As a result of the COVID-19 pandemic, Congress amended the Bankruptcy Code and passed the “Coronavirus Aid, Relief, and Economic Security Act” also known as the “CARES Act”, which was signed into law by the President on March 27, 2020.  Specific amendments were made to Subchapter V of Chapter 11 of the Bankruptcy Code to change and expand the availability of small business bankruptcy relief.  Subchapter V is a relatively new section of the Bankruptcy Code that became effective earlier this year prior to the COVID-19 outbreak to make it easier for small businesses to successfully reorganize under Chapter 11 of the Bankruptcy Code.  Under the regular provisions of Chapter 11 there are significant challenges and obstacles for small business debtors to successfully reorganize in Chapter 11.

The new Subchapter V was enacted on August 23, 2019 as part of the Small Business Reorganization Act (“SBRA”), which became effective on February 19, 2020.  Under SBRA the debt limit or cap for debtor eligibility for Subchapter V small business debtors was $2,725,625.  Under the CARES Act this has been increased to $7,500,000.  However, the CARES Act contains a sunset provision, and will expire one year after March 27, 2020.  So after March 27, 2021 the SBRA eligibility limits will go back down to $2,725,625.

Both individuals and business entities (such as corporations or LLCs) are eligible to file as small business debtors under SBRA (as modified by the CARES Act).  However, at least half of the debtor’s total debt must come from business activity.  So for an individual debtor who has a mix of business and consumer debt (i.e., non-business related debt for personal, family and household reasons), as last 50% of the total debt must be business related.

For attorneys in other jurisdictions who need to appear pro hac vice in the United States District Court for the Southern District of New York (“SDNY”) or the United States District Court for the Eastern District of New York (“EDNY”) for bankruptcy appeals, or other matters, we have created a fillable pdf version of the motion of admission pro hac vice which you can download here: SDNY form of pro hac vice motion_fillable   and a fillable pdf version of the proposed order which you can download:SDNY form of pro hac vice order_fillable pdf.

The SDNY and EDNY requirements for admission pro hac vice are discussed separately on a post on our website.

At Starr & Starr, PLLC we have an active local counsel practice.  We are experienced in assisting out-of-state counsel in a local counsel capacity in a variety of different types of cases.  The extent of our involvement depends on what out-of-state counsel and the client want us to do.  We cover all of the court locations for SDNY and EDNY (U.S. District Court SDNY, Manhattan and White Plains Courthouses; U.S. District Court EDNY, Brooklyn and Central Islip Courthouses).  Please feel free to contact us at 888-867-8165 or by email at for additional information.

Chapter 7 bankruptcy is the most common type of personal bankruptcy and is used to wipe out most types of debts (with certain exceptions).  But, what do you do when you have serious creditor problems, such as collection calls, collection lawsuits, and/or wage garnishments, but can’t afford to file a chapter 7 bankruptcy?

Do you end up like the person in the image above struggling to try to carry a huge debt burden with no end in sight?   Thankfully, there is a solution.  As pointed out in an interesting article that appeared in ProPublica  by Paul Kiel, a challenge people face is they want to file bankruptcy but lack money to hire a bankruptcy attorney.  The article points out that in the southern part of U.S. more people file 13 bankruptcy than in other parts of the country because in chapter 13 bankruptcy they can pay the bankruptcy attorneys’ fees off over time out of their earnings.

Chapter 13 bankruptcy has been covered in previous blog posts here.  At Starr & Starr, PLLC we typically use chapter 13 bankruptcy to help people in New York City (Manhattan, Bronx, Queens, Brooklyn and Staten Island), Westchester, Nassau and Suffolk Counties save their homes, catch up on back rent, and/or catch up with car payments.  However, we have some clients who want and need to file bankruptcy but don’t have enough money to pay the fees and costs associated with a Chapter 7 bankruptcy, even if we give them a pre-filing installment plan with payments over time.  For those clients chapter 13 bankruptcy can be a way to allow them to file now and pay the attorneys’ fees over time out of their earnings through their chapter 13 plan.  This can be particularly useful for clients whose bank accounts are frozen or have a pending wage garnishment (which stops once the bankruptcy is filed).

For the information of our clients with pending chapter 13 cases in the Southern District of New York and the bankruptcy community at large we are sharing the following information:  effective February 1, 2018, Jeffrey L. Sapir has retired as Chapter 13 Trustee for the Southern District of New York.  Krista M. Preuss has taken over all of the chapter 13 cases that were formerly administered by Mr. Sapir in the Southern District of New York (which is New York County (Manhattan), Bronx County and Westchester County.    A copy of the notice sent out by the new Chapter 13 Trustee can be read here: Notice of Change of Chapter 13 Trustee_effective 2-1-2018


  1. Trustee will Accept Payment Electronically.   The new Chapter 13 Trustee will accept electronic payments through TFS Bill Pay.  You can sign up for this at  We strongly suggest that all our Chapter 13 bankruptcy clients sign up for this.  It will make their lives easier.

Since the end of August 2017 through today we have been receiving electronic notice from the U.S. Bankruptcy Court for the Southern District of New York (SDNY Bankruptcy Court) of the filing of Amended Discharge of Debtor Order of Final Decree  in our clients’ previously closed (and successful) chapter 7 personal cases.  To date we have received hundreds of these notices from the Court in cases going as far back as 2006.  The Court has mailed out copies to the debtors (our clients) as well as the service list in each case.  Some of our bankruptcy attorney colleagues have reported they are experiencing the same thing.

We are starting to receive calls and emails from concerned clients wondering what this is all about.  The SDNY Bankruptcy Court has not posted any information about this on its website.  For that reason I decided to make this post to address this issue for the benefit of our clients and public at large.  I have attached a redacted copy of the Amended Discharge of Debtor Order of Final Decree with the case specific information redacted: Amended Discharge of Debtor Order of Final Decree.

