New Yorkers who are considering filing a Chapter 13 bankruptcy petition are frequently deterred by fear of the unknown. One of the biggest unknowns is the effect that filing a Chapter 13 petition - frequently called a wage earner or, more generally, a consumer bankruptcy - will have on a person's ability to buy or rent a home. The filing of a Chapter 13 petition does not ipso facto prevent a person from buying or renting, but the process often becomes more laborious.
Bankruptcy can serve many purposes for a financially stressed New York business, from restructuring its operations to increase profitability to liquidating its assets and going out of business. The women's shoe retailer Aerosoles is reported to be on the verge of filing a Chapter 11 bankruptcy petition that will allow it to close a number of unprofitable stores in the United States but continue operations.
The changing retail markets in the United States have affected both large and small merchandisers. As big online retailers such as Amazon gain larger and larger shares of various markets, their competitors are facing dire financial futures. One of the most recognizable chains, Toys "R" Us, has already abandoned its flagship store in New York City and is now reported to be considering bankruptcy because of reduced sales and a heavy debt load.
The ability to seize a portion of a debtor's paycheck is one of creditors' most powerful collection tools under New York law. For low-income families, the loss of even a small portion of a regular paycheck can be catastrophic. Filing a petition for personal bankruptcy can help alleviate this problem by invoking the so-called automatic stay.
People who filed bankruptcy petitions often lose sight of their responsibility to be honest in their statements to the court and to the bankruptcy trustee. Both the court and the trustee possess the power to impose civil fraud penalties on persons who make material misstatements to the court. In a recent order in a New York business bankruptcy case involving TV star Chris Laurita of "Real Housewives of New Jersey," the trustee demonstrated the scope of this power.