Bankruptcy Solutions – Bankruptcy Attorneys

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Bankruptcy Lawyers Suffolk & Nassau Counties

Bankruptcy allows individuals and businesses to eliminate, reduce and/or extend debt. Our law office represents clients under all chapters of the bankruptcy code (Chapters 7, 11 and 13) and Adversary Proceedings and Bankruptcy Appeals.

• 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?
• What Are the Qualifications for a Bankruptcy Case?
• What are: a) an Adversary Proceeding; b) a Contested Motion; and c) a Bankruptcy Appeal?
• Can a Credit Rating Be Rebuilt After a Bankruptcy Filing?
• When Can or Should a Bankruptcy Case Be Filed?
• How Has Covid-19 Affected Bankruptcy Law and Practice?
• Why Use Our Law Office for Your Legal Needs?

What Is Bankruptcy?

The purpose of federal bankruptcy legislation, sometimes known as Title 11 of the United States Code or the “Bankruptcy Code,” is to provide an opportunity for financial reorganization or a fresh start for legitimate debtors who are unable to fulfill their obligations. This objective is achieved by bankruptcy law, which gives debtors a legally binding tool that allows them to: (1) eliminate, reduce, reorganize, and/or extend the majority of their debts; and (2), subject to certain restrictions, shield themselves from creditors’ harassment and pursuit during the bankruptcy case. In addition to trying to provide the debtor with relief, bankruptcy law also aims toThe aim of bankruptcy law is to treat a debtor’s creditors fairly through the following means: (A) safeguarding them from fraud; (B) treating creditors in similar circumstances equally; (C) establishing a process by which the debtor must reveal details about their assets, income, and debts in order to confirm their eligibility for a case; and (D) giving creditors regular notice and a chance to be heard during the bankruptcy case.

Who Can File for Bankruptcy Protection?

An individual (by themselves or as a married couple) or a business (a sole proprietorship, partnership, or corporation) may file for bankruptcy protection, with very few exceptions. Although most people who file for bankruptcy protection are “insolvent,” which is defined as having more liabilities than assets or being unable to pay their debts on time, being insolvent is not a prerequisite for filing for bankruptcy voluntarily.

What Are the Potential Benefits of a Bankruptcy Case?

When a bankruptcy case is filed, a “automatic stay” is immediately put in place to shield the petitioner from creditors. Most debts in a Chapter 13 or Chapter 11 case can be cured, decreased, and/or reformed under a plan; in a Chapter 7 case, most debts can be removed by the bankruptcy “discharge.” There is a forum to go to if there are disagreements or concerns regarding a case because bankruptcy cases are managed by a federal bankruptcy court that is expressly authorized to handle bankruptcy matters.Nonetheless, after a case is filed, creditors will stop all collection efforts and honor the bankruptcy stay and discharge. They will also record the discharge on the debtor’s credit report.
The following uses of filing for bankruptcy are common:

• by people to get rid of excessive credit card debt, hospital expenses, and other debt;
• by people or companies to prevent the foreclosure of their real estate or home, or to prevent the repossession of their vehicle or other assets;
• enterprises in a cash flow crunch to ask creditors for a “breathing spell” so they can sell off assets or restructure their finances;
• by people or companies to extend, settle, and/or restructure heavy sales and withholding tax obligations, mortgage or real estate tax arrears, and
• by companies to prevent the seizure of leased equipment or the eviction from leased real estate.

Bankruptcy can be used for purposes other than those listed above; there are additional uses for bankruptcy cases. However, because bankruptcy law can be complicated, a person or company thinking about filing for bankruptcy should carefully discuss their objectives with a bankruptcy counsel. Based on the specifics of each case, a bankruptcy lawyer can decide whether or not the aforementioned objectives can be met.

What Are the Alternatives to Bankruptcy?

Although declaring bankruptcy is a common solution for those facing severe financial difficulties, there are other options available to them that can serve as a substitute for filing for bankruptcy. A few of these alternatives entail extrajudicial discussions that could result in settlements or loan adjustments with creditors. Other possibilities include arguing against a creditor’s pursuit of debt by contesting the validity of the debt or the means by which the creditor has attempted to pursue the debt, as well as responding to the creditor’s complaint (within 20 or 30 days).Options other than filing for bankruptcy exist and are sometimes better. However, for a debtor facing significant financial difficulties, declaring bankruptcy is frequently the most effective and straightforward course of action. However, it is important to emphasize that not all difficult financial situations may be resolved by bankruptcy, and that there are hazards associated with bankruptcy in some circumstances.
If the majority of your debts are unsecured, such as credit card debt, you may be able to reduce the amount owed by negotiating with your credit card companies. This is especially true if your credit card company is one like ours that can file for bankruptcy. Payment plans do not offer the same discounts as lump sum agreements, although both can have favorable outcomes.

