Bankruptcy Lawyers in Astoria, NY, Helping Families and Businesses Find Their Ways Out of Debt
Debt, right or wrong, has become a natural part of American life. Recent studies have found that roughly 80% of Americans are in some level of debt. Collectively, Americans are in debt to each other and various corporations for an estimated $14 trillion dollars, with the biggest slice of the debt pie reserved for homeowner mortgage debts. Medical debt, student loans, and costly living conditions in high-cost cities are responsible for much of the rest of our personal debts. And this is to say nothing about the debts that small businesses and their owners take on.
When we take on debt, we have every intention of paying it off someday. But sometimes, things just don’t work out the way we wanted them to. Sometimes the debts keep piling up. In such instances, bankruptcy becomes a real viable option for those desperately in need of debt relief.
To better understand whether bankruptcy is the right decision for you or your business, it is highly advisable to speak with an attorney who has noted experience in the practice area of bankruptcy law. At the law firm of Ortiz & Ortiz in Astoria, NY, our lawyers have decades of experience helping clients through their financial hardships as they explore the advantages and disadvantages of the bankruptcy process. For legal advice on whether filing bankruptcy is right for your situation, please contact our law offices to schedule a consultation with our attorneys and associates.
What Are the Different Types of Bankruptcy in New York?
There are many types of bankruptcy, both for businesses and individuals in New York. While most people have heard of Chapters 7, 11, and 13, there are actually six types of bankruptcy under the modern bankruptcy code.
The Different Types of Bankruptcies:
- Chapter 7 is a liquidation bankruptcy, for individuals and businesses alike. Those who file for Chapter 7 liquidate their assets in order to pay off unsecured debts. Certain assets may be exempt from creditors.
- Chapter 9 is for municipalities like cities, towns, and school districts that are desperate for debt relief. The most famous recent example of a city filing for Chapter 9 was when Detroit filed in 2013.
- Chapter 11 is a reorganization bankruptcy for businesses that want to restructure their debts while remaining open for business. Chapter 11 is complex and costly, but it is possible for a business to survive bankruptcy and pay off its creditors over a certain number of years.
- Chapter 12 is reserved for family farmers and fishermen who have fallen on hard times financially and need debt relief in order to survive.
- Chapter 13 is similar to Chapter 11, except it is only for individuals and not businesses. It restructures your debts and commits you to a repayment plan, giving you three to five years to pay what you owe to your creditors.
- Chapter 15 is the newest addition to the bankruptcy code and is for foreign debtors or debts tied up in multiple countries. It streamlines the process between bankruptcy courts in the US and abroad.
Each form of bankruptcy has its own pros and cons.
What Are the Pros of Filing for Bankruptcy?
The most notable benefit of bankruptcy is that many debtors can see their unsecured debts discharged, granting them a fresh new start financially. Unsecured debts which can be eliminated via Chapter 7 include medical expenses, personal loans, motor vehicle loan debts, and credit card debts.
For businesses filing Chapter 11 bankruptcy, they may reorganize their debts in a way that is suitable to both their creditors and their own personal business interests. In doing so, they can remain open for business, taking in new profits and making their shareholders happy, keeping their employees on staff, and keeping the community consumer base coming back.
Additionally, filing for bankruptcy often comes with an automatic stay, which blocks creditors and collection agencies from bothering you or seeking further payments while your bankruptcy case is ongoing. If a creditor attempts to collect or harasses you in any way during the automatic stay, they may be cited and held in contempt of court.
What Are the Cons of Filing Bankruptcy in NYC?
There are notable drawbacks to filing bankruptcy as well, though, and they must be considered. For individuals considering the clean slate afforded to those who file for Chapter 7, it must be noted that some luxurious assets and extra property may be seized in order to pay off creditors.
For businesses considering Chapter 11, it is worth noting that this form of bankruptcy is especially complex and can be very costly. And if a business files for Chapter 7, liquidating all their assets, they may never reopen.
Before committing to filing for bankruptcy, it is important that you understand all the advantages and disadvantages of the legal action you’re considering.
Contact the Bankruptcy Attorneys of the Ortiz & Ortiz Law Firm in Astoria, New York
The law firm of Ortiz & Ortiz, LLP, has been serving clients in and around Astoria, NY for decades. Our reputation in the community is strong and we have represented small businesses, large businesses, and New York families during our years of operation.
The lawyers of our law firm can provide dedicated, knowledgeable legal services to those in need of our help, whether you be a legal and financial novice or a business owner yourself.
If you have a bankruptcy case in Astoria or any of NYC’s five boroughs, please contact the law firm of Ortiz & Ortiz to schedule a consultation. You may reach our law offices by email, through our website, or by calling us at 916-796-1858.