Before you meet with an attorney, learning a little bit about the basics of bankruptcy law can give you a better understanding of the process and put your mind at ease. Keep in mind that bankruptcy isn’t the end; you still have options ahead of you. Our Buffalo debt relief lawyers will help get you back on your feet as soon as possible.
Basics of Bankruptcy Law | Voluntary vs. Involuntary
Bankruptcy can be voluntary or involuntary. A bankruptcy is voluntary if an individual or company freely chooses to file. On the other hand, an involuntary bankruptcy is when creditors force the individual or company to file. A voluntary bankruptcy is much more common than an involuntary, which usually occurs in conflicts between a business and its creditors.
Basics of Bankruptcy Law | Liquidation vs. Reorganization
In liquidation bankruptcy (Chapter 7), a trustee is appointed by the court to sell off any of a debtor’s assets that are not protected by law. The proceeds are then given to the creditors. Fortunately, all the debtor’s assets are usually protected in most cases. In a reorganization bankruptcy (Chapter 13), the debtor submits a repayment “plan” that allows a portion of the debts to be paid off over a three to five-year period. After that, the remaining unpaid debts are discharged.
Basics of Bankruptcy Law | Automatic Stay
Automatic stay is one of the most important benefits of filing for bankruptcy. The automatic stay temporarily stops all collection activities against the debtor, including telephone calls, collection letters, lawsuits, and repossessions. If creditors violate the automatic stay, they could be liable for damages against the debtor.
Basics of Bankruptcy Law | Exemptions
While bankruptcy is largely governed by federal law, New York State laws have a great impact in determining what property a bankruptcy debtor can keep, otherwise known as exemptions. New York State’s exemption laws are favorable to bankruptcy debtors. While it must be determined on a case-by-case basis, the vast majority of bankruptcy debtors in New York State find that all or nearly all of their property, including a house and vehicle, is protected by exemptions.
If you need more information on bankruptcy law in New York State, please contact our experienced Buffalo debt relief attorneys today to get the help you deserve.