If the majority of your bills are credit card debt or other unsecured debt, negotiations with your credit cards,particularly by a company like ours, which is capable of filing for bankruptcy and can effectively reduce the debt. Payment plans do not offer the same discounts as lump sum agreements, although both can have favorable outcomes. Additionally, we can litigate with unsecured creditors, particularly in cases where there might be a disagreement or when we require more time or power to get a favorable resolution. When it comes to paying off debt, bankruptcy typically offers more assurance and speed. However, in situations where a client may not be eligible for bankruptcy (due to income or asset limitations in Chapter 7 or due to debt limitations in Chapter 13, as explained further below), negotiated agreements or litigation defense may be preferable if the client does not have a general debt problem and only has issues with one or two isolated creditors. Additionally, some clients might decide to try to avoid filing for bankruptcy; in these cases, negotiation methods can offer enough relief without the necessity for filing, even though they are less effective than filing for bankruptcy. negotiates most debts in the interest of our clients, such as credit card, tax, mortgage, as well as other debts.

What Are the Basic Types of Bankruptcy Cases?

Bankruptcy cases can be of three fundamental types: In a liquidation bankruptcy, Chapter 7 is the most typical type. A Chapter 11 business reorganization is filed under Chapter 11, which is mostly used by enterprises. Chapter 13, also commonly used by people, is a “wage earner’s bankruptcy.” These fundamental categories of bankruptcy cases are suitable for various circumstances and are called after the corresponding chapters in the Bankruptcy Code. A Chapter 7 bankruptcy case can be used to liquidate a corporation or to erase or “discharge” the majority of an individual’s obligations.In order to pay off debt over time, a person or a sole proprietorship business with a regular source of income may file for Chapter 13 bankruptcy. This type of case is frequently filed by people with other problematic debt who do not qualify for Chapter 7 due to excess income or equity in their assets, as well as by debtors trying to prevent foreclosure on their home or other real property. A company or an individual may utilize a Chapter 11 reorganization case to restructure its financial obligations while keeping ownership, control, and operation of its assets.

The procedures, conditions, and rights associated with these various bankruptcy case types fluctuate significantly, and their applicability to a given situation might also differ substantially based on the specific facts and persons involved.

What are the Qualifications for Bankruptcy?

Chapter 7, Due to its ability to “discharge” or erase debt, Chapter 7 bankruptcy cases are the most common ones filed. But because Chapter 7 has requirements that dictate whether a client can and/or should bring a case under Chapter 7, it is not accessible to all parties. The primary criterion involves comparing the client’s income level to the median income of a family with the same size in New York State, which is based on family size, or the number of dependents in a household. The goal of means testing is to ascertain whether a client makes more money than the average for their A household’s eligibility to submit a lawsuit in the State of New York is based on the necessary expenses, which are ascertained by their real demonstrable spending and limited by certain IRS rules utilized in such testing. The exam examines a client’s earnings, allowable expenses, and essential outlays for the six months leading up to the bankruptcy petition. When examining a client’s actual expenditure in terms of net income less regular expenses (without taking into consideration payments on debts the bankruptcy has incurred), a negative budget as well as negative disposable income under the means test are required in order to be eligible for Chapter 7. situation would end). A client may still be eligible for Chapter 13 relief and may even be able to pay off a small portion of their debt over the course of a five-year plan if they meet the requirements of both the means test and the budget test. However, at that point, they are not permitted to apply for Chapter 7. Chapter 7 contains additional non-official restrictions regarding the equity in the client’s assets in addition to official, statutory constraints on the income level. Even while liens and exclusions may be able to safeguard such equity, if a client has a lot of unprotected equity in their assets, such as a home or car,and/or a right to money via an inheritance, a court case, or a tax refund—may be subject to a sale by the Chapter 7 trustee. Therefore, if a possible asset has a significant amount of exposed equity, a client might wish to consider filing under Chapter 7.

