pic

How Common are Bankruptcies on Long Island?

Bankruptcy rates vary depending on economic conditions, local factors, and individual circumstances. Long Island, like any other region, experiences fluctuations in bankruptcy rates from year to year. 

While Long Island generally has a diverse economy with a mix of industries, including healthcare, education, technology, and tourism, economic challenges or personal financial hardships have led to bankruptcies for individuals and businesses. 

Common Causes Of Bankruptcy on Long Island 

  • Job Loss: According to a recent labor study by Ychart, the unemployment rate in New York was 5.4%. Loss of employment or underemployment can lead to financial strain, making it difficult to meet expenses and debt obligations.
  • Medical Expenses: High healthcare costs, including medical bills and insurance premiums, can overwhelm individuals and families, especially in the event of a serious illness or injury.
  • Divorce or Separation: Legal fees, property division, and alimony or child support payments associated with divorce or separation can strain finances and contribute to bankruptcy.
  • Housing Costs: Long Island’s relatively high cost of living, including mortgage payments, property taxes, and rent, can stretch budgets and make it challenging to manage debt.
  • Credit Card Debt: Accumulating credit card debt due to overspending, emergencies, or unexpected expenses can spiral out of control, leading to bankruptcy.
  • Business Failure: Economic downturns, changes in consumer behavior, or mismanagement have caused businesses on Long Island to struggle financially, leading to bankruptcy filings.
  • Student Loans: The burden of student loan debt can be significant for Long Island residents, particularly recent graduates or those pursuing advanced degrees, impacting their ability to manage other financial obligations.
  • Unexpected Expenses: Unforeseen events such as natural disasters, car accidents, or home repairs can create financial emergencies, especially if individuals lack adequate savings or insurance coverage.
  • Legal Judgments: Lawsuits, judgments, or liens resulting from legal disputes or unpaid debts can lead to wage garnishment or asset seizure, precipitating bankruptcy for some individuals.
  • Predatory Lending Practices: Falling victim to predatory lending schemes, including high-interest loans or subprime mortgages, can trap borrowers in a cycle of debt and contribute to bankruptcy.

Business Bankruptcy

There are two main types of business bankruptcy–Chapter 11 and Chapter 7. Chapter 7 bankruptcy, also known as liquidation bankruptcy, is when a business is liquidated to pay as much of its debt as possible. As long as the process goes smoothly, it should no longer have to pay off all unsecured debts. The downside of Chapter 7 business bankruptcy is that it generally ends with the business closing down. Chapter 11 bankruptcy, on the other hand, is designed to allow business owners to restructure their debts, keep their businesses running, and become a profitable entity once again. 

These are just a few common causes of bankruptcy on Long Island, but individual circumstances can vary widely. If you’re a Nassau or Suffolk County resident who believes either Chapter 7 or Chapter 11 bankruptcy may benefit you, contact a bankruptcy attorney on Long Island

Similar Posts