I am a consultant in New York and my income varies. In some periods, I make about $5,000 per month while at other times I make about $3,000 per month. My wife, who makes about $5,000 per month, and I are separated and no longer live together. I own a cooperative apartment with my wife, which has about $90,000 in equity. I have over $50,000 in debt. Under the new bankruptcy laws can I file for Chapter 7 bankruptcy? If I do file for Chapter 7 bankruptcy would I risk losing my cooperative apartment in New York? (NY)

The means test is based on the average of the last six months income of the filer prior to filing for bankruptcy. If the filer does not live with their spouse, the spouse’s income is not included. Otherwise, under New York Bankruptcy Law, the spouse’s income would be included even if the spouse did not file. Under such circumstances filing for bankruptcy after a period of time in which the filer was making less per month would be the most prudent course of action, provided the median income generated from the means test would be less than the median income in New York. Under New York Bankruptcy Law, establishing the filer’s income fluctuates on a regular basis might provide a special circumstance that can be utilized to rebut the means test presumption of abuse.

In the case of the cooperative apartment, under the new bankruptcy laws the exemption has been increased in New York to $50,000. A cooperative apartment owned jointly by the filer and spouse would entitle the filer to an exemption equal to one-half the total equity in the cooperative apartment. If this is less than the $50,000 exemption allowed under New York Bankruptcy Law the filer would not risk losing your apartment. A new appraisal of the cooperative apartment’s value should be obtained prior to filing bankruptcy in New York.

(Courtesy of Association of the Bar of the City of New York)