Most residents of Rockland County and New York City view bankruptcy solely as a means for eliminating burdensome debts. However, a bankruptcy proceeding can often be used for other purposes, as a recent filing in the bankruptcy court in the Southern District of New York has demonstrated.
New Yorkers who have been overcome by debt and are seeking a discharge by filing for bankruptcy should be aware of certain factors that could impact the success or failure of the case. For individual debtors without property and assets that can be used to settle their secured debts, Chapter 7 is generally the best alternative. However, it is imperative to understand the rules when filing for bankruptcy under Chapter 7 and that there is no guarantee there will be a discharge. Knowing when creditors have the right to object to the discharge is key to avoiding these pitfalls and clearing the debt.
In New York and across the nation, older people are increasingly finding themselves facing overwhelming debt they are unable to repay. At a time when they should be looking forward towards retirement, these problems are causing concern about how they are going to retain their home, keep their property and even survive. While older people will frequently believe negative perceptions about bankruptcy, it is a way to get back on stronger financial ground and move forward with their lives without the everyday worry about bills. For those who are experiencing financial turmoil, it is important to know what steps to take to file.
The United States Bankruptcy Code excludes several types of claims from the discharge provisions. Perhaps the most common exception is a debt obtained by fraud. The code states that a discharge in bankruptcy does not apply to a debt "for money, property [or] services . . . to the extent obtained by false pretenses, a false representation, or actual fraud. . . ." A Rockland steel fabricating company is now being sued by a Florida firm for allegedly making fraudulent statements that induced it to ship steel.
Most businesses in Rockland County attempt to avoid dealing with a business that has filed for bankruptcy under either Chapter 7 or Chapter 11. The chances of being paid for goods and services is obviously reduced if the other party is a bankruptcy petitioner. One of the most serious risks is to have a contract with a debtor rejected, even though the debtor is legally obligated to perform according to the contract. Such contracts are known as "executory contracts," and they receive special treatment under the Bankruptcy Code.