Public Employee Press

Debtors can still file under new bankruptcy law

MELS sets workshop for Oct. 25

There has been a great deal of publicity about new bankruptcy laws that took effect in October. Their effects, however, are not as bad as we had feared. Bankruptcy remains a viable option for those burdened with crushing debt.

Members who want to know more about their rights under the bankruptcy law can attend the Oct. 25 workshop on debt, credit and bankruptcy offered by DC 37’s Municipal Employees Legal Services.

Chapter 7 (or liquidation), the more common type of bankruptcy, is meant for individuals with little or no property. The debtor can “discharge” most obligations except debts such as student loans, alimony and child support, recent taxes and parking tickets. The debtor can retain clothing, furniture, pensions, life insurance policies, real estate up to $50,000, cars up to $2,400 and cash up to $2,500.

Chapter 13 bankruptcy involves paying back creditors over time. It is for people who are in foreclosure or behind on rent or car payments or with substantial property.

Under the new law, persons who are above their state’s median income undergo a “means test” to determine if their income is substantially higher than a schedule of standard expenses. If it is, the person may have to file a Chapter 13 rather than a Chapter 7 and make a monthly payment to creditors.

However, few bankruptcy filers — and almost no MELS clients — are actually being forced into Chapter 13.

The new law made the bankruptcy process harder, but it has not prevented our members from filing. The filing fee is now $299 for Chapter 7. Debtors need more documents, such as tax returns and pay stubs, and must participate in credit and debt management counseling, usually by telephone or on the Internet.

If you think you may want to file for bankruptcy, call the MELS Screening Unit at 212-815-1111 for an appointment.

Members considering bankruptcy face difficult legal, emotional and practical issues. Attorneys and Social Workers from MELS, the DC 37 Health and Security Plan’s legal service, will provide information and answer your questions on the law’s effect on working people, when it makes sense to file for bankruptcy, dealing with budget and debt problems, using credit wisely and responding to debt collectors.

Space is limited, so please register by returning the coupon as soon as possible.

— Sheldon Barasch,
Supervisor, MELS Debt/Bankruptcy Unit