Bankruptcy helps people who can no longer pay their debts get a fresh start by liquidating assets to pay their debts or by creating a repayment plan. Bankruptcy laws also protect financially troubled businesses.
This section explains the bankruptcy process and laws.
Q: If I file for personal bankruptcy will I lose all my assets?
A: Even with a Chapter 7 bankruptcy, exemptions exist to allow you the ability to “start over” after bankruptcy. Such exemptions may apply with varying degrees to your home, car, pension, jewelry, and personal belongings.
Q: Will my filing for bankruptcy become public knowledge?
A: A common fear related to filing for bankruptcy is that it may hurt your relationships and future job prospects. Although it will become a public record, the general public will typically not have access to such information. Bankruptcy information is only available to those who register for an account and pay a per-page fee for every page they obtain. A bankruptcy filing is not permanent, it will appear on your credit score for up to 10 years.
Q: What kind of debt is forgivable?
A: Unsecured debt such as credit card debt, medical bills, and personal loans are generally discharged in most Chapter 7 bankruptcies. Certain types of taxes, student loans, and alimony are examples of non-dischargeable debt.
Q: Is it worthwhile to consult with an attorney if I am considering bankruptcy, even if I don't think I need to do so yet?
A: Although you can file bankruptcy in a short time frame, like many things in life, a more desired outcome can be achieved with proper advanced pre-bankruptcy planning.
Q: I've lent money to someone who filed for bankruptcy. Is my money gone?
A: Hope is not lost. There are ways to preserve your claim but proper guidance navigating through the complex bankruptcy laws will help you learn what kind of claim you have and what path will properly preserve it.
Q: I want to purchase assets from a bankruptcy auction. What do I need to know to protect myself?
A: There are many unique aspects to a bankruptcy sale that need to be considered before a purchase. Bankruptcy sales have the potential to carry burdensome consequences if done improperly. A seasoned bankruptcy attorney will advise you on various ways in which to protect yourself through this process.
Q: What will happen to my business once I file for corporate bankruptcy?
A: Filing for a Chapter 11 corporate bankruptcy will provide you the ‘breathing space' you need from your creditors. It will afford you the opportunity to reorganize your financial affairs while focusing on important business decisions and future success.
Q: My business is growing but we are straddled by burdensome leases and contracts. Will bankruptcy allow me a way-out of these leases?
A: Bankruptcy serves as a protection for companies burdened by commercial leases. In fact, proper use of the bankruptcy laws enables a struggling company's future growth and stability. When a lease is terminated in bankruptcy (and it is done properly), the debtor may only pay a fraction of its original responsibility over an extended period.
Q: My business was incorporated out of state, but we operate here in New York. Can I still file bankruptcy in New York State?
A: This is common amongst many corporations. Yes, in most cases, you can file in New York State.
Q: Does filing bankruptcy on one corporation affect my ability to open other corporations in the future?
A: No. Bankruptcy law was established to give people a second chance. This is why bankruptcy law does not inhibit your ability to earn a living and specifically ensures a fresh start for debtors.