What is the process of Bankruptcy?
The process referred to as Bankruptcy occurs when a party, either individual or organization, declares an inability to pay debts to other parties. These other parties are usually referred to as creditors. Bankruptcy is often the most prudent and occasionally only real course of action for many people or businesses facing substantial debt. However, filing for bankruptcy in Long Island and New York is often very complicated and potentially harmful if the correct steps are overlooked. It is highly recommended for parties considering this option to confer with an experienced lawyer before proceeding.
How can I declare bankruptcy?
The starting point of a bankruptcy filing is the debtor’s very decision to do so by submitting an application. After this point, the court evaluates all of the debtor’s non-essential assets, determining what assets are non-essential and prudent to liquidate. This can be very specific, and thus another reason to confer with an attorney. A debtor’s non-essential assets are sold and the financial profits are awarded to the crediting party as compensation for at least a portion of the outstanding debt. Once sale of the debtor’s assets is finished, the person or company declaring bankruptcy is relieved of financial requirements accumulated prior to filing.
What are the alternatives to bankruptcy?
Bankruptcy is not always the best option. A professional bankruptcy attorney, like those at Blutter & Blutter on Long Island, will discuss the details of each potential and applicable course of action. People should be aware that some types of debt, including taxes, student loans and child support, are not dischargeable. This means that they cannot be forgiven by filing for bankruptcy.
Favorable bankruptcy court decisions can have disadvantages and drawbacks. Some of these are:
Some forms of property may be seized by the court and sold off to pay the creditors.
A debtor will have their bankruptcy appear on future credit reports
Credit card companies will often cancel any line of credit
A bankruptcy filing may interfere with obtaining a mortgage for several years
After a bankruptcy, a debtor may be denied tax refunds
When applying for some jobs or for a rental residence, employers and landlords may frown upon the application once the bankruptcy filing becomes known
A limited liability company, or LLC, may not hire a person with a bankruptcy record
What are the different types of Bankruptcy?
There are three common forms of bankruptcy including:
Chapter 7 – This is usually a debtor’s first choice. During Chapter 7 bankruptcy, a debtor is required to prove inability to repay the outstanding debt. The court uses a means test which scrutinizes the debtor’s income for the last six months prior to his or her filing for bankruptcy. Once the court has this information, it compares the debtor’s income to his or her income. If his or her income level is lower than the specified income level, the debtor may be allowed to pursue Chapter 7 bankruptcy. If the debtor’s income is higher than the median income of the specified community, the party may still file Chapter 7 if the party proves insufficient disposable income
Chapter 11 – This type of bankruptcy is filed when a business wishes to reorganize in order to return to solvency, or ability to pay bills and debts. The principal of a company filing Chapter 11 is required to attend a credit counseling class. Creditors are typically offered the chance to accept the reorganization plan. Once the entire Chapter 11 case is settled, the debtor company is able to return to business as usual
Chapter 13 – This type of bankruptcy enables the debtor to pay debts over a lengthy period of time. This requires a court-approved payment plan. This is often the right decision for debtors with many creditors, as only some need be paid in full. Afterwards, unpaid amounts are discharged
Can a debtor declare bankruptcy without retaining legal counsel?
It is possible for someone to legally manage their own bankruptcy process. However, this is highly discouraged. A bankruptcy attorney from a prestigious firm, such as Blutter & Blutter, seems initially pricey, however when the details of the entire process are taken into consideration, people will see that a bankruptcy attorney is most often the best option. When a party insists on independent filing, there are a number of issues to think about and steps to take including:
Closely analyzing which type of bankruptcy is the best for the specific situation
Separating dischargeable bills and non-dischargeable ones
Getting all the required documents via the United States Bankruptcy Courts website
Filing all paperwork with a local bankruptcy court; the court will inform about the next steps
How can a lawyer help with declaring bankruptcy?
When a party files bankruptcy, the person or company must seek professional advice first. As stated, laws related to bankruptcy are complex. Moreover, a mistake, by the debtor risks repossession or liquidation of assets otherwise protected. This can include your home or car. Additionally, omitting some assets during filing can lead to criminal charges. When all issues are concerned, it becomes apparent that you need to hire an experienced bankruptcy lawyer.
Ultimately, a bankruptcy attorney will advise a company or individual on how to make the best decisions during the process. If the party files, a lawyer will ensure that all protectable assets are protected, all of the debtor’s dischargeable debts are discharged, and that any creditors will respect the individual or organization’s rights. The basic objective of a bankruptcy request is to become financially stable again. By hiring an expert such as a bankruptcy lawyer, a debtor enjoys a better chance of getting back on track.
How can Blutter & Blutter help me?
Blutter & Blutter partners Arthur and Joanne Blutter, have a long and respected record of assisting debtors who live and or work in Long Island. From their extensive experience and history of success, they are able to offer local clients the best possible legal advice necessary to persevere through a bankruptcy.