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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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An involuntary bankruptcy case is a bankruptcy case started against a debtor by its creditors. The debtor can be either an individual or a business entity. The creditors file a petition with the bankruptcy court and then if the debtor — if he, she or it doesn’t want to be in bankruptcy — can challenge that the requirements for an involuntary bankruptcy are not satisfied.

If a debtor has more than 12 creditors, and most debtors will have more than 12 creditors,
an involuntary bankruptcy requires 3 or more petitioning creditors that don’t have contingent claims, or claims that are subject to dispute as to liability or amount, totaling at least $13,475. So one creditor alone holding a judgment can’t file an involuntary bankruptcy against a debtor. It is usually a good idea to have more than 3 petitioning creditors so that if the validity of any creditor’s claim is challenged, such as that the claim is subject to bona fide dispute, there are still additional petitioning creditors with valid claims.
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When a creditor obtains a judgment against a debtor in New York the judgment creditor will typically seek to enforce the judgment and recover money to satisfy the judgment. This topic is covered in prior Blog posts and on the Frequently Asked Questions (FAQs) on our web site.

A common method of enforcement of a judgment is by a writ of execution against the judgment debtor’s bank account or a wage garnishment. This is accomplished with the assistance of a New York City Marshal in New York City or County Sheriff.

When the Marshal or Sheriff receives a judgment for enforcement they add five percent (5%) to the amount of judgment as their fee. This statutory fee is called “poundage”. For each $1 the Marshal or Sheriff recovers from the judgment debtor they cut 5¢. However, the total amount of the judgment is also increased by 5% to account for poundage.
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As the recession continues many people are having trouble paying their bills even if they have a job. A common question we get from employees in Manhattan and other surrounding areas is whether the employer gets notified if there is a wage garnishment.

When a creditor obtains a judgment against a debtor in New York the judgment creditor will typically seek to promptly enforce the judgment and recover money to satisfy the judgment. This topic is covered in our prior Blog posts and on the Frequently Asked Questions (FAQs) on our web site.

A common method of enforcement of a judgment is by a wage garnishment. This is accomplished with the assistance of a New York /City Marshal in New York City or County Sheriff. Up to ten percent (10%) of a judgment debtor’s wages (25% in any pay period, not exceeding 10% per year) can be garnished.
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If you default on credit card debt typically your credit line will be cancelled if the default is not promptly cured. Usually your account will be turned over to the internal collection department of the creditor. They will call you (frequently — often daily if not more) and send you letters about the past due debt. They may offer you a discount for a single lump sum payment or payment of an agreed reduced amount in 2-3 payments (perhaps longer).

The next stage is that the debt will get turned over to an outside debt collection agency. This is a company that specializes in collecting past due debts. They usually have a stable of collectors who are employed on a primarily contingency basis — meaning the collector’s salary is directly tied to his or her ability to collect money from you.. Many collection agencies — particularly in New York employ what has become to be know as the “Buffalo” style of collections (named after the collections agencies in that city that often utilize this style). The Buffalo style of collections is very aggressive and confrontational. Even if an individual collector does not engage in blatant violations of the Fair Debt Collections Practice Act (FDCPA) by engaging in prohibited debt collection activities — they often will create an artificial atmosphere of fear, uncertainty and urgency. For example, it would be a clear violation of FDCPA for a debtor collector to state “If you don’t pay this debt you will go to jail” — since that statement is false (we have not had debtors prison in the U.S. since the 1800s). However, a Buffalo style collector may intimate unspecified dire consequences intended to elicit fear and anxiety in the debtor, such as “I wouldn’t want to be in your shoes if you don’t pay this debt by the end of the month.” When the debtor inquires what will happen the collector might respond vaguely, such as “It’s not good” or “You’ll fine out if you don’t pay.”
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By the time many of our bankruptcy clients come to has they have exhausted most of their personal savings, and often their retirement assets. Some people invade these funds — that are intended to provide income in retirement — and use them to try make minimum payments on credit cards and cover living expenses. This is a very common scenario we see for people who have lost their job and unemployment has run out.

In bankruptcy, retirement assets, such as I.R.A.s and 401(k) are generally exempt. If someone intends to file bankruptcy and get a fresh start from their debts it doesn’t make a lot of sense to Continue reading

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A common question we are asked by people living in Manhattan, Brooklyn, Queens and surrounding counties is whether they can leave the state after filing for bankruptcy..

The answer is that there is no requirement that a debtor remain physically present in New York continuously after filing for bankruptcy until his or her case is closed. The debtor (person filing bankruptcy) will be required to attend the meeting of creditors in his or her case that is held approximately 30 days after the case is filed. In a chapter 13 case he or she will also be required to attend the confirmation hearing with respect to the chapter 13 plan held approximately four months after the case is filed. In a chapter 11 case there are various status conferences that the debtor may need to attend.
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In prior posts we have covered how a wage earner repayment plan (chapter 13 bankruptcy) works. Many people are interested in filing chapter 13 bankruptcy in Manhattan, Brooklyn or Queens, but are concerned about what happens if they are unable to make all plan payments, or if they decide they don’t want to continue to be locked into a long repayment plan, In this post we will look at the options available to a chapter 13 debtor who is unable to make all plan payments, such as because he or she lost his/her job, or because expenses were higher than planned.

1. Conversion to Chapter 7. A debtor in a chapter 13 case has the right to automatically convert the case to chapter 7 at any time. This is done by filing a Request for Conversion form with the Clerk’s Office. Once the case has been converted to chapter 7 the debtor no longer has to continue making chapter 13 plan payments. The debtor can obtain a discharge of his/her dischargeable debt in the chapter 7. An example of a situation in which someone might do this is if they had filed chapter 13 for a very specific reason, such as to try to catch up on car loan payments or home mortgage payments to prevent loss of the car or foreclosure, but they weren’t able to successfully make the required catch up payments and lost the car or house. In that situation it may not make sense to continue to be in chapter 13 and conversion to chapter 7 may make more sense.
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