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With the worst economic crisis that this country has seen in decades, many people are having a tough time paying their monthly expenses. As a result, millions of people throughout New York and the United States are suffering from mounting debt and reduced income with no end in sight.
Bankruptcy was designed to help people who have become so inundated with debt that they have fallen behind on their finances and can no longer pay their bills or other financial obligations. The goal of the bankruptcy process is to provide individuals and families with the relief they need to recapture their financial freedom and start fresh again.
Personal
Bankruptcy
Bankruptcy refers to the federal court process of eliminating or restructuring a person’s debt. In the United States, the two most common forms of bankruptcy available to individuals and families are Chapter 13 bankruptcy and Chapter 7 bankruptcy.
Chapter 7 bankruptcy, also known as liquidation, is the most common and most favored form of bankruptcy as it eliminates most of a debtor’s unsecured debt. However, Chapter 7 does not discharge all of a person’s debt. Certain debts cannot be discharged under Chapter 7, such as:
- Alimony/Spousal Support
- Child Support
- Student Loans (unless extreme hardship can be proven)
- Court fines or penalties
- Personal injury damages or restitution
However,
there
are
many
myths
in
bankruptcy
that
are
untrue
and
in
most
cases,
you
can
keep
your
car
and
home,
and
in
some
cases,
you
may
be
able
to
get
rid
of
your
2nd
mortgage
in
the
bankruptcy.
Chapter 13 bankruptcy is slightly different from Chapter 7 bankruptcy, as it does not discharge debt completely. Rather, Chapter 13 consolidates a person’s debt and restructures it into a feasible monthly payment plan. Under Chapter 13 bankruptcy, you will have a set amount of time, usually three to five years, to pay off a portion of your debt each month. Although this type of bankruptcy does not completely eliminate your debt, it does restructure it in a way that is manageable.
Bankruptcy
for
Businesses
Chapter 11 bankruptcy
is available to businesses that are experiencing financial troubles. Under Chapter 11, a business can continue to operate while it restructures or reorganizes its debts and finances. Many businesses favor this form as bankruptcy as it awards them protection from creditors during the reorganization and restructuring period. Furthermore, businesses can also repay their creditor while continuing to operate.
If you are suffering from insurmountable debt and are considering filing for bankruptcy, the first step you should take is to consult a knowledgeable and experienced bankruptcy attorney. At The Law Office of Darren Aronow, PC we will review your financial situation, and help you determine whether or not bankruptcy is right for you. If you are interested in scheduling a free consultation, please contact us at (516) 663-0970 and let us help you start over again.
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