What is Debt Relief?
Consumers and commercial businesses sometimes cannot pay their debts as they fall due. Title II of the United States Code permits consumers to file for protection to prevent creditors from continuing lawsuits and wage garnishments.

Federal Insolvency Laws, for both Chapter 7 and Chapter 13, exist for the benefit and relief of both lenders and borrowers. On the one hand insolvency laws provide an orderly process for dividing the borrower's property and repaying each lender to the extent possible. On the other hand, laws are intended to give borrowers a fresh start in rebuilding their economic lives. The Chapter 7 and Chapter 13 alternatives were designed to accommodate the competing interest of individuals whose obligations exceed their ability to pay and the creditors of those individuals. Its purpose is to give people who have incurred more debts than they can pay an opportunity to discharge those financial obligations in a fair and equitable manner and to prevent creditors from collecting their claims after the filing.

What is a chapter 11 bankruptcy?
Chapter 11 is the reorganization chapter available to businesses and individuals that have substantial assets and/or income to restructure and repay their debts. Creditors vote on whether to accept or reject a plan of reorganization that must be approved by the court. Chapter 11 allows flexibility in structuring the reorganization. Some plans may even release a debtor from ongoing contracts such as a commercial lease or service contract. Because of the flexibility, if you think that you are nearing financial trouble, you should consult with an attorney before you reach a financial crisis. There is no debt limit under Chapter 11. However, only a chapter 11 debtor that qualifies as a small business may request expedited treatment under chapter 11. To qualify as a small business, the debtor must be engaged in commercial or business activities, other than the ownership of real property, and the total of its secured plus unsecured debts must be less than $200,000. Due to the expense and complexity of chapter 11, the decision to file a chapter 11 petition should be made in consultation with an attorney. In addition to the filing fee paid to the Clerk, a quarterly fee must be paid to the U.S. Trustee in all chapter 11 cases.

What is a chapter 13 bankruptcy?
Chapter 13 is the debt repayment chapter for individuals with regular income whose debts do not exceed $1,000,000 ($250,000 in unsecured debts and $750,000 in secured debts), including individuals who operate businesses as sole proprietorships. It is not available to corporations or partnerships. Chapter 13 generally permits individuals to keep their property by repaying creditors out of their future income. Each chapter 13 debtor proposes a repayment plan that must be approved by the court. The amounts set forth in the plan must be paid to the chapter 13 trustee who distributes the funds for a small fee. Many debts that cannot be discharged can still be paid over time in a chapter 13 plan. After completion of payments under the plan, chapter 13 debtors receive a discharge of most debts.

What is a chapter 7 bankruptcy?
Chapter 7 is the liquidation chapter of the Bankruptcy Code. Chapter 7 cases are commonly referred to as straight bankruptcy or liquidation cases, and may be filed by an individual, corporation, or a partnership. Under chapter 7, a trustee is appointed to collect and sell all property that is not exempt and to use any proceeds to pay creditors. In the case of an individual, the debtor is allowed to claim certain property exempt. In exchange for this, the debtor gets a discharge, which means that the debtor does not have to pay certain types of debts. Corporations and partnerships do not receive discharges. Consequently, any individuals legally liable for the partnership`s or corporation`s debts will remain liable. Therefore, individual bankruptcies may be required as well as the corporation or partnership bankruptcy.

Do you Lose Property if You File a Chapter 7?
Pursuant to the laws of the State of New York, certain assets are exempt and are not lost in a bankruptcy. In an overwhelming majority of all of the bankruptcies filed, consumers do not lose any of their assets. The property that you keep is referred to as exempt property. Generally speaking, for an individual consumer, they can keep up to $5,000 for cash, personal property and household goods. For valuating household goods and personal property, a trade- in value is used rather than the original cost. In addition, if the consumer is involved in a trade, there is a provision for keeping tools of trade that have a value of up to $600.00. When assets exceed the exempt asset limitations, your attorney should advise you of the Chapter 13 option which may enable you to keep all of your assets. These exemptions are being reviewed by the State Legislature and they may be increased in the future.