A New York bankruptcy lawyer spends his or her day helping people who have fallen on hard times. Growing numbers of people and businesses have had to turn to bankruptcy protections in order to get a handle on their finances. Filing for these protections indicates an inability to meet one’s debt obligations, and depending on the chapter utilized, there are a variety of ways to satisfy as many creditors as possible. Here is a look at the work of New York bankruptcy lawyers, and the laws they work with for their clients.
The most common chapters of the US Federal Code utilized by New York bankruptcy lawyers are Chapters 7, 11 and 13. A Chapter 7 filing involves liquidation of the debtor’s assets and distribution of the proceeds to the various creditors. The first step of the process is the appointment of a trustee by the court involved who will oversee the process and take responsibility for the assets’ collection and distribution. Some assets are protected by state law, particularly in the case of an individual filer, but in general all of the filer’s assets are sold off. Then comes the process of deciding what order creditors will be paid. Secured creditors—those who hold some sort of collateral—are usually the first to be paid, while unsecured creditors come next.
Chapter 11 bankruptcy is almost never filed by individuals anymore. It is generally only utilized by a New York bankruptcy lawyer in the employ of a corporation. This is the chapter dedicated to reorganization of the firm in question in order to eventually bring it back to solvency. The trustee decides whether or not to keep the current management of the company, and may take management over themselves. They can also turn over ownership of the company to the creditors involved. The firm is allowed to break many of the contracts that previously bound them, including collective bargaining agreements, and they are protected from most lawsuits by what is called an “automatic stay.” This allows the firm to reorganize and bring itself back to solvency in order to ultimately pay back its creditors.
Chapter 13 has become the most common statute for individual filers to use when declaring bankruptcy, and it allows for the satisfaction of creditors over time. While New York bankruptcy lawyerd can use this chapter to stop some foreclosure and repossession proceedings, the debtor will still be obligated to pay off their debts over the course of 3 to 5 years, depending on the deal struck with creditors and overseen by the trustee.