The Rules and Regulations Pertaining to New York Bankruptcy Law

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There are several chapters such as Chapter 7, 9, 11, 12, 13 of the Bankruptcy Code under the federal law that governs the bankruptcy laws of New York. The various chapters of the Bankruptcy Act deal with a variety of issues and thus serve as a guide on how to deal effectively with and resolve cases under each chapter. Chapter 7 applies to debtors who have no assets to repay their debts. Chapter 9 deals with cases of government municipalities. Chapter 11 is for the owners or shareholders of a company. Chapter 12 concerns fishermen and farmers. For employed persons or families, self-employed persons and employees, see Chapter 13.

As stipulated in Chapter 7 of the New York Bankruptcy Act, the income of an individual in such cases should be lower than the average income. Under this chapter, the cases dealt with are almost completely debt-free, but some things, such as student loans, alimony, child support, and fraudulent debts must be repaid. The rules are different in Chapter 13 where recovery is made from the person who declares bankruptcy after reorganizing the legal liability for the debt. This is usually done over a longer period and as much as possible at a lower interest rate, as well as reducing monthly payments. But if anyone thinks that by filing for bankruptcy, he will be safe from paying his debt, he is mistaken because there is no provision to remove liability without paying off the debt.

Strict federal laws have been put in place so that it is possible to control the random ranking of bankruptcies. Nowadays, to file a complaint under the New York Bankruptcy Law, it is necessary to completely convince the institution that it is truly devoid of any assets that can be used to repay outstanding debts. Therefore, there is no choice but to file for bankruptcy, to stop paying interest on the debts. In order to be able to file a bankruptcy petition, documented evidence confirming the claims of an individual wanting it to be totally devoid of any assets is necessary. The courts that manage bankruptcy cases usually decide what are the real and truly deserving cases and allocate them accordingly in the different chapters. There are also cases of bankruptcy where a company fails for various reasons and must therefore declare bankruptcy, stating that the company is not able to repay the debt because it has exhausted all his resources. At the same time, the company may also declare that, even if it is bankrupt, it wishes to continue its commercial activities. Chapter 11 deals with cases in which the petitioner is the owner or shareholder of the company.

New York bankruptcy legislation prefers that cases be classified under Chapter 13, not under Chapter 7, the reason being that under Chapter 13, it is still possible to recover claims as much as possible. This is usually done by spreading the recovery period over a longer period, realizing the minimum amount due after the reorganization of the loan liabilities. But truly real cases in which a person is not in a position to pay his or her interest on debts, for example people suffering from a chronic illness, unemployed persons, persons suffering from physical deformity or all other forms of high-cost illness are listed in Chapter 7. This is a way to prevent scams and help people who are truly ruined to get back on their feet and find their place in society. In this way, the state and its citizens are protected and put on the path of economic renewal.


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