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Bankruptcy Basics


It is no secret that the economy has been very sluggish the past few years and just when someone feels they are finally digging themselves out of debt, another major expense comes their way, whether it is a medical expense, an increase in your mortgage payment due to an adjustment in the interest rate , divorce, a wage garnishment or a major car repair.  Even if you are working full time or have two jobs, you simply can't make ends meet and you are just barely making your mortgage or rent payment.  A sudden, unexpected bill comes and that puts you even more behind and it seems you can only pay for the bare necessities, even though you truly want to meet your obligations.  This financial pressure adds stress to your life and affects your relationships with your family and loved ones.  You are not alone.  Many people throughout New York and the United States are suffering from insurmountable debt and feel this kind of hopelessness.

Bankruptcy was designed to help honest, hard working people achieve a fresh financial start.  My firm assists people who have become so straddled with debt that they don't know where to turn for help.  I want to help you get the fresh financial start that you desire.  Contact my office today at (585) 546-7410 to schedule a time to meet so that you can take the first step towards getting your fresh start.

Types of Bankruptcy

Bankruptcy refers to the federal court process of eliminating or restructuring a person’s debt. The two most common forms of bankruptcy available to individuals and families are Chapter 13 bankruptcy and Chapter 7 bankruptcy.

The most common form of bankruptcy is filed under Chapter 7 of the bankruptcy code and is often referred to as "liquidation" or "straight bankruptcy." This chapter of bankruptcy is designed for debtors whose prospective income does not generate a monthly surplus in excess of their basic necessities like rent, utilities, groceries, car payments, insurance, etc., so they really cannot afford to pay any part of their dischargeable debts. Chapter 7, however, does not necessarily discharge all of a person’s debt. Certain debts cannot be discharged under Chapter 7, such as:

  • Most tax debts (but there are exceptions)
  • Child Support
  • Student Loans (unless extreme hardship can be proven)
  • Court fines or penalties
  • Alimony/Spousal Support
  • Parking tickets
  • Personal injury caused by drunk driving or under the influence of drugs.

 

Chapter 13 bankruptcy is different from Chapter 7 bankruptcy in that in Chapter 13, your debts are consolidated into one monthly affordable payment to the Chapter 13 case trustee. Chapter 13 debtors are those whose prospective monthly income does to some extent exceed their monthly expenses for necessities, except not enough to pay what is required to be paid. These types of people are able to pay at least the minimum payments on their credit cards, but find themselves left with no money for food, gas and other expenses at the end of the month, so they end up charging those items. They then find that their credit card balances go up and up every month until their credit limits are maxed out, then the problems start. Unlike Chapter 7, in Chapter 13, at the end of the payment period, you receive your "discharge" of debts from the bankruptcy Court. Under Chapter 13 bankruptcy, you will have a set amount of time, usually three to five years, to pay off your consolidated debts (usually the consolidated amount is substantially less than the total amount you owe). This type of bankruptcy completely eliminates your debt; however, the payments that are made over time result only in a fractional part of your debts being paid. Why is this something you should consider? It is because Chapter 13 is an affordable method of paying back missed mortgage payments, tax debts and other debts in a much more comfortable way than through wage garnishment, foreclosure, tax liens and child support enforcement proceedings. 

Bankruptcy for Businesses

An exclusive form of Bankruptcy is available for Corporate debtors and individual debtors who do not qualify for Chapter 13 because the dollar amount of their debts exceed the jurisdictional limits of Chapter 13. Chapter 11 bankruptcy is available to such companies and individuals. Many people think that only giant corporations qualify for Chapter 11, but many so-called "mom and pop" small businesses, such as used car dealerships, grocery stores and landlords can benefit from Chapter 11. Under Chapter 11, the business continues in operation while it restructures its debts. Many businesses file Chapter 11 to pay certain taxes, like sales taxes, that could be assessed against the corporate members individually. In Chapter 11, some tax penalties can lose their priority status, meaning that the tax debt could get satisfied in full for less money than what would be needed to satisfy the tax debt outside of bankruptcy. Many people who operate small businesses file companion personal bankruptcy cases if there is a benefit to the debtor. Every Chapter 11 case is different. If you feel that your business could benefit from our services, contact us today at (585) 546-7410 to set up a consultation.  

If you are struggling with debt and would like more information on bankruptcy and how bankruptcy can help you get rid of debt, I am here to help. The initial consultation is free and together we will formulate a plan to determine if bankruptcy is right for you. I offer personal attention and my rates are reasonable. Contact my office today online or by telephone at 585-546-7410 to speak with an experienced New York bankruptcy attorney.   

 

If you are considering filing for bankruptcy, you want an experienced bankruptcy lawyer on your side. I have over 20 years of experience handling bankruptcy cases on behalf of individuals, families, and businesses in Rochester, Buffalo and throughout Western New York. At the initial conference, I will obtain your credit report, review your financial situation, and help you determine whether or not bankruptcy is right for you. If bankruptcy is the right debt management tool for you and your family, I will help you file all of the necessary legal documents, and represent you through every step of the bankruptcy process.  My goal is to help you, the client, overcome your financial problems.

If you are interested in setting up a free consultation with a knowledgeable, experienced and dedicated Rochester, New York bankruptcy lawyer, please contact us at the Law Office of Ronald S. Goldman, Esq. (585) 546-7410. 

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