Jump to Navigation

Garnerville Bankruptcy Law Blog

The advantages of reaffirming a debt in bankruptcy

When a resident of Rockland County considers filing a bankruptcy petition, one of the many questions he or she may have is whether he or she will be able to keep his or her car. The answer depends in part on the kind of bankruptcy petition that is filed and also on whether the debtor elects to reaffirm the installment payment agreement that was used to finance the original purchase of the car.

If the debtor files a consumer bankruptcy under Chapter 13 petition, the status of the car loan will be included in the reorganization plan. Most debtors keep their car and propose a schedule to make up late payments. In a Chapter 7 proceeding, the installment purchase agreement is canceled and the creditor usually reclaims the car. If, however, the debtor wants to keep the car, he or she can "reaffirm" the debt and enter a reaffirmation agreement with the creditor.

Personal bankruptcy basics for individuals

All the recent news about high-profile corporate bankruptcies including, Toys "R" Us, Gibson Guitars and Weinstein Companies, can obscure the remedies that bankruptcy may provide for individuals. Individuals in Rockland County and other suburbs of New York City should remember that portions of the federal Bankruptcy Code are specifically tailored for them. This post will review the fundamental remedies that consumer bankruptcy provides for individuals.

The nation's bankruptcy laws are intended to provide a fresh financial start for people whose accumulated debts are greater than their ability to make regular payments. People seeking bankruptcy protection have two main options. A filing under Chapter 7 asks the court to collect the debtor's assets, to use those assets to settle with creditors and to discharge -- that is, declare no longer collectible -- many of the debtor's obligations.

What should landlords know if a tenant files for Chapter 11?

The bankruptcy of a business tenant can be financially cataclysmic for a commercial landlord. If a commercial landlord in New York believes that a tenant is on the verge of filing a Chapter 11 business bankruptcy petition, understanding the provisions of the Bankruptcy Code that directly affect a landlord's rights can save a landlord many thousands of dollars.

Three provisions of the Bankruptcy Code figure most prominently in untangling the landlord-tenant relationship. The first is the "automatic stay." Under the Bankruptcy Code, the mere filing of a petition seeking relief under Chapter 11 automatically stops all collection actions. If a landlord has sued a defaulting tenant for overdue rent, that lawsuit is stopped in its tracks. However, if the lease expired before the petition was filed, the landlord may still pursue an eviction action.

Condo developer faces involuntary business bankruptcy

Real estate developers often use favorable markets to obtain financing to build and sell their projects. Unhappily, bull markets do not last forever, and when a market cools, developers and investors are often left wondering what happened -- and what to do next. Filing a lawsuit or a business bankruptcy petition is often the next step.

Several banks in the New York City suburbs, including one in Rockland County, have recently filed a petition in bankruptcy court in White Plains asking the court to declare a real estate developer and his firm, Michael Paul Enterprises, involuntarily bankrupt and to liquidate their assets. About seven years ago, the developer began to buy older townhouses and either renovate them or demolish them and build high end condominium apartments in their place. According to the allegations of the bankruptcy petition, the developer sought financing for seven projects in or near New York City. Total project costs were estimated to exceed $114 million. The bankruptcy petition alleges that the developer has failed to make payments when due.

Understanding the role of the bankruptcy trustee

People in Rockland County who may be contemplating filing a petition in bankruptcy court will want to know who will be controlling their fate after they file a petition. Most people realize that the bankruptcy judge will have the final say over whether and how their debts are paid, but very few people are aware of an official called the bankruptcy trustee and the trustee's role in the bankruptcy process.

Understanding the role of the trustee begins with the concept of the bankruptcy estate. A bankruptcy estate is automatically created when the debtor files the petition. The estate consists of all property owned by the debtor that is not exempt from claims of creditors. The estate becomes an independent legal entity. The bankruptcy trustee is an official appointed by the court to take possession and supervise the handling of the bankruptcy estate. The exact duties of a trustee depend upon the specific circumstances of the case, and whether the filing is under Chapter 7 or Chapter 13.

Personal bankruptcy code held to outweigh arbitration clause

Virtually every credit card contract issued in Rockland County and throughout the country contains a binding arbitration clause. These clauses require all disputes between the card holder and card issuer to be resolved in a binding arbitration proceeding. The Second Circuit Court of Appeals was recently faced with a case in which a card holder attempted to escape the arbitration clause in a credit card agreement after he had won the discharge of the credit card debt in a Chapter 7 proceeding.