For all the hundreds of clients that Starr & Starr, PLLC has successfully represented in personal bankruptcy cases over the years, please be aware that you have nothing to worry about.  You may view this as a technical correction that the SDNY Bankruptcy Court is doing.  It does not change any of the advice we previously provided our clients.   For more information continue reading below. Continue reading

Many people in New York and New Jersey have houses that are “underwater” — meaning the current value of the house is less than the value of the mortgage. In the Supreme Court case of Bank of America, N.A. v. Caulkett, – U.S. – , No. 13-1421 (June 1, 2015), the Court ruled that in a chapter 7 bankruptcy a debtor cannot “strip off” or void a wholly underwater junior or second mortgage.

By way of example, if the property was worth $300,000 and subject to a first mortgage of $305,000 and a second mortgage of $50,000, the debtor seeking stip off argued he should be able to strip off or void the second mortgage as being wholly unsecured. The debtor argued that based on section 506(d) of the Bankruptcy Code (that provides “[t]o the extent that a lien secures a claim against the debtor that is not an allowed secured claim such lien is void….”), the unsecured second mortgage could be stripped off with the result that the claim of the second mortgage lender would be treated as a wholly unsecured claim.

The Court held, however, that based on its prior ruling in the case of Dewsnup v. Timm, 502 U.S. 410 (1992), this interpretation of section 506(d) was not correct. The Supreme Court found that in the prior Dewsnup case it had already “defined the term ‘secured claim” in §506(d) to mean a claim supported by a security interest in property, regardless of whether the value of that property would be sufficient to cover the claim.”

The recent Supreme Court case of Wellness International Network, Ltd. v. Sharif, – U.S. ___ , No. 13-935 (May 26, 2015) resolved the issue of whether litigants in the Bankruptcy Court can consent to have the Bankruptcy Court decide matters that otherwise would need to be decided by the U.S. District Court.

The Wellness decision resolved an issue that remained undecided since the Court’s prior ruling in Stern v. Marshall, 564 U.S. _ , 131 S.Ct. 2594 (2011), as to whether litigants can consent to having a Bankruptcy Court decide a matter which otherwise would need to be decided by a U.S. District Court judge. The Stern Court had found that the Bankruptcy Court did not have authority to adjudicate counterclaims based on state law.

The Wellness Court distinguished the Stern decision as involving a case in which the parties did not consent to Bankruptcy Court jurisdiction.

It is important to note that the Court in Wellness found that consent does not have to be express and may be implied, but must still be knowing and voluntary, and that parties need to be notified of the right to refuse non-Article III adjudication. The Court indicated that it is a good practice to obtain express consent.
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A common question we get from our clients and prospective clients in New York City, Nassau. Suffolk and Westchester Counties is whether they will be able to keep their homes if they file for personal bankruptcy.

This is Part II of a two part series on this issue. In Part I we looked at the information we need to answer the question of whether a debtor will get to keep his or home in bankruptcy. In this Part II we will look at different bankruptcy strategies that can be used in different situations.

1. Chapter 7 to Wipe Out Unsecured Debt. For many people considering bankruptcy who own a home, the problem is not that they can’t pay the mortgage, but that all of their debts combined are too much for them to pay. They may have enough to pay their living expenses and the mortgage, but not also make credit card payments. In that situation, assuming that the debtor has equity less than his or her applicable homestead exemption (discussed in Part I), a chapter 7 personal bankruptcy filing may be used to wipe out the unsecured debt. There are specific requirements for chapter 7, and not everyone will necessarily will be eligible for chapter 7. However, even if you own a home there is a still a good chance that you are eligible for chapter 7.
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A common question we get from our clients and prospective clients in New York City, Nassau. Suffolk and Westchester Counties is whether they will be able to keep their homes if they file for personal bankruptcy.

This is Part I of a two part series on this issue. In this Part I we will look at the information we need to answer the question of whether a debtor will get to keep his or home in bankruptcy. In Part II we will look at different bankruptcy strategies that can be used in different situations.

1. Value of the Home. This is the critical starting point question. It is always surprising how many people considering bankruptcy are not aware of the current fair market value (FMV) of their home (i.e., house, condo or cooperative apartment). Anyone considering a personal bankruptcy case needs to obtain current and accurate information regarding their home’s present value (FMV). Free online home value estimates (such as are not useful because they will not be a trustee or bankruptcy judge as evidence of value. A Broker’s Price Opinion is a good potential starting point However, the best evidence of current market value is a written appraisal report prepared by a licensed appraiser. In NY the current fee for an appraisal is about $350 – 550 depending on the whether the house is a single family, two family or three family house.

2. Debt on the Home. In addition to the current fair market value of the home anyone considering a personal bankruptcy filing needs to know how much secured debt there is on the home. Secured means that the loan has a mortgage on the property (such as a first mortgage, second mortgage, and/or home equity line of credit). A payoff demand from the lender is the best evidence of the current balance of a loan. In addition, any other liens or encumbrances, such as tax liens or judgment liens need to be considered. If the debtor isn’t sure whether or not there are other liens on his or her home a title report may be needed.
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Many of our clients and prospective clients in Manhattan, Bronx, Queens and other boroughs are facing the difficult situation of a wage garnishment and wonder if a personal bankruptcy filing could help.

Just to review, a creditor with a judgment can garnish the defendant/judgment debtor’s wages. The law permits up to 25% of a judgment debtor’s wages to be garnished in any pay period, not exceeding 10% per year,.

Immediately upon filing a personal bankruptcy petition the automatic stay goes into effect.
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