"It doesn't matter if you are a big corporation, such as American Airlines, or an individual, you have the ability, under bankruptcy law, to begin anew after tough financial times," said Andrew M. Doktofsky, Long Island bankruptcy lawyer.
Huntington, NY (PRWEB) March 14, 2013
One of the United States' largest airlines is now emerging from bankruptcy with a new logo and, they say, a new way of doing business. American Airlines announced earlier this year that, after coming out of bankruptcy in December, they will have a new logo for the first time in 40 years. Bankruptcy is an ideal time for renewal, both for large corporations and for individuals, said New York bankruptcy lawyer Andrew M. Doktofsky.
"Bankruptcy is a time when people can reorder their lives and come out anew," Doktofsky said. "That's the purpose of bankruptcy law: Everyone needs a chance to start over again."
American Airlines' parent company, AMR, filed for Chapter 11 bankruptcy in 2011, citing high labor costs in their decision. The airline had suffered four consecutive years of losses amid a generally poor market for airlines.
In December, American Airlines announced it has reached a deal with its pilots' union, restructuring labor costs and allowing the company to exit bankruptcy. Less than a month later, American Airlines announced that, for the first time in 40 years, it would change its logo, from an eagle between two A's to a sleeker, more stylized eagle alongside the name (Marketing Magazine, "American Airlines rises from bankruptcy with first rebrand in 40 years," Jan. 24, 2013). The change was announced alongside a new marketing campaign and the more substantive business news that it was finalizing a merger with US Airways.
Doktofsky said the move makes sense in the context of bankruptcy.
"When a company files bankruptcy, it is saying 'We're going to change paths and do some things differently,'" he said. "It's a concept that is not limited to corporations, either. Individuals can also seek renewal after difficult times by filing bankruptcy."
Like American Airlines, people who feel crushed by their financial obligations can seek bankruptcy relief when they are unable to pay those obligations, be they credit cards, or most other types of debt the person may be facing, Doktofsky said. Individuals may file a Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is the most common chapter that people file under.
In a Chapter 7 bankruptcy, a bankruptcy trustee is appointed by the court. The trustee may sell non-exempt property to meet the obligations of the debtor, hence the reason why Chapter 7 bankruptcy is also called liquidation bankruptcy.
However, property exemptions in bankruptcies in New York are generous, Doktofsky said. Debtors in New York have a choice between the property exemptions provided under New York State law or the exemptions provided by the federal Bankruptcy Code. Debtors who have substantial equity in their homes generally use the New York State exemptions because of the generous homestead exemption that it affords. A debtor in New York can exempt up to $150,000 of equity in a principal residence. The $150,000 applies to debtors in Nassau and Suffolk Counties, New York City, Westchester, Rockland, and Putnam Counties. The homestead exemption is lower in other counties in New York State.
Debtors with little or no equity in their homes generally utilize the federal bankruptcy exemptions, which provide for a “wildcard” exemption of $11,975. This exemption can be applied to any type of personal property, including bank accounts and tax refunds. A Long Island Chapter 7 bankruptcy attorney can assist the debtor in determining what property is exempt.
Non-exempt property is liquidated to pay creditors. Whether or not creditors are paid anything in a bankruptcy case, most types of debts will be discharged. Generally, the debts discharged include unsecured debts, like credit cards, personal loans, and medical debt. Student loans are among the types of debts that are usually not dischargeable. Discharging the debt means the debtor is no longer under the obligation to pay the debt back.
"Bankruptcy law was written to give everyone an opportunity at a fresh start," Doktofsky said. "It doesn't matter if you are a big corporation, such as American Airlines, or an individual, you have the ability, under bankruptcy law, to begin anew after tough financial times."
Andrew M. Doktofsky is a Long Island bankruptcy lawyer who represents New Yorkers seeking to file Chapter 7 or Chapter 13 bankruptcy.