Frequently Asked Questions Regarding Bankruptcy Definition in New York
When it comes to financial hardship, the thought of filing for business bankruptcy can be overwhelming and intimidating3 min read
When it comes to financial hardship, the thought of filing for business bankruptcy can be overwhelming and intimidating. There may be several questions running through an individual’s head: What is bankruptcy? Is bankruptcy an option? How should I prepare if I am thinking of filing?
Navigating through the complex legalities of bankruptcy can be a daunting process. It is important to understand the legal process prior to making any decisions, and to consult an experienced attorney to ensure your interests are protected. This article contains some of the frequently asked questions regarding bankruptcy definition in New York, and provides an overview of the state-specific bankruptcy laws.
What is bankruptcy?
Under the Bankruptcy Act of 1978, bankruptcy is a legal process that permits individuals or businesses with financial difficulties to reduce or eliminate their debts. Bankruptcy can provide protection from creditors, deter collection lawsuits, and freeze interest rates. There are many different forms of bankruptcy that are specific to a person's or entity's need.
In New York, the two most common forms of bankruptcy that individuals and businesses can file are Chapter 7 and Chapter 13.
What is Chapter 7 bankruptcy?
Chapter 7 bankruptcy is a form of bankruptcy that serves individuals and business entities who can no longer meet their financial obligations. When a business or individual is in a state of financial distress, it is often a viable option to help resolve some of their debts.
When filing Chapter 7 bankruptcy, the debtor (the person filing for bankruptcy) is required to liquidate their assets to pay off debts. Once a creditor has received the repayment, the debt is discharged.
The debtor is not required to repay the debts, and the court may order the creditors to waive any remaining debts. It is important to note, though, that some types of debt may not be eligible for discharge under Chapter 7, including student loans, tax debts, domestic support obligations, and criminal restitution.
What is Chapter 13 bankruptcy?
Chapter 13 bankruptcy is a type of bankruptcy that provides relief to individuals who are having difficulty meeting their financial obligations. This form of bankruptcy enables individuals to refinance their debts and pay them off over a three to five-year repayment plan.
The repayment plan requires the debtor to make monthly payments to the designated trustee, who in turn disburses the payments among the creditors. After the repayment plan is complete, the remaining debt is discharged.
It is important to note that Chapter 13 can only be used by individuals who have regular income and debts below certain thresholds. If these qualifications are not met, a debtor must file Chapter 7 bankruptcy.
What is the Bankruptcy Court in New York?
The Bankruptcy Court in New York is comprised of three district offices located in Buffalo, New York City, and Central Islip, New York. The Federal court system has exclusive jurisdiction in all bankruptcy matters, and only the Bankruptcy Court in New York can administer cases in the areas of insolvency and bankruptcy.
The Bankruptcy Court in New York handles all matters related to filing for bankruptcy, including the preparation and filing of the petition, the appointment of a trustee, the examination of the debtor's assets, and the discharge of the debt.
What are the benefits of filing for bankruptcy in New York?
There are many benefits to filing for bankruptcy in New York. One of the primary benefits is the protection provided from creditors. Filing for bankruptcy automatically stops any existing collection efforts and lawsuits from creditors.
Additionally, once a debtor has filed for bankruptcy, he or she can also generally discharge certain types of debt, such as medical bills, credit cards, and unsecured loans, which can drastically reduce a person's financial burden. Finally, filing for bankruptcy can also help to rebuild a person's credit rating, as it will remain on a credit report for 10 years.
What should I consider prior to filing for bankruptcy in New York?
Prior to filing for bankruptcy in New York, it is important to consider several factors, including the type of debt you have, the assets you own, and your income and expenses. Additionally, you should also think about the potential tax implications and the long-term impact on your credit, as well as any alternatives to filing for bankruptcy that may be available.
When navigating the bankruptcy process, it is important to consult with a qualified attorney who can provide unbiased advice and help ensure the outcome is in your favor.
It can be overwhelming trying to understand the bankruptcy laws in New York and the various forms of bankruptcy that may be available. Seeking assistance from an experienced business attorney can help make the process easier and provide peace of mind.
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