Long Island, Nassau County, Suffolk County - Bankruptcy General Information

Bankruptcy General Information

 

Bankruptcy allows individuals and businesses to eliminate, reduce and/or extend debt. We represent clients under all chapters of the bankruptcy code (Chapters 7, 13 and 11).


Click here to learn more about
Chapter 7, Chapter 11 and Chapter 13 Bankruptcy
What is Bankruptcy?
Who Can File for Bankruptcy Protection?
What Are the Potential Benefits of a Bankruptcy Case?
What Are the Alternatives to Bankruptcy?
What Are the Basic Types of Bankruptcy Cases?
Can a Credit Rating Be Rebuilt After a Bankruptcy Filing?
When can or should a bankruptcy case be filed?



A Bloomberg Video on Bankruptcy Myths

Alternatives to Filing a
Bankruptcy Case


One alternative to bankruptcy is a negotiated settlement with one's creditors. However, extreme caution needs to exercised here, since as recently reported in the New York Times, debt settlement companies that promises large reductions on the debt for allegedly only small amounts paid by the consumer are often disappointing and potentially fraudulent. As reported in the New York Times in several articles, the New York State Attorney General's Office has initiated an inquiry into the debt settlement industry based on their charging of large fees for relatively modest results.

Article Links:


(Title 11 of the United States Code, otherwise called the "Bankruptcy Code"

What Is Bankruptcy?


Federal bankruptcy law (Title 11 of the United States Code, otherwise called the "Bankruptcy Code") was enacted to allow the honest debtor, who is unable to meet his/her financial obligations, to obtain a fresh financial start or to reorganize his/her financial affairs. Bankruptcy law accomplishes this goal by providing debtors with a legally enforceable mechanism through which they may: (1) eliminate, reduce and/or extend most debt, and (2) protect themselves, subject to certain qualifications, during the bankruptcy case, from pursuit and harassment by their creditors. At the same time that bankruptcy law seeks to give relief to the debtor, it is also the goal of bankruptcy law to deal equitably with a debtor's creditors by: (1) protecting the creditors against fraud, (2) treating similarly situated creditors in an equal manner, and (3) providing the creditors with constant notice and an opportunity to be heard during the bankruptcy case.
Return to top

With only certain limited exceptions, an individual (alone or together as a married couple) or a business (a sole proprietorship, partnership, or corporation) may file for bankruptcy protection

Who Can File for Bankruptcy Protection?


With only certain limited exceptions, an individual (alone or together as a married couple) or a business (a sole proprietorship, partnership, or corporation) may file for bankruptcy protection. While debtors filing for bankruptcy protection are usually "insolvent" (meaning that they are either unable to pay their debts as they become due, or that their liabilities are greater than their assets), insolvency is not a requirement for a voluntary bankruptcy filing.
Return to top

By individuals to eliminate overwhelming credit card debt, medical bills, and other types of debt

What Are the Potential Benefits of a Bankruptcy Case?


A bankruptcy filing is often used as follows:

  • By individuals to eliminate overwhelming credit card debt, medical bills, and other types of debt;
  • By individuals or businesses to save their house or other real property from foreclosure or to save their car or other assets from repossession;
  • By businesses, under a cash flow squeeze to obtain a "breathing spell" from their creditors in order to reorganize their financial affairs or to sell off assets;
  • By individuals or businesses to extend or resolve burdensome tax liability; and
  • By businesses to stop eviction from leased real property or repossession of leased equipment.

The above uses of bankruptcy are not exclusive and a bankruptcy case can be used for other purposes. However, an individual or business contemplating filing a bankruptcy case should carefully review their goals with a bankruptcy attorney since bankruptcy law can be complex. A bankruptcy attorney will be able to determine whether the above goals can be achieved depending upon the particular circumstances of a situation.
Return to top

What Are the Alternatives to Bankruptcy?


