The thought of filing for bankruptcy can be frightening to many people. The stress of limited finances and creditor harassment can cause some to make poor choices, but these choices may only worsen an already serious situation. A good way to avoid making further mistakes is to contact a bankruptcy law attorney.
At the law offices of Genova & Malin, Attorneys at Law, we help people in financial distress by exploring the possibility of filing a bankruptcy petition under either Chapter 7, Chapter 11 or Chapter 13 of the federal Bankruptcy Code. Our New York bankruptcy attorneys are very experienced in helping clients weigh the pros and cons of filing a bankruptcy petition and examining alternatives to bankruptcy before making a decision. Our clients are fully advised about what to expect if they should choose to file for bankruptcy. Struggling consumers and small-business owners can use a Chapter 7 bankruptcy filing to liquidate debt. Chapter 13 provides a way for debtors, with significant assets to preserve, to pay debts in a manageable way under a court-approved repayment plan. Chapter 11 is generally for businesses seeking to reorganize their debt and get breathing space from creditors to allow the business to get healthy. Please read more about bankruptcy law below. Call us at 845-236-5282 to schedule a consultation.
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There were nearly 1.7 million bankruptcies filed in 2003, up 7.4% from the 1,547,669 filings in 2002. In fact, bankruptcy filings have increased nearly 100% since 1994. To help sort your way through the complicated maze of overcrowded bankruptcy courts, you need the assistance of knowledgeable legal advocates, with years of experience and demonstrated trustworthiness.
If you are experiencing financial distress — with creditors hounding you and overwhelming debts that won't go away — it may be time to consider filing for bankruptcy, or at least taking steps to head off filing for bankruptcy. Contact us now so that a Poughkeepsie bankruptcy lawyer may evaluate your financial situation. We offer a free initial consultation.
Commercial Bankruptcy
Like a consumer, a business sometimes finds itself in the uncomfortable position of being unable to pay its debts. One solution is to file for bankruptcy, a legal process in federal bankruptcy court that releases the business from the obligation to pay all or some of its debts. Contact Genova & Malin, Attorneys at Law in Wappingers Falls, NY, to schedule a consultation with an attorney who is experienced in advising business owners about whether bankruptcy is right for them.
Bankruptcy Choices for Small Businesses
Businesses must choose among alternative types of bankruptcies, each of which corresponds to a different chapter of the federal Bankruptcy Code. Businesses usually choose either Chapter 7 or Chapter 11, or occasionally Chapter 13. Sometimes businesses can be involuntarily drawn into bankruptcy by their creditors, who face stiff financial penalties if they initiate an involuntary bankruptcy for invalid reasons.
Chapter 7
Chapter 7 bankruptcies are called "liquidation bankruptcies." Chapter 7 is usually employed by consumer debtors, but can also be used by businesses that want to liquidate their assets to be relieved of debt. A Chapter 7 bankruptcy is commenced when the business files a petition with the bankruptcy court. The court then orders an automatic stay of all collection action against the business and its property. A court-appointed trustee manages the details of the bankruptcy, selling business assets to satisfy business debt, to the extent possible. At the conclusion of the proceeding, remaining debts of the business are not discharged as with an individual debtor, but generally the business ceases to exist because its assets are gone and it is no longer a profitable concern.
Chapter 11
In Chapter 11 bankruptcies, which are usually filed by businesses and rarely by individuals, the commercial debtor is usually allowed to stay in business throughout the bankruptcy proceedings. A business debtor may only operate independently in its ordinary course; transactions outside the ordinary course of business require court approval.
A Chapter 11 proceeding, like one under Chapter 7, is initiated by filing a petition, but a trustee is not automatically appointed. Although the bankruptcy judge may decide to appoint a trustee in a Chapter 11 case, it is the exception rather than the rule. As in Chapter 7, the filing of the bankruptcy petition stops creditors from attempting to collect their debts.
The debtor has time to file a proposed plan of reorganization. The plan of reorganization sets forth in detail how the debtor intends to conduct its business, while continuing to make payments to its creditors. In some situations, creditors may instead or also propose plans of reorganization. Creditors are divided into classes with varying rights depending upon the types of debt they hold. The approval process involves negotiation and input from creditors. Ultimately, a plan must be approved by the court. In some cases, the court approves the plan even though some of the creditors did not. If no plan is approved, however, the bankruptcy is often converted to a Chapter 7 liquidation or may be dismissed.
The choice between Chapter 7 and Chapter 11 is not necessarily permanent; once proceedings have begun, a case may be converted to a different chapter, under certain circumstances.
Speak to a Bankruptcy Lawyer
Bankruptcy may not be the best option for every business, but sometimes it is the best choice a business owner can make. Alternatives to bankruptcy include working informally with creditors toward a repayment plan or assigning assets for the benefit of creditors. Contact Genova & Malin, Attorneys at Law in Wappingers Falls, NY, to schedule a consultation with a lawyer experienced in bankruptcy law.
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