To Our Clients & Prospective Clients -- As of March 18, 2020, Starr & Starr, PLLC remains open for business during the current Corona virus (COVID-19) crisis. We remain in communications with our clients by phone, email and our secure file share site. We are scheduling telephone consultations by phone and video chat. The U.S. Bankruptcy Courts remain open and we are able to continue to file new cases. The U.S. District Court remains open and we continue to file new cases. The New York State Court system has temporarily suspended “non-essential functions” which includes most civil matters.

We hope everyone stays safe throughout these difficult times.

Articles Posted in Chapter 13

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?

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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

VERY IMPORTANT INFORMATION REGARDING PLAN PAYMENTS:

  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 https://www.tfsbillpay.com.  We strongly suggest that all our Chapter 13 bankruptcy clients sign up for this.  It will make their lives easier.

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 zillow.com) 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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1. The Bankruptcy Court is a Court of Limited Jurisdiction.

Upon the commencement of a bankruptcy case the automatic stay goes into effect. The automatic stay is a mandatory injunction of the bankruptcy court that prevents to commencement or continuation of litigation against the debtor (person or entity that has filed for bankruptcy).

The bankruptcy court, however, has limited subject matter jurisdiction. This means that there are certain subject matters that the bankruptcy court does not have jurisdiction over. For example, the bankruptcy court does not have jurisdiction to determine criminal, family law or probate matters, among others.

In addition, the statutory grant of jurisdiction to the Bankruptcy Code provides that the bankruptcy court does not have jurisdiction to enter final orders in personal injury or wrongful death matters. A bankruptcy judge has jurisdiction to make findings of facts and conclusions of law based on the record before the court, and based on this the United States District Court in the district where the bankruptcy case is pending has jurisdiction to enter final orders. In this regard a bankruptcy judge’s jurisdiction is similar to that of a United States Magistrate Judge (the underlying reason for this is the distinction made between judges appointed under Articles III and IV of the Constitution).
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A question that we get from time to time from clients and prospective clients in Manhattan, Bronx, Brooklyn and surrounding counties is whether if they file for bankruptcy some one will come search their house or apartment.

From an attorney perspective this question is always troubling because whether or not someone will actually come search your house or apartment if you file for bankruptcy, the schedules and statement of financial affairs need to be answered completely and truthfully. There are currently many individuals serving time in federal penitentiary who have been convicted of “bankruptcy crimes” — such as concealing assets in connection with a bankruptcy case.

The bankruptcy trustee has the ability to obtain an order authorizing him or her to search the debtor’s house or apartment with the assistance of the United States Marshall — and break doors, locks and safes to conduct an investigation. Usually this type of order will be obtained on an ex parte basis — meaning without prior notice to you to prevent you.
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A question many of our clients and prospective clients in Manhattan, Brooklyn, Westchester and surrounding counties have is why the fees some attorneys charge for consumer bankruptcy cases are much less than others?

Experienced and knowledgeable bankruptcy attorneys who specialize in bankruptcy tend to charge fees that are set fairly close to each other. In part this is because the fees charged by bankruptcy attorneys are not a mystery. Bankruptcy attorneys are required by law to disclose the fees charged to their clients on a statement filed with each bankruptcy petition. Bankruptcy attorneys who regularly practice in the Bankruptcy Court often will see these statements in the course of their practice and know what their colleagues are charging. Generally these fees reflect what the experienced bankruptcy attorney believes will be a reasonable and fair fee to cover the anticipated issues likely to arise in the debtor’s case.
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A common question we get from our clients and prospective clients in Manhattan, Bronx, Brooklyn and adjacent counties is if the Bankruptcy Court/Bankruptcy Judge will “approve their case”.

In a typical personal bankruptcy case you will not encounter a bankruptcy judge. There will not be a hearing held in the Bankruptcy Court for the Judge to evaluate your bankruptcy petition and approve it or deny it.

In the typical non-business consumer bankruptcy case your only personal contact with the “bankruptcy system” will be at the meeting of creditors at which the chapter 7 trustee or chapter 13 trustee (depending on which chapter of bankruptcy you file) will ask you questions about your income, assets, debts and financial history. However, the trustee is not a bankruptcy judge. He or she does not have the power to “approve” or “disapprove” your case. A denial of discharge or dismissal of a personal bankruptcy case can only be done by a bankruptcy judge. However, a trustee can bring a motion seeking to deny discharge or dismiss a bankruptcy case in appropriate cases.
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Whether a debtor gets to keep his or home in a bankruptcy case depends on a number of factors, such as whether or not there is equity in the house, how much of a homestead exemption the debtor is able to claim, if there is a mortgage — whether the debtor is current with mortgage payments to the lender or not, and finally what chapter of bankruptcy the debtor files (i.e., Chapter 7 or Chapter 13).

For further information regarding chapter 13, please review our prior Blog posts ( Chapter 7 or Chapter 13 Bankruptcy Filing in New York? ), ( New York Chapter 13 Bankruptcy Eligibility Requirements and Issues), and ( What are the benefits of chapter 13 (why file chapter 13 instead of chapter 7)?)
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