While filing for bankruptcy protection is often an option chosen by debtors in resolving serious financial problems, there are also non-bankruptcy options that may provide an alternative to a bankruptcy filing. Some of these options involve out of court "workouts" or settlements with creditors. Other options entail answering the creditor's complaint (within 20 or 30 days) and defending against a creditor's pursuit of debt by either challenging the legitimacy of the debt or the methods by which the creditor has attempted to pursue the debt.

In some situations, non-bankruptcy options are available and preferable. However, a bankruptcy filing is often the most direct and powerful tool for a debtor to deal with serious financial problems. Nonetheless, it must be stressed that bankruptcy is not the solution for every problematic financial situation, and that in some cases, bankruptcy entails certain risks.
Return to top

A Chapter 7 liquidation, a Chapter 13 "wage earner's bankruptcy," and a Chapter 11 reorganization

What Are the Basic Types of Bankruptcy Cases?


There are three basic types of bankruptcy cases: A Chapter 7 liquidation, a Chapter 13 "wage earner's bankruptcy," and a Chapter 11 reorganization. These basic types of bankruptcy cases are named after their respective chapters in the Bankruptcy Code and are appropriate to different situations. A Chapter 7 bankruptcy case may be used to eliminate or "discharge" most debts of an individual or to liquidate a business. A Chapter 13 bankruptcy case may be used by an individual or by a sole proprietorship business, that has a regular income, in order to pay debt over a period of time, and is often used by debtors who seek to save their house or other real property from foreclosure or individuals with other problematic debt who do not choose Chapter 7 because of equity in their assets. A Chapter 11 reorganization case may be used by a business or an individual to reorganize its financial affairs while continuing to own, manage, and operate its property.

The mechanics, requirements, and rights involved in these different types of bankruptcy cases vary drastically and how they may apply to a particular case can also vary greatly depending on the particular circumstances and parties involved in a case.
Return to top

A bankruptcy attorney can advise persons filing for bankruptcy protection as to the methods by which they can rebuild their credit rating

Can a Credit Rating Be Rebuilt After a Bankruptcy Filing?


Persons and businesses contemplating filing for bankruptcy protection are often undergoing serious financial problems that have already, or will shortly in the future, appear on their credit reports. While a bankruptcy filing would also appear on a person's credit report, the bankruptcy filing has the advantage of dealing with and potentially solving some of the financial problems inherent in the situation. Therefore, after a bankruptcy filing, a person is often better situated to repay new creditors and in time can be a better credit risk than they were prior to the bankruptcy filing. A bankruptcy attorney can advise persons filing for bankruptcy protection as to the methods by which they can rebuild their credit rating.
Return to top

A bankruptcy attorney can advise persons filing for bankruptcy protection as to the methods by which they can rebuild their credit rating

When can or should a bankruptcy case be filed?


A bankruptcy case becomes an option when a person or family is unable to pay its bills as they become due. If this is a temporary problem and it is possible to catch up with unpaid bills, a bankruptcy case may not be necessary. But if the problem persists and the household is falling further behind, than the bankruptcy option should be considered. When credit cards and other bills are not paid for several months they start to call to demand payment. When they fail in resolving their debt they turn over the account to collection attorneys who start litigation to obtain a judgment. This process usually occurs between five (5) months to one (1) year. Therefore if you are overwhelmed with bills and do not expect your finances to improve in the coming months the bankruptcy option should be considered. If you have been in collections already and there are judgments threatened or already obtained against you, it is detrimental to your finances and to your credit rating to allow such difficulties to persist and a bankruptcy case to protect your wages, bank account, assets and credit rating becomes advisable in the majority of situations. The bankruptcy case will immediately protect you from your creditors and help you to discharge or eliminate the obligation to pay the vast majority of debts, such as credit cards, personal loans and hospital bills. In most cases you will be able to keep your cars and home. Please call us to discuss whether a bankruptcy case will help you with your financial difficulties.
Return to top


A Bloomberg Video on Your Credit Score

Return to top

Please call us at (631) 271-3737, or e-mail us at weiss@ny-bankruptcy.com for a free consultation
to discuss such legal options in greater detail.




Contact Long Island Bankruptcy
Return to the homepage of Long Island Bankruptcy