Bankruptcy in East Rockaway, New York is a court procedure through which a person or business who is unable to pay their debt is able to have some of their debt legally excused, or "discharged." This theoretically allows the debtor to move on with a clean slate. However, bankruptcy should not be treated as a way to avoid debt that one simply doesn't feel like paying. It is meant to be a safety net for people or businesses who are really unable to pay off their debts. Because bankruptcy is not without negative consequences (such as a heavily damaged credit rating for many years afterward), it should be viewed as an option of last resort.
Accordingly, it might be a good idea to consult with an East Rockaway, New York bankruptcy attorney. Your lawyer will be able to counsel you about your options, including alternatives to bankruptcy, if such alternatives exist in your case. Whatever the result, it is often challenging to anticipate the long-term consequences of any bankruptcy-related decisions, so the advice of a bankruptcy in East Rockaway could prove invaluable.
Types of Bankruptcy in East Rockaway, New York
There are three basic bankruptcy schemes that are most commonly used in East Rockaway: Chapters 7, 13, and 11. Bankruptcy is a creation of federal law, so the process for filing for bankruptcy in East Rockaway, New York will be roughly the same as it would be anywhere else in the U.S. Chapter 7 bankruptcy involves liquidation of part of the debtor's assets to pay off as much of his or her debt as possible. Once the liquidation is done, and the proceeds given to the creditors, the rest of the debt is discharged. Liquidation is essentially selling assets to the highest bidder. Only some of the debtor's assets have to be sold, and various classes of property are exempt, meaning that the debtor can keep them, including homes, cars, insurance policies, and retirement accounts. It should be noted that certain types of debt cannot be discharged through Chapter 7 bankruptcy, including student loans, child support payments, criminal fines, and recent taxes.
The other largely used bankruptcy system in East Rockaway is Chapter 13 bankruptcy. This allows a debtor to repay most or all of their debts in a structured manner. It reorganizes the debt into lower periodic payments that, with a bit of frugality, the debtor should find manageable. This allows the debtor to continue to earn a living, and allows the creditors to eventually collect what they are owed. Once a repayment plan is authorized by the bankruptcy court, creditors are legally barred from seeking repayment under the terms of the arrangements that gave rise to the debt in the first place, and will instead have to accept payment under the new plan. Chapter 13 bankruptcy is typically a better option for people who have a steady income. Though Chapter 11 bankruptcy can be used by individuals, it is almost always used by businesses. Similar to Chapter 13, Chapter 11 involves restructuring of debts, rather than complete discharge. The debtor is required to come up with a restructuring plan that lays out how it plans to cut costs, streamline operations, and pay its debts. The plan must then be authorized by a vote of participating creditors.
While going through Chapter 11 bankruptcy, a business can continue operating, and its stock can continue to be traded.
How Can a East Rockaway Bankruptcy Lawyer Help?
Filing for bankruptcy in East Rockaway is a very important decision, and should not be made easily. Before filing, one should consult with a seasoned East Rockaway bankruptcy attorney for assistance.