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Exceptional Legal Representation Throughout
Long Island and New York, Since 1993.
CALL FOR A FREE CONSULTATION
Exceptional Legal Representation Throughout
Long Island and New York, Since 1993.
Experienced Bankruptcy Lawyers Serving Brooklyn and Queens
Bankruptcy provides individuals and businesses with the opportunity to eliminate, reduce, or restructure debt. Our law office represents clients in all chapters of the Bankruptcy Code, including Chapter 7, Chapter 11, and Chapter 13, as well as Adversary Proceedings and Bankruptcy Appeals.
Let us help you navigate the complexities of bankruptcy and find the best financial solution for your situation.
The goal of federal bankruptcy laws, commonly referred to as Title 11 of the United States Code or the “Bankruptcy Code,” is to offer financially struggling but legitimate debtors a chance for reorganization or a fresh start. This is accomplished by providing debtors with a legally enforceable mechanism that enables them to: (1) discharge, reduce, restructure, or extend most of their debts; and (2) protect themselves—within certain limits—from creditor harassment and collection efforts while the bankruptcy case is ongoing.
Beyond assisting debtors, bankruptcy law also seeks to ensure fair treatment of creditors by: (A) protecting them from fraudulent actions; (B) ensuring equal treatment for creditors in similar situations; (C) requiring debtors to disclose details about their assets, income, and liabilities to confirm their eligibility for bankruptcy; and (D) providing creditors with regular notifications and opportunities to voice their concerns throughout the bankruptcy proceedings.
An individual (whether alone or as part of a married couple) or a business (including a sole proprietorship, partnership, or corporation) can seek bankruptcy protection, with only a few exceptions. Filing a voluntary bankruptcy petition does not require insolvency, although most debtors pursuing bankruptcy protection are considered “insolvent”—meaning they either cannot meet their financial obligations as they come due or have more liabilities than assets.
Filing for bankruptcy provides several key benefits, including immediate protection from creditors through an “automatic stay.” This stay halts collection efforts, foreclosure proceedings, repossession actions, and creditor harassment as soon as the case is filed.
In Chapter 13 or Chapter 11 bankruptcy, most debts can be restructured, reduced, or repaid under a court-approved plan. In Chapter 7 bankruptcy, eligible debts can be eliminated through a “discharge.” Since bankruptcy cases are handled by a federal bankruptcy court with the authority to resolve disputes, debtors have a legal forum to address any concerns or challenges related to their case.
Once a bankruptcy case is filed, creditors must comply with the automatic stay and discharge provisions, ceasing all collection efforts and updating the debtor’s credit report accordingly.
Common reasons individuals and businesses file for bankruptcy include:
Beyond these common uses, bankruptcy may serve other financial and legal purposes. However, because bankruptcy law is complex, individuals and businesses considering filing should consult with an experienced bankruptcy attorney. A lawyer can evaluate the case and determine whether the desired financial relief can be achieved.
While declaring bankruptcy is a common solution for severe financial difficulties, there are several alternatives that can serve as substitutes. Some options involve out-of-court negotiations that may lead to settlements or loan modifications with creditors. Others include disputing a creditor’s claim by challenging the validity of the debt or the methods used to collect it, as well as responding to a creditor’s complaint within the required 20 to 30 days.
In some cases, alternatives to bankruptcy may be preferable. However, for individuals facing significant financial hardship, bankruptcy is often the most effective and straightforward option. That said, not all financial difficulties can be resolved through bankruptcy, and in certain situations, it carries risks.
If most of your debt consists of credit card balances or other unsecured obligations, negotiating with creditors—especially with the assistance of a firm like ours, which has the ability to file for bankruptcy—can lead to significant debt reductions. While lump-sum settlements generally offer larger discounts than payment plans, both can yield positive results. Additionally, we can litigate against unsecured creditors, particularly in cases involving disputes or when additional time or leverage is needed to secure a favorable resolution.
Bankruptcy typically provides faster and more certain debt relief. However, if a client is ineligible for bankruptcy due to income or asset restrictions under Chapter 7, or debt limits under Chapter 13 (as detailed below), negotiated settlements or litigation defense may be better suited—especially if their financial trouble is limited to one or two specific creditors rather than a broader debt issue. Furthermore, some individuals may prefer to avoid bankruptcy altogether, and negotiation strategies can offer meaningful relief without the need for filing, even if they are not as effective as bankruptcy.
Our office regularly negotiates a wide range of debts on behalf of our clients, including credit card, tax, mortgage, and other financial obligations.
Bankruptcy cases generally fall into three main categories. Chapter 7, also known as liquidation bankruptcy, is the most common type. It is used to liquidate a business or eliminate most personal debts through a discharge. Chapter 13, often referred to as wage earner’s bankruptcy, is designed for individuals with regular income who want to repay their debts over time. This type is commonly chosen by those seeking to prevent foreclosure, manage problematic debt, or avoid Chapter 7 due to excess income or asset equity. Sole proprietors with a steady income may also use Chapter 13 to reorganize and pay off debts. Chapter 11, known as reorganization bankruptcy, is used by both businesses and individuals to restructure financial obligations while maintaining ownership and control of assets. Companies often opt for Chapter 11 to continue operations while managing debt repayment. The procedures, requirements, and rights associated with each type of bankruptcy vary significantly, and their suitability depends on the specific circumstances of the debtor.
