The Most Common Types of Bankruptcy

Both people and businesses file for bankruptcy when they are financially unable to pay their creditors on time, or at all. Bankruptcy allows individuals and businesses to get a fresh start so they can resume their lives without the burden of debt they can’t pay. Common reasons why they file bankruptcy are sudden and catastrophic medical problems resulting in large medical bills; loss of income; divorce; home foreclosure; unexpected losses; student loans payments that can’t be paid; among many others.

While every bankruptcy scenario is unique, they typically fall into one of four categories:

Chapter 7 Bankruptcy

People file chapter 7 bankruptcy when they are unable to pay their creditors, need to get quick relief from those creditors, and they don’t have assets that they need or want to keep (such as a house or car).

Chapter 13 Bankruptcy

People file chapter 13 bankruptcy when they are unable to pay their creditors on-time and need to have their debts restructured, wish to keep some of their assets (such as their home, car, and furniture), and they are unable to qualify for chapter 13.

Chapter 11 Bankruptcy

Chapter 11 is typically used when a business (i.e. sole proprietors, partnerships and some corporations) needs to reorganize its finances and restructure their debt. Very often, the debtor is able to maintain control of its business operations, subject to the jurisdiction and oversight of the bankruptcy court.

Chapter 12 Bankruptcy

Chapter 12 is similar in nature to chapter 13 but is designed for farmers and fishermen who have a regular annual income.

Finding a Great Bankruptcy Attorney

Bankruptcy law is complex and always changing, and an attorney who doesn’t practice bankruptcy law on a regular basis probably won’t be able to provide you with the same expertise as one who does. In Nassau County and Suffolk County alone, there are so many bankruptcy attorneys to choose from. This is why it’s important that you hire an attorney who has excellent qualifications and one you feel comfortable with.

Questions to Consider

  1. How many cases have they filed in the past year? If they haven’t filed many, they may not be experienced enough to win your case.
  2. How many of those cases have they won? You want an attorney that has won (with discharge orders from the court that relieve you from your obligation to pay your debt) in many cases, the more the better.
  3. Do they belong to the bankruptcy division of their state or local bar association, the National Association of Bankruptcy Attorneys, or a similar organization (this shows they have continuing education and are serious about doing the best job for their clients)?
  4. Does the Bankruptcy attorney have any peer reviews, and how favorable are they?
  5. Does the Attorney have an AVVO rating, and if so how high is it? AVVO is an online legal service that provides client reviews, endorsements by peers, and disciplinary actions of attorneys. It can be a valuable source of information when deciding what attorney to hire.
  6. Is the attorney familiar with Adversarial cases where the creditors contest the bankruptcy in court, and if so how many of those cases have they tried and won?
  7. Go online to the State Bar Association to see if the attorney has any complaints or sanctions against them.
  8. Ask family and friends if they have had good personal experiences with a bankruptcy attorney, and ask if they would recommend that attorney and why.
  9. Call and visit the attorney’s office to see if you feel comfortable working with them. An attorney who has an office that is cluttered and feels chaotic probably handles their cases the same way.
  10. Does the attorney provide a free consultation?
  11. Does the attorney fill out a questionnaire to find out all the necessary information needed to advise you what to do, and to prepare your case for bankruptcy court?
  12. When you have a question for your attorney, does he/she respond to you within a day or two?
  13. Does the attorney have enough working experience to be on good working terms with the judges, bankruptcy court, trustee, and creditors? When the attorney has a good working relationship with them, it’s also good for you.

For individuals and business owners, filing for bankruptcy can be humiliating. People don’t want to share their personal finances with anyone. They just want to find a solution to their financial problems and move on with their lives. This is where a qualified and reputable bankruptcy attorney can help.

Choosing an attorney isn’t always easy and you want to take your time choosing one. Whatever you decide, don’t choose an attorney simply because he/she charges less than others. You know the saying, “you get what you pay for”?  It generally holds true, especially when dealing with bankruptcy law. Bankruptcy law is complex and continually changing. If attorneys don’t keep up with those changes, they won’t be able to give you the help you need.

Finding an attorney isn’t as hard as it might seem. It’s important to find one near you, especially if you live in a densely populated area such as New York City. If you live in New York City and need a bankruptcy attorney in Nassau County or the surrounding area, give us a call. We take pride in helping people solve their bankruptcy problems.