The Basics of Bankruptcy

Article I, Section 8, of the United States Constitution authorizes Congress to enact “Uniform Laws on the Subject of Bankruptcies.” Under this grant of authority, Congress enacted the “Bankruptcy Code” – the uniform federal law that governs all bankruptcy cases. The Bankruptcy Code has been amended several times since its enactment in 1978.

A fundamental goal of the federal bankruptcy laws is to provide debtors with a financial “fresh start” by eliminating overwhelming debt. The bankruptcy discharge accomplishes this goal by releasing or “discharging” debtors from personal liability for most debts. This discharge or release prohibits creditors from taking any future collection actions against the debtor forever.

Six basic types of bankruptcy cases are provided for under the Bankruptcy Code. The cases are traditionally given the names of the chapters that describe them. The three most common types of cases are those under Chapter 7, Chapter 13, and Chapter 11.

Chapter 7 cases are a “liquidation” or sale of a chapter 7 debtor’s nonexempt property and the distribution of the proceeds to creditors. Cases under Chapter 7 may be filed by natural persons or a business organization.

Chapter 13 cases are a “reorganization” or adjustment of debts of an individual with regular income. A chapter 13 debtor may retain property and pay debts over time, usually three to five years. Cases under Chapter 13 may only be filed by natural persons.

Chapter 11 cases are a “reorganization,” usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to maintain its business and pay creditors over time. Cases under Chapter 11 may be filed by natural persons or a business organization.

Basics of Bankruptcy Law

The bankruptcy process utilizes complex legal concepts like the “automatic stay,” “discharge,” and “exemptions” to provide debtors with a fresh start. Call Todd S. Cushner directly at (914) 600-5502 to learn more about these useful tools and discuss gaining your own fresh start through bankruptcy.

Interacting with Creditors Before Bankruptcy

If bankruptcy is on your financial horizon and creditors are contacting you around the clock, there’s no guarantee that threatening to file bankruptcy will stop this repeated harassment.

Contacting the creditor directly and requesting that its collection agents cease and desist from further contact rarely works and, if it does, not for long.

Hiring a qualified bankruptcy attorney to represent you in any and all contact with creditors will allow you to eliminate time-consuming and aggravating harassment. Hiring a qualified bankruptcy attorney will allow you to permanently avoid all contact with creditors and get back to a normal life.

The Law Office of Todd Cushner & Associates, P.C. can stop creditors from harassing you today! Call Todd S. Cushner directly at (914) 600-5502 for a free consultation. The Law Office of Todd Cushner & Associates, P.C. offers extensive knowledge, expertise, and experience to anyone considering and contemplating bankruptcy.

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