How To File Bankruptcy for Free in New York

Collect Your New York Bankruptcy Documents

The first step in preparing to file your bankruptcy case is collecting your bankruptcy documents. These are the documents you’ll need to fill out your bankruptcy petition. 

Must-have documents include:

• The last two years of tax returns. 

• Paycheck stubs for the last six months.

• Bank statements that include the date of filing.  

There are also some documents that are nice to have, including:

• Your credit report: It will be easier to report all your debts for the bankruptcy paperwork if you have your credit report in hand. You’re entitled to a free copy of your report from each of the three major credit bureaus annually. If you are using Upsolve’s tool, Upsolve will pull your credit report for you.

• Recent collection notices: Gather all collection notices you’ve received in the last 90 days. This might include credit card bills, student loan statements, or medical bills. This will be helpful since some of them may not yet appear on your credit report. 

Older bank statements: Bank statements from the last six months to a year can be useful for painting a picture of your expenses and creating a post-bankruptcy budget.

Take Credit Counseling

To file a bankruptcy petition, you’re required to complete a credit counseling course. This course takes about 1–2 hours, and you can take it online, by phone, or in person, depending on where you live. You need to take the course from a pre-approved provider. There is a fee but you can apply for a waiver if needed. 

You have to complete the course at some point in the six months (180 days) before you file your bankruptcy with the court. You’ll receive a certificate of completion when you finish the course. Hold onto this certificate as you’ll need to submit it to the bankruptcy court along with the rest of your bankruptcy forms when you file.

Complete the Bankruptcy Forms

Most of the bankruptcy forms you’ll need to fill out are standard across the country. These forms are available online as free fillable PDFs. If you work with a bankruptcy lawyer, you’ll fill out a questionnaire, and they’ll fill in your bankruptcy forms based on that. If you use Upsolve’s tool, you’ll fill out a questionnaire and our software will fill in your forms for you. 

Regardless of which process you choose, make sure to take your time and be as thorough as you can when answering the questions. You’ll be swearing to the truth of your statements when you sign these documents. There’s a penalty if you misrepresent the facts, which is considered perjury.

Get Your Filing Fee

The court filing fee for a Chapter 7 bankruptcy is $338. This fee can be waived if you earn below 150% of the poverty guidelines (see the New York Fee Waiver Eligibility table below). 

If you’re not eligible to apply for a fee waiver, but you’re having a hard time coming up with the fee all at once, you can file an application to pay in installments. You choose the size of the four installment payments you’ll make totaling $338. The last payment is due within 120 days of your filing. 

Paying with an installment plan allows you to file your bankruptcy case faster, which is helpful if you’re facing wage garnishment or other serious collection measures. As soon as you file your case, the court issues an automatic stay, which prohibits your creditors from taking any further action against you. If you don’t make your installment payments completely and on time, the court can dismiss your case. This is why you should wait to file until you have the full filing fee if possible. 

All New York State bankruptcy courts accept money orders or certified checks. You can purchase a money order for $1.25 at a U.S. Post Office. The Eastern District also allows filers to pay online through Pay.gov. The Southern District usually accepts cash payment in person at the Manhattan office, but this isn’t currently allowed because of COVID-19. The Western District accepts cash at the Buffalo office.

Prepare To Submit Your Bankruptcy Forms

You can skip printing your forms if you’re planning to e-file your documents online. If you have a bankruptcy lawyer assisting you, they’ll review each form with you and show you where to sign. Then, they’ll submit everything to the bankruptcy court via the court's electronic filing system. If you use Upsolve’s free filing tool, you’ll get your documents in a packet as a single download, complete with dividers that flag each signature page.

If you submit your filing without an attorney, this is where your district can make a big difference. The e-filing rules vary widely depending on where you live in New York State.

File Your Forms With the New York Bankruptcy Court

You can go to any of the courts located in your district to file your forms, even if your case is ultimately assigned to a different division within the district. In response to the coronavirus pandemic, most courts have restricted hours or are offering alternative filing options. Check what your court is doing before planning your trip to the courthouse.

Mail Documents to Your Trustee

You’ll receive the name and contact information for your bankruptcy trustee a few days after you file your bankruptcy case. The trustee's job is to administer your case and make sure all your information is correct. They also review the circumstances surrounding your case to determine what (if anything) your creditors will be paid. You’ll meet your trustee in person at your 341 meeting, also known as the creditors’ meeting.

You must provide a copy of the following to your trustee at least seven days before your 341 meeting:

• Your two most recent federal income tax returns.

• A bank statement covering the date of filing. This shows the trustee how much money you had on the day you filed.

Additionally, some trustees mail out a letter requesting other documents, such as paycheck stubs. Keep an eye out for any such request from your trustee, and make sure you follow their instructions on how and when to submit everything to the trustee's office.

Take a Debtor Education Course

You had to take the credit counseling course to understand the consequences of bankruptcy before filing your case. After you file, you have to take a debtor education course. This course focuses on financial management tools and aims to help you take full advantage of your post-discharge fresh start.

The course itself only takes about 1–2 hours. Like the credit counseling course, it can be taken online, over the phone, or in person. If you were happy with the company you used to complete the first bankruptcy course, find out if it’s approved to offer the financial management course in New York as well. If so, you can go through them again for this second course. You may even be able to get a discount for taking both classes with them. If not, check out the list of providers approved to offer this course for New York bankruptcy cases.

You must complete this course within 60 days of filing your petition. Once you complete it, you’ll receive a certificate, which you have to submit to the court before you can get your bankruptcy discharge. If you don’t submit the certificate, the court can close your case without discharging your debts.

Attend Your 341 Meeting

Everyone filing bankruptcy in New York has to attend a meeting of creditors. This is also known as the 341 meeting because that’s the section of the Bankruptcy Code that requires it. The same notice that has your trustee's contact information will also tell you the date and time of your 341 meeting. As a COVID-19 precaution, most 341 meetings are currently being held over the phone or by video. 

It’s completely normal to feel nervous about your meeting, but these meetings are fairly routine. Your trustee will confirm your identity and ask you some questions about the information in your bankruptcy forms and about your general financial situation. You don’t need to do much to prepare, though it’s helpful to review all of the bankruptcy forms you filed with the court to refresh your memory before the meeting.

If you find yourself worried about what could go wrong, focus on the light at the end of the meeting tunnel: the discharge of your debts!

Deal With Your Car

Filing bankruptcy in New York gives you the opportunity to deal with your car in a way that makes sense for you. If you own your car outright, you can keep it so long as it’s covered by an exemption. Exemptions allow you to protect some of your property. (More on this later.) The motor vehicle exemption in New York is $4,000.

If you’re leasing your car and you’re current on your payments, you can keep the lease and keep driving the car. If you want don’t want to keep the lease or can’t afford to, you must return the car by “rejecting” the lease. 

If you have a car loan and you’re struggling to make the payment every month and/or the balance you owe on the car loan far exceeds the actual value of your vehicle, it may make sense to give the vehicle back to the bank. 

If you like your car, can afford the monthly payment, and don’t owe a lot more than your car is worth, it may make sense to keep everything the way it is by signing a reaffirmation agreement with the lender. Since this means that you’ll continue to be responsible for the full loan balance, you should only do this if the car is in decent condition and you can easily make the payment every month. 

You’ll be able to buy a car after bankruptcy if you need to. But you may want to wait a while to give your credit time to recover. Waiting will give you a better shot at a good deal if you need financing.