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Bankruptcy FAQ

The following information is provided for informational purposes only and is not to be construed as legal advice. Please contact our NY bankruptcy law firm or seek other competent legal advice regarding your individual situation.

Why have consumer bankruptcies increased?


The current recession, accompanying high unemployment and the housing crisis are all factors that have contributed to an increased number of personal bankruptcies over the past several years. Most citizens have every intention of repaying their debts, but unexpected developments in their financial situations such as job loss, medical problems, disability, divorce or death of a spouse have made it difficult or impossible to meet them. When this happens, relief under the bankruptcy code may enable them to get a fresh start.

I can’t make my monthly payments. Are there any alternatives to filing bankruptcy?


There are some alternatives to filing a petition. Debtors may attempt to negotiate workouts with creditors to lower interest rates, partially forgive a debt or extend payment terms. Debtors may also carry out an “ABC” or assignment of property for the benefit of creditors, thereby putting their assets into a trust where a neutral third party pays off creditors.


A business or commercial debtor may decide to sell the business, and negotiate that the new owner will pay off part or all of the debts.


An experienced bankruptcy attorney will analyze your financial situation and counsel you on the best financial strategy in your unique situation.

What kinds of bankruptcy options are available for consumers?


Basically there are two kinds of filings, liquidations and reorganizations.


Chapter 7 liquidation is the most common type of consumer bankruptcy, where the debtor turns over any nonexempt assets to a bankruptcy trustee who turns the assets into cash and pays off a portion of debts according to a formula set out by the courts. Any remaining debts are discharged. Debtors who do not have disposable income as determined by the means test, are eligible to file a Chapter 7 petition.


Chapter 13 is the most common type of consumer reorganization bankruptcy. Under Chapter 13, debtors come up with a plan and once approved are allowed to pay back all or a portion of their debts over several years.

What happens to alimony and child support payments under bankruptcy?


The 2005 the BAPCPA brought changes in the law. It states that domestic support obligations are not dischargeable and that debtor must pay them on a timely basis throughout the bankruptcy. If a debtor is supposed to receive alimony or child support payments, those payments are not considered part of their assets if they file bankruptcy.

If I file bankruptcy, must I still pay back student loans?


Yes, debtors must continue to repay student loans even after filing bankruptcy with very few exceptions.

How long will a bankruptcy show up on my credit report?


Depending upon the chapter you file under, credit agencies may keep bankruptcy information on credit reports between 7 – 10 years.

I’m thinking about filing for bankruptcy. Should I consult an attorney?


Yes. Bankruptcy is a complicated process with many rules and regulations. An experienced bankruptcy attorney can help analyze your financial circumstances and determine if bankruptcy is the best way back to solvency in your individual situation.

Contact the NY bankruptcy law firm of Rosenberg, Musso & Weiner


We have over 60 years of combined experience in bankruptcy law. Call us at 718-795-2415 to have all of your bankruptcy faq answered or contact us to schedule a no-cost consultation online.

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