Bankruptcy Services We Offer in Manhattan, Brooklyn and Queens
Chapter 7 Bankruptcy
Chapter 7 is one type of bankruptcy that is available for individuals. It is also called straight bankruptcy or liquidation. The bankruptcy court appoints a trustee who administers the bankruptcy. The individual filing for bankruptcy usually retains all the typical types of household goods and clothing. They may also retain their home and vehicles as long as they do not have more equity in those items than they can exempt (or protect).
If the bankruptcy trustee allows an individual in bankruptcy to keep a car secured by a car lien or a house encumbered by a mortgage, the individual filing for bankruptcy must pay all car and mortgage payments as they fall due and pay the insurance on those items. A chapter 7 bankruptcy usually lasts about four to six months. At the end of the bankruptcy, most debts are extinguished through a discharge of debts. Secured debts, however, such as a car loan or a mortgage, receive different treatment.
At the beginning of the bankruptcy process, the debtor will select to do one of the following:
- Pay the creditor for the replacement value of the property
- Return the property to the creditor
- “Reaffirm” (or agree) to new contract terms with the creditor
Chapter 13 Bankruptcy
Chapter 13 is another type of bankruptcy available for individuals. This bankruptcy lasts for the duration of a debt repayment plan, from three to five years. General, unsecured creditors are usually only repaid a small percentage of what is owed, but past-due taxes must be paid in full, as well as arrearages on secured debt, such as a mortgage or car loan.
This form of bankruptcy may allow individuals to keep a home or car even if they have become seriously delinquent on the loans. At the end of a successful bankruptcy, most debts are extinguished through a discharge of debts. To be eligible for Chapter 13, a debtor must meet debt limitation requirements. If unsecured debt exceeds $394,725 or secured debt exceeds $1,184,200, then they do not qualify for this type of bankruptcy.
Chapter 11 Bankruptcy
Chapter 11 is a type of bankruptcy that is referred to as “business reorganization” bankruptcy. It is specifically aimed at relieving the debts of businesses and corporations. Businesses that file for Chapter 11 are able to continue with almost normal operation as a debtor-in-possession. It is designed to permit a business the ability both to restructure its debt and to reorganize its business operations.