The trade at the center of the case
Chapter 7 bankruptcy is a liquidation case: a court-appointed trustee reviews what you own and may sell property that is not protected, and in exchange many of your debts are discharged. In a large share of consumer cases nothing is actually sold, because exemptions cover what the household owns. Exemptions are the rules that decide which property stays with you, and in New York a filer generally chooses between the state set and the federal set rather than combining them. Some obligations survive the discharge, such as domestic support, and student loans are difficult to eliminate. A company can also file under Chapter 7, but a corporation or LLC does not receive a discharge; the case is about winding it down.
What the trustee and the court will look at
Individuals whose debts are mostly consumer debts face a means test that compares household income against figures set for your state and household size. Passing it is not automatic when income is near the line, and the calculation depends on actual pay records rather than estimates. Before filing you complete a credit counseling session with an approved provider, and after filing you attend a meeting where the trustee asks questions under oath. Gather recent pay statements, tax returns, bank statements, vehicle titles, and a complete list of what you owe and to whom. Transfers of money or property to relatives, and large payments to a single creditor before filing, deserve a conversation before the petition is prepared, because a trustee can ask questions about them.
Decisions made before anything is filed
Timing is often the first real decision: a recent tax refund, an expected bonus, or a pending injury claim can change what is exposed. We also look at whether a prior bankruptcy limits when a new discharge is available. If you have a house with equity or a car loan you want to keep, we compare Chapter 7 with Chapter 13 on those specific assets rather than in the abstract. Co-signers matter too, since a discharge protects you but not the person who signed alongside you. You leave the first meeting knowing whether Chapter 7 fits, what it would likely touch, and what still has to be confirmed.
