Today, many individuals and businesses face tough financial circumstances that leave them unable to manage their debts. That’s the bad news. The good news is that there are ways to eliminate these burdens, obtain a fresh start and build a more secure financial future. At O’Connell and Aronowitz, we help clients in Albany and Saratoga assess their financial situations and explore their options. Our practice handles all aspects of bankruptcy law, including debtor filings under Chapters 7, 11, 12, and 13 of the Bankruptcy Code.
Chapter 7 Bankruptcy
A Chapter 7 bankruptcy can eliminate most individual or business unsecured debt. Often referred to as a “liquidation bankruptcy,” this process involves selling the property and assets of a debtor and then paying off as much debt as possible. The remaining debt is then eliminated or discharged. Certain property, however, such as residential real estate, automobiles and personal property like furniture and clothing is protected, or exempt, from being sold.
To qualify for this form of bankruptcy protection, your income must be lower than the median income in New York. Those who earn more than this amount must pass what is known as a “means test” to show that there is not enough disposable income to pay the debts. In addition, prior to filing, it is necessary to attend credit counseling with an agency that is approved by the trustee.
Once the petition is filed, the court issues an automatic stay that immediately stops collection activities by creditors. This order also prohibits creditors from proceeding with repossessions, foreclosures, garnishments and lawsuits without the permission of the bankruptcy court. The stay is effective until the bankruptcy is discharged.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is referred to as “reorganization bankruptcy” and involves setting up a repayment plan to pay off debts with future income while retaining your property. Only individuals and married couples can file Chapter 13; businesses are not eligible. The process starts with the filing of a petition along with a proposed 36-to-60 month repayment plan. It is necessary to pass a means test to qualify and also to pay a filing fee.
Once the repayment plan is approved by the bankruptcy court, monthly payments are made that are distributed to creditors by the bankruptcy trustee. In order to receive a discharge, all payments under the plan must be completed. If you fail to do so, the case will be dismissed and creditors can resume collection activities.
Like a Chapter 7, this form of bankruptcy stops all collections activities, garnishments, repossessions, and civil lawsuits. In addition, Chapter 13 will stop a foreclosure, and the plan enables you to catch up on delinquent payments as long as monthly mortgage payments continue to be made. Chapter 13 also allows the balance of a delinquent auto loan to be paid off over a 3 to 5 year time period. Lastly, tax debts can be repaid through the plan and certain tax debts (for a collection period that is at least 3 years old) may be eliminated.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is designed to enable a small business to reorganize its debts while continuing its operations. To qualify as a small business, the debtor must be engaged in business or other commercial activities and owe no more than $2,490,925 in total claims at the time the petition is filed. The business must file a plan for repaying its debts over a set period of time and demonstrate that it can return to profitability. If the court determines that returning to profitability is not feasible, the case will be converted to Chapter 7 and the business will be liquidated.
Chapter 12 Bankruptcy
Chapter 12 allows distressed family farmers and family fishermen with regular annual income to propose a plan to repay all or part of their debts in installments to creditors over three to five years.
This form of bankruptcy is specifically designed to deal with the economic realities in these sectors and eliminate some of the barriers family farmers and fisherman might face under other chapters of the Bankruptcy Code.
At O’Connell and Aronowitz, we recognize that filing for bankruptcy is a difficult step to take. We can help evaluate your situation, determine if you are eligible, and help you get a fresh start. In addition, we also represent banks and other lending institutions in commercial collection cases as well as creditors in bankruptcy matters under Chapters 7, 11 and 13. Our attorneys are often requested to provide legal counsel to representatives of the Office of the United States Trustee. If you are looking for relief from a debt burden or are a creditor looking to defend your rights, call our Albany office today.
Bankruptcy Disclaimer: We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code. The services or benefits which we offer our clients are with respect to bankruptcy relief under Title 11 of the United States Code and the assistance which we provide may involve bankruptcy relief under that title.