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Garnerville Bankruptcy Law Blog

How bankruptcy can save a home from foreclosure

For families in Rockland County who are struggling with financial problems, one of the greatest fears is the loss of the family home through foreclosure. Filing a bankruptcy petition often seems like surrender, but, a bankruptcy petition under either Chapter 11 or Chapter 13 can be the surest means of stopping a foreclosure proceeding in its tracks.

Section 362(a) of the Bankruptcy Code provides that the filing of a bankruptcy petition automatically halts all collection proceedings against the debtor, including any proceeding to enforce the lien of a mortgage through a judicial sale. The provision applies to any debt that existed as of the date of the filing of the petition. If a loan secured by a mortgage is not paid in full as of the filing of the petition, the bank or other holder of the mortgage cannot take any action to collect on the loan or begin or pursue foreclosure proceeding.

