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Garnerville Bankruptcy Law Blog

What is the 'means test' in a bankruptcy proceeding?

Most New Yorkers who consider filing a bankruptcy petition must choose between filing under Chapter 7 or Chapter 13. Under Chapter 7, virtually all unpaid debts are discharged. But, under Chapter 13, the debtor must submit a plan to pay-off debts over time.

In 2005, Congress decided that persons could only seek the broad relief of Chapter 7, if their annual income was below a prescribed level. This income level has become known as the "means test."

What is the automatic stay in bankruptcy?

Most residents of Rockland understand that filing for bankruptcy is one way to manage an overwhelming amount of debt, but very few understand how that happens. One of the most important provisions of the United States Bankruptcy Code is the so-called "automatic stay." This post will explain the mechanics of the automatic stay and show how it can be used to manage all sorts of debts.

The automatic stay is contained in 11 U.S. Code §362. When a person files a bankruptcy petition in either Chapter 7 or Chapter 13, the bankruptcy court in which the petition is filed automatically issues an order - called a "stay" - that stops almost all actions by creditors to collect on obligations owed by the debtor. The debtor must provide the name and address of each creditor so that the court can provide notice of the automatic stay. The automatic stay is intended to give the debtor breathing space to work out a plan of reorganization in a wage earner bankruptcy or collect and sell assets to reduce debt in a Chapter 7 liquidation. The issuance of the automatic stay does not determine whether a debt must be paid; that issue must await the outcome of the bankruptcy proceeding.

We help New Yorkers struggling under credit card debt

As a previous post on this blog discussed, credit card companies offer all kinds of incentives to get New Yorkers to sign up for and then use their credit cards. In addition to "zero interest" purchases, companies also offer cash back incentives, travel rewards and other goodies that are in fact wonderful deals so long as people pay off the balances.

However, whether due to a job loss or some other economic misfortune, sometimes families can no longer make their payments on credit cards. When these sorts of things happen, interest can quickly pile up and leave a family struggling with thousands or even tens of thousands of dollars in credit debt, even if they are able to get out of whatever situation caused them to fall behind in the first place.

Deferred interest versus no interest credit cards

One of the reasons families who live in Rockland County, New York, wind up having to file bankruptcy is credit card debt. Although a family may be able to swing regular payments, at least on the interest, when everything is going well, big credit card balances combined with unemployment or a medical problem can cause a family's finances to unravel quickly.

This is why families in New York need to be careful when signing up for the latest, greatest credit deal, especially on the spur of the moment when making a big purchase. As alluring as those retail store offers can be, it is important for consumers to be aware of the fine print and details of the deal they are making with the credit card company.

New York's real estate exemption

One of the pieces of property a New York family who is struggling financially is most likely to want to hang onto is the family home. For these people, New York's homestead exemption is very important to understand, as it can help a family protect their residence even through a bankruptcy.

The homestead exemption is one of several exemptions that may come into play during a Chapter 7 bankruptcy. The general rule is that a debtor's property has to be turned over to the bankruptcy trustee so that it can be sold to pay off a portion of the debts. However, in New York a debtor can declare certain property exempt, meaning that the debtor can keep the exempt property.

As bankruptcy looms, nursing home CEO seeks payout

A major nursing home chain, the second largest in the country is facing the real possibility of a business bankruptcy but is currently trying to navigate a dispute between the chain's chief officer and the firm which is the landlord of the chain's many properties. A private equity firm which bought the chain is also involved.

When the private equity firm bought the chain 10 years ago, the CEO signed an agreement calling for $100 million, which would be paid as deferred compensation in order to save the manager some tax liability. Perhaps because of the chain's financial problems, the CEO now wants an immediate payout. Sources indicate that if a business bankruptcy does get filed, the CEO will likely get $60 million.

How an attorney can help if you are facing foreclosure

A previous post on this blog discussed how the foreclosure process works in this state. Although foreclosure is a court process in New York, many Rockland County residents whose homes are in danger of being foreclosed may think that there is little that can be done to slow or stop the process assuming that they indeed owe the bank money. Moreover, some might question why they would sink money into legal fees when they are already in financial trouble and behind on their house payments.

An attorney can be helpful in a foreclosure action in several different ways. For one, not every foreclosure is "routine."In some cases, a bank may be trying to foreclose on a lien against the property but the moneyis not owed by the person who lives in the house. A bank may also initiate foreclosure if it suspects payments will not be made in the future, even if a home owner or commercial business owner is current on payments to that point.These sorts of issues often require litigation to resolve.

Overview of how a foreclosure works in New York

No one in the Rockland County, New York area ever wants to get into financial problems and have to worry about losing their home to foreclosure. Unfortunately, though, even hardworking New York families can find themselves in a situation in which the bank begins the process of taking back their home. These sorts of situations often arise in the case of an unexpected job loss or a sudden health crisis.

New York is what is called a "judicial" foreclosure state. This is generally good news for debtors since the process tends to take longer than in "non-judicial" states and also requires the involvement and supervision of the local courts. Overall, the process lasts about one year and three months.

High Court rules it fair play to file outdated claims

After a recent Supreme Court ruling, Rockland County, New York residents who are contemplating a bankruptcy filing may need to pay more careful attention to the slew of paperwork that follows a bankruptcy.

To give context to the Court's recent opinion, a New York debtor is expected to list everything he or she owns and owes, including unpaid bills and other debts, on his or her bankruptcy paperwork. However, listing a debt only ensures a creditor will get notice of the bankruptcy. In order to get paid, a creditor has to file a claim for payment with the bankruptcy court. If there is money available, the creditor will get a portion of the proceeds.

What are the big differences between Chapter 13 and Chapter 7?

Most Garnerville and Rockland County residents who follow this blog probably know that Chapter 7 and Chapter 13 are types of personal bankruptcy but that they are different. While Chapter 13 bankruptcy and Chapter 7 differ in many ways, there are a couple which really stand out.

Perhaps the most important difference between the two is that Chapter 13 allows a New York resident in financial trouble to keep most all of his or her assets during a bankruptcy but instead requires the person to turn over a set portion of his or her income each month for three to five years. This portion of income, which works a lot like a wage garnishment, goes to re-pay some of the person's debts.

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