Chapter 7 is the most commonly filed type of bankruptcy because it eliminates debt through discharge. However, not everyone qualifies for Chapter 7 due to specific eligibility requirements. The primary factor in determining eligibility is the means test, which compares a client’s income to the median income of a household of the same size in New York State. This test evaluates whether an individual earning above the median income can still qualify based on their necessary expenses, which must be verifiable and are subject to IRS guidelines. The means test examines a client’s earnings, allowable expenses, and essential outlays over the six months preceding the bankruptcy filing. To be eligible for Chapter 7, the client must have a negative budget—excluding payments on debts that would be discharged—and a negative disposable income as determined by the test.
If a client does not qualify for Chapter 7 but has positive disposable income under the means test and budget test, they may be eligible for Chapter 13. This option allows them to repay a portion of their debts over a five-year plan, providing an alternative form of debt relief without being required to file for Chapter 7.
Beyond income restrictions, Chapter 7 also has non-official limitations related to the equity in a client’s assets. If a client has significant unprotected equity in property such as a home, car, or an inheritance, a Chapter 7 trustee could potentially liquidate those assets to repay creditors. Even if liens and exemptions provide some protection, clients with substantial exposed equity may want to reconsider filing under Chapter 7.
For small businesses, Subchapter V of Chapter 11 provides a streamlined reorganization process that is more efficient and cost-effective compared to a traditional Chapter 11 case. This option bridges the gap between Chapter 11 and Chapter 13, offering businesses a more practical path to financial restructuring.
Determining which bankruptcy chapter is the best fit requires careful planning. Consulting with a bankruptcy attorney can help individuals and businesses make informed decisions based on their unique financial situations. Contact us today for a free consultation.
An adversary bankruptcy proceeding is a lawsuit filed within a bankruptcy case by a creditor, debtor, or bankruptcy trustee to resolve a significant legal issue that requires a court decision. Creditors may initiate these proceedings to challenge the dischargeability of a debt, often based on allegations of fraud or misrepresentation by the debtor. The bankruptcy trustee may also file an adversary proceeding to contest the overall discharge, prevent a fraudulent or preferential transfer, or recover an asset for the benefit of creditors.
A contested motion in a bankruptcy case is a dispute that arises when one party files a motion, and another party opposes it. Common examples include a creditor’s motion to lift the automatic stay despite the debtor’s objection or a Chapter 13 debtor’s motion to reduce or eliminate a specific creditor’s claim.
A bankruptcy appeal is the process of challenging a decision made by the U.S. Bankruptcy Court by seeking review from the U.S. District Court when there is a belief that the decision was made incorrectly.
Individuals and businesses considering bankruptcy often already have significant financial issues reflected on their credit reports or will soon. While filing for bankruptcy does impact a credit record, it also helps address and potentially resolve underlying financial problems. As a result, individuals who file for bankruptcy may find themselves in a better position to repay new creditors and could eventually present a lower credit risk than before filing.
By eliminating or restructuring high-risk debt, bankruptcy can help individuals regain financial stability and remove the root cause of their financial struggles. Additionally, a bankruptcy attorney can provide guidance on steps to rebuild credit after filing.
Filing for bankruptcy can be a strategic choice to protect one’s income, assets, bank accounts, and credit standing. It immediately shields the filer from creditors and can help discharge or eliminate most debts, including credit card balances, personal loans, and medical bills. In many cases, individuals can retain their homes, vehicles, bank accounts, and other assets.
The decision to file for bankruptcy is personal and depends on individual financial circumstances. The best way to determine if bankruptcy is the right option is through a free consultation. We offer both phone and in-person consultations at our Melville and Brooklyn offices to discuss your situation and explore the best course of action.
In response to the economic challenges caused by the COVID-19 pandemic, the U.S. Congress enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law on March 27, 2020. This legislation provided emergency financial assistance to individuals and businesses while also introducing key modifications to bankruptcy laws.
For Chapter 11 cases, the CARES Act simplified and streamlined the approval process by removing the requirement for a disclosure statement, making it easier for businesses to reorganize under a more concise and efficient plan.
In Chapter 7 cases, the Act made it easier to qualify for bankruptcy relief by excluding the additional federal unemployment assistance ($600 per week, later reduced to $300 per week) from the income calculation used in the means test.
For Chapter 13 cases, the CARES Act allowed debtors facing financial hardships due to COVID-19 to extend their repayment plans for up to seven years instead of the standard five, reducing monthly payments and providing greater financial flexibility.
We provide comprehensive bankruptcy services, covering everything from A to Z. With nearly 30 years of experience in bankruptcy law, we have the expertise, knowledge, and resources to handle even the most complex cases. Our deep understanding extends to litigated bankruptcy matters, including adversary proceedings, contested motions, and bankruptcy appeals. We specialize in all chapters of the Bankruptcy Code—7, 11, 13, and the newly added Subchapter V of Chapter 11.
Whether your case is straightforward or requires a sophisticated, customized approach, we offer efficient, affordable, and highly effective solutions. Our team is not only skilled and detail-oriented but also passionate about helping clients navigate financial challenges. We take pride in our work and strive to make the process as smooth and stress-free as possible. Despite the difficulties you may be facing, we are committed to finding the best solutions while making the experience a positive one for you.
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