to appear at a 341(a) hearing with the bankruptcy Trustee assigned to their case. If the debtor has any non-exempt assets (for example, a personal injury case worth more than the exemption, non-exempt real estate equity, non-exempt money in the bank, etc.), those assets or nonexempt portion thereof, may be liquidated and the proceeds are administered by a bankruptcy trustee, who will pay the claims filed by creditors in the case. However, please note that the vast majority of Chapter 7 bankruptcy cases are considered no asset cases and accordingly, will not have a distribution to pay creditors. At the end of the bankruptcy process, the debtor’s dischargeable debts are eliminated, and the debtor receives a fresh financial start.
Filing for Chapter 13 Bankruptcy in Brooklyn
Chapter 13 bankruptcy is where a debtor proposes a repayment plan to pay their debts over a period of up to 60 months which must be approved by a Bankruptcy Judge. Depending upon the circumstances of the case, a debtor may only have to repay a small percentage of their unsecured debt back. However, debts for secured claims, such as mortgage arrears, and priority claims, such as taxes or child support arrears, must be paid in full. In a chapter 13 bankruptcy case, the debtor is required to make monthly payments to a Bankruptcy Trustee and the trustee pays the claims of the creditors in the case. Chapter 13 bankruptcy is only available to those with sufficient disposable income to afford the payment required in their case. The plan that the debtor proposes must be feasible and the creditors must receive at least as much as if the debtor filed for Chapter 7 bankruptcy. At the end of the plan, the debtor receives a discharge of their debts and there are no negative tax consequences from any unpaid debt that is eliminated.
Local Standards for Brooklyn, NY
If a debtor is subject to the Chapter 7 Means Test, a budget test within the Bankruptcy Code, the Office of United States Trustee provides local standards (based on IRS living standards) that are to be used by residents of Brooklyn in the Means Test. As an example, the current Local Housing and Utilities Standards for Kings County (as of 5/15/2023) are as follows:
Household of 1: Utilities $754 and Mortgage/Rent $2,360
Household of 2: Utilities $885 and Mortgage/Rent $2,772
Household of 3: Utilities $933 and Mortgage/Rent $2,921
Household of 4: Utilities $1,040 and Mortgage/Rent $3,257
Household of 5 or more: Utilities $1,057 and Mortgage/Rent $3,310
As evidenced, these expenses may not actually reflect what is often the real cost of housing and utilities for living in Brooklyn. If a debtor fails the Means Test, they are restricted to filing for Chapter 13 bankruptcy.
Remote Hearings
Since the Covid pandemic, almost all hearings in the Brooklyn division for the Eastern District of New York are done remotely. These remote hearing are done either telephonically or via the Zoom video conference platform. All 341(a) Meetings of Creditors in the Eastern District are being held telephonically and only a few judges require video appearances via Zoom.
Contact the Law Offices of David I Pankin, PC
The Law Offices of David I. Pankin, P.C. has been helping Brooklyn residents file for bankruptcy for over 25 years. If you are contemplating bankruptcy, please do not hesitate to contact our office to arrange a free consultation with an experienced bankruptcy lawyer. You can contact our office at 888-529-9600 or by using our easy online contact form.