In contrast to Chapter 7, Chapter 13 and 11 do not have an official income cap or an unofficial asset/equity value limitation, making them far more accessible to those filing. Chapter 13 provides for a five-year plan in which a person with positive discretionary income and/or equity in their assets can file for bankruptcy. During this time, the debt, or a portion of it, can be paid off without incurring additional interest or fees from the creditors. However, Chapter 13 places a cap on the total amount of debt—$1,395875 for secured debt and $465,275 for unsecured debt as of April 1, 2022—but because these limits are so high, they typically only apply to those who are investing in real estate, businesses, or who owe extraordinarily large mortgages. Individuals who are impacted by the Chapter 13 debt limits may file under Chapter 11, which is intended for cases involving greater debt loads and is typically used by companies or individuals with higher debt burdens. Corporations can only file under Chapter 7 to liquidate debt or Chapter 11 to reorganize debt; they cannot file under Chapter 13, which is only available to individuals, even with modest amounts of debt. Compared to Chapter 13, Chapter 11 is far less organized and can address various corporate reorganizations in quite varied ways. The most current inclusion of With provisions designed to give small businesses corporations that fall between those of a traditional Chapter 11 case and a Chapter 13 case a reorganization option, Subchapter V to Chapter 11 for small businesses allows Chapter 11 cases for small corporations to proceed more effectively, economically, and quickly.

In certain situations, choosing which bankruptcy code chapter to apply may necessitate careful planning with a bankruptcy attorney. Give us a call to schedule a free consultation.

What is an Adversary Proceeding?

An adversary bankruptcy proceeding is a court lawsuit that is brought by a creditor, the debtor, or a bankruptcy trustee to resolve a significant matter that needs to be decided by the bankruptcy court. Objections to the debt’s dischargeability based on claims of fraud or misrepresentation by the debtor about the debt are among the issues raised by creditors. The Bankruptcy Trustee’s concerns include contesting the bankruptcy discharge in its entirety, stopping a purportedly fraudulent or favorable transfer, and turning over an asset.

What is a Contested Motion?

An appeal of a decision that we believe may have been made

What is a Bankruptcy Appeal?

An appeal of a decision that we believe may have been made incorrectly is made from the U.S. Bankruptcy Court to the U.S. District Court. This process is known as a bankruptcy appeal.

Can a Credit Rating Be Rebuilt After a Bankruptcy Filing?

Individuals and companies who are thinking about declaring bankruptcy frequently have major financial issues that have already been reported on their credit reports or will soon. A person’s credit record would also be affected by filing for bankruptcy, but the filing has the benefit of addressing and possibly resolving some of the underlying financial issues. As a result, a person who files for bankruptcy is frequently in a better position to pay back new creditors and eventually may represent a lower credit risk than they did before filing.

Any financial activity you do has the potential to impact your credit report. The majority of clients who contact us to inquire about bankruptcy already have numerous entries on their credit report that indicate their financial difficulties. The client’s credit has already been impacted by such entries, and although filing for bankruptcy will reveal that the client has financial difficulties, it will also help the customer by assisting in the repayment of the debt that led to those difficulties. In essence, the customer is now free from their onerous commitments from the bankruptcy proceedings.focus on restoring their credit, which might take anywhere from six months to two years. For ten years, the client’s credit report will bear the notice of the bankruptcy filing; nevertheless, this is also the period of time that any judgment entered into court will be on the record. As a result, a bankruptcy filing differs from judgments on your credit record in that it indicates that you have already discharged your troublesome debt obligations and that the period of financial hardship has passed. However, a judgment states that your debt obligation is continuing, and that lenders would be reluctant to grant you fresh credit if your circumstances are too hazardous and unclear. Therefore, if you have debt that is either in collections currently or soon to be, filing for bankruptcy can help you eventually rebuild your credit by removing the cause of your financial difficulties and deleting or reorganizing problematic debt.

People who are filing for bankruptcy protection might get advice from a bankruptcy attorney on how to improve their credit score.

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 bills are falling further behind, than the bankruptcy option should be considered. When credit cards and other obligations are not paid for several months, they start to call and send letters demanding payment and threatening legal action. When creditors, after protracted efforts, are unable to get paid for monies owed, they turn over the delinquent account to collection attorneys who start litigation to obtain a judgment. This process usually occurs after five (5) months to one (1) year of payment delinquency. 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 becomes a strong option to protect one’s wages, bank accounts, assets and credit rating. The bankruptcy case will immediately protect the person filing from their creditors and help them to discharge or eliminate the vast majority of debts, such as credit cards, personal loans and hospital bills. In most cases the person filing will be able to keep their cars, home, bank accounts and other assets. Please call us to discuss whether a bankruptcy case will help you with your financial difficulties.