The card holder defaulted on his credit card loan from Credit One Bank. In March 2014, the Bankruptcy Court for the Southern District of New York issued an order discharging the card holder's debts, including the debt owed to Credit One Bank. The bank had earlier written off the loan at issue but had refused to remove the write-off from the debtor's credit report. The debtor then asked for permission to reopen his bankruptcy case and allow him to sue the bank to enforce the discharge order. The bank claimed that the dispute must be submitted to binding arbitration per the credit card agreement.

What are bankruptcy exemptions?

When a resident of Rockland County contemplates filing a bankruptcy petition, one of the first questions asked is whether creditors can seize the person's residence, automobiles, retirement plans or other assets. In most cases, debtors will not be required to surrender their personal assets in a Chapter 7 bankruptcy proceeding. Assets subject to this protection are generally called "exemptions." The rules governing the designation of exempt assets are complex, but this post will provide a useful overview.

New York and every other state in the union have laws that identify the types of assets that can be declared exempt from Chapter 7 bankruptcy. The Bankruptcy Act itself likewise contains a list of allowable exemptions.

Bankruptcy for the small business owner

Many small business owners in Rockland County who are facing unexpected financial difficulties may wonder about the consequences of filing a bankruptcy petition. Perhaps the most important question is whether to seek dissolution under Chapter 7 or a reorganization under Chapter 11. The second question is what happens to the business and its assets in a Chapter 7 or Chapter 11 proceeding.

The form of organization used by the business can have a significant impact on whether the business owner can use Chapter 7. Chapter 7 is available for individual and cannot be used by corporations or limited liability companies. If a business is a sole proprietorship or partnership, i.e., neither a corporation nor an LLC, The owner may choose to file under Chapter 7. Filing under Chapter 7 essentially means that the owner is filing as an individual, which means that he or she must pass the so-called "means test" under Chapter 7. The means test forecloses Chapter 7 to anyone whose annual income exceeds the median income in the state whether the debtor files the petition. Under Chapter 7, the debtor's assets, including the assets of the business, are turned over to the bankruptcy trustee, who uses the assets to pay off the claims of creditors. Any claims not satisfied are discharged and do not need to be repaid. The business, in effect, ceases to exist.

Toys 'R' Us suppliers weigh options after business bankruptcy

The decision by the leadership of Toys 'R' Us to close the company's stores in the United States is no longer fresh news. While adults in New York mourn the loss of a childhood icon, the company's suppliers are wondering if they will receive payments for toys sold to the retailer over the last few months.

Toys 'R' Us has abandoned all attempts at reorganization and is exploring how best to liquidate its remaining assets. In a series of interviews conducted by Reuters, many executives and consultants said that many small toy manufacturers will likely find themselves in bankruptcy along with the giant retailer. The CEO of a large doll manufacturer said that Toys 'R' Us' owes his company $14 to $15 million and that he does not expect the bill to be paid in full. Another toy company executive lamented the loss of an outlet that provided 15 percent of his company's annual sales.

Choosing between a Chapter 7 and a Chapter 13 bankruptcy

People in Rockland County who are considering filing a bankruptcy petition usually wonder whether they should use Chapter 7 or Chapter 13. A Chapter 7 bankruptcy usually results in the discharge of many of a person's debts, whereas a Chapter 13 bankruptcy results in a plan to pay existing obligations over time, usually five years. While Chapter 7 may seem more appealing, only individuals whose income is below a prescribed level are eligible for Chapter 7. People whose income is above the prescribed level must file under Chapter 13. Nevertheless, approximately 70 percent of all bankruptcies are filed under Chapter 7, while the other 30 percent are filed under Chapter 13.

Most people worry about keeping their house and their automobile. Under Chapter 7, assets subject to a lien, such as a real estate mortgage or security interest, will be returned to the creditor unless the debtor is able to pay off the balance of the loan. Under Chapter 13, the debtor can keep the asset by staying current with the repayment plan prescribed by the court. Many debtors have valuable assets that are not exempt from collection, such as works of art, non-homestead real estate and corporate stock. These assets must be surrendered in a Chapter 7 proceeding, but the debtor can retain ownership under a court approved plan in a Chapter 13 bankruptcy.

Subscribe to This Blog's Feed


Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

FindLaw Network


Law Office of Ronald V. De Caprio 65 West Ramapo Road Garnerville, NY 10923 Phone: 845-406-4201 Toll Free: 866-936-8113
Map & Directions