Long Island Bankruptcy Lawyer

Bankruptcy is a federal court-administered process that legally eliminates, reduces, or reorganizes debt — depending on the chapter you file under and your specific financial situation. Because the resolution is imposed by the Bankruptcy Court, the outcome is generally more predictable than negotiation or litigation. For most consumer cases, Chapter 7 fully discharges qualifying debts; Chapter 13 reorganizes them into a five-year repayment plan. Chapter 11 and Subchapter V handle business reorganizations.

It depends on your income, household size, types of debt, assets, and goals. Chapter 7 is for individuals and corporations whose income is below the New York median and whose monthly budget shows a negative cash flow. Chapter 13 is the “wage earner’s bankruptcy” for individuals with regular income who need to reorganize secured debts (mortgage arrears, car loans) or non-dischargeable debts. Chapter 11 is for larger businesses or individuals with higher debt who need flexibility. Subchapter V is a streamlined Chapter 11 for actively-operating small businesses. We run every potential client through Means, Budget, Asset, Good Faith, Avoidable Transfer, and Debt Limit tests to determine which fits.

The Automatic Stay is one of the most powerful protections in bankruptcy — it kicks in the minute the bankruptcy petition is filed. It immediately halts most creditor actions: foreclosure sales, vehicle repossessions, bank restraints, wage garnishments, collection lawsuits, and eviction actions. The stay is not unconditional — secured creditors and landlords can move to lift it — but for emergency situations (a foreclosure sale on the calendar, a paycheck about to be garnished) we routinely expedite filing so the stay takes effect before the creditor action.

Timeline varies by chapter. A typical Chapter 7 with no asset issues lasts about four months from petition to discharge order. Chapter 13 requires a confirmed plan and lasts three to five years — the discharge comes after the final plan payment. Subchapter V can be confirmed much faster than a traditional Chapter 11 because it does not require a disclosure statement or formal voting. Complex matters — adversary proceedings, contested motions, appeals — can extend any timeline.

Most clients keep their property. New York exemptions protect a substantial portion of home equity, retirement accounts (401(k), IRA), tools of the trade, household goods, and a vehicle up to certain values. In Chapter 13, you can cure mortgage arrears over the life of the plan to save your home from foreclosure. Retirement accounts are generally fully protected in both Chapter 7 and Chapter 13. We run an Asset Test in every case before filing so there are no surprises — if there is unprotected equity, we strategize how to handle it (or whether a different chapter is better).

The 341 Meeting — named after Section 341 of the Bankruptcy Code — is a meeting where the bankruptcy trustee, and possibly creditors, can ask you questions about your finances under oath. Post-COVID, most 341 Meetings are conducted by Zoom, with our clients coming to our office where our attorneys prepare them beforehand and represent them during the meeting. The trustee’s job is to marshal assets — checking for unprotected equity, potential lawsuits the estate could pursue, avoidable transfers, and whether your income/budget actually qualify you for the chapter you filed.

Most debts are dischargeable. The most common exceptions: most government fines, most student loans (without showing undue hardship), recent income taxes, certain debts incurred by fraud or misrepresentation, domestic support obligations (alimony, child support), and debts arising from willful and malicious injury. Even within these categories there are exceptions and strategies; for example, older income taxes can be discharged if specific timing rules are met. We review every debt during your free consultation to determine what can and cannot be discharged.

Yes — in extreme situations. Creditors or the Trustee can object to the discharge of all the debtor’s debt, or to the dischargeability of a specific debt, based on misrepresentation, lack of cooperation, unexplained loss of assets, abusive spending, avoidable transfers, or excessive income. These contests typically proceed as Adversary Proceedings — full court cases within the bankruptcy with separate discovery and sometimes a trial. Our office defends clients in adversary proceedings and contested motions throughout the bankruptcy.