Whether or not to file for bankruptcy is a personal decision. However, there are many ways in which you can tell whether it is a strong option. Firstly, if your debts are overwhelming and clearly disproportionate to your income, bankruptcy should definitely be considered. Secondly, if you are presently vastly behind with your debts and see no way to catch up, once again, bankruptcy becomes a strong option. Thirdly, if you are barely current with your debts, but realize that you are juggling important bills, credit cards, mortgage payments, etc., bankruptcy should again be looked at as a possible option because you do not want lower priority debt, such as credit card bills, to interfere with higher priority debt such as mortgage and car payments. Lastly, if you realize that your payments are merely buying you time, that in the long run there is no way to take care of all the debt, and that your payments are being wasted on debt that will with time go bad anyway, than bankruptcy again should be considered.

The best way to approach the issue is to seek a free consultation. Our office offers a free consultation by phone or in person at our Melville law office, and we can certainly review with you your options and whether a bankruptcy case is the best way to proceed.

How has Covid-19 Affected Bankruptcy Law and Practice?

The Coronavirus Aid, Relief and Economic Security (“CARES”) Act which was passed in by the United States Congress in the early part of the 2020 Coronavirus pandemic and signed into law by the President, on March 27, 2020, included not only emergency assistance to families and businesses affected by the pandemic but also some substantive changes to the Bankruptcy Laws, as follows:

CHAPTER 11 and COVID-19 – The CARES Act, passed by Congress and signed by the President at the end of March 2020, included changes to the U.S. Bankruptcy Code which were intended to help deal with the Covid-19 pandemic. One of the major changes was the temporary expansion of the use of Subchapter 5 of Chapter 11 of the Bankruptcy Code, which was already part of the Small Business Reorganization Act of 2019, by vastly raising the debt cap to $7.5 million, thereby expanding the applicability of a statue which was passed to make the reorganization of small businesses more expeditious, efficient and affordable. The most innovative change in subchapter 5 was having a businessman, rather than attorneys from the United States Trustee’s Office, operate as the trustees over the Subchapter 5 Chapter 11 cases. The oversight of the case by a trustee with business experience, as opposed to an attorney from or appointed by the United States Trustees Office, would potentially shift the expertise and interests of the trustee in a direction which focuses on the businesses’ financial health, as opposed to a more traditional Chapter 11 trustee’s focus on strict technical compliance with administrative requirements.The other improvements under Subchapter 5 are a streamlined and shorted process of getting Chapter 11 Plan approval by dispensing with the requirement for a disclosure statement and allowing for a shortened and less complex Chapter 11 plan and approval process.

CHAPTER 7 and COVID-19 – The Cares Act tried to allow easier access to Chapter 7 relief by not including in the income counted in applying the ‘means test” for Chapter 7 eligibility the extra federal assistance to the unemployment insurance (which was an extra $600. per week in addition to unemployment insurance and later went down to an extra $300. per week).

CHAPTER 13 and COVID-19 – The Cares Act has allowed that a confirmed chapter 13 plan can be extended by up to 2 years based on Covid-19 related hardships. Effectively the extension of a chapter 13 plan from 5 years (60 months) to up to 7 years (84 months) allows a debtor’s payments to be effectively lowered on a monthly basis and greater flexibility during periods of Increased financial hardship for the debtor.

Why Use Law Our Office for Your Legal Needs?

When it comes to bankruptcy we have it all, from A to Z. We have experience, knowledge and resources in that we have been concentrating in bankruptcy law for almost 30 years. We have broad expertise in all chapters of the Bankruptcy Code – Chapters 7, 11, 13 and the new, Subchapter V of Chapter 11 – as well as deep-seated skills in sophisticated litigated bankruptcy matters in the form of: defending and prosecuting Adversary proceedings, filing and opposing Contested Motions, and taking Bankruptcy Appeals from decisions that we believe are unfair and erroneous. We have the capacity to be efficient and affordable with more straightforward bankruptcy matters, and also the capacity to be very sophisticated (and still affordable) with more complex and unique bankruptcy matters that require creative intelligence, structured brilliance and intricate customization. At the same time we are a quirky, warm, friendly and brilliant bunch who love our work, enjoy dealing with our clients and take pride in what we do as if every case is our own and every task is a signed piece of art. Despite the debt problems life gave you, our law office had the capacity to tackle them together with you, improve your situation and despite the difficulties, make the solutions to your debt challenges an enjoyable experience for us all.

Our consultations are free, but our legal advice may be invaluable.
Please call us at (631) 271-3737, or e-mail us at [email protected] for a free consultation at our Melville law office to discuss legal options, including Bankruptcy Solutions, in greater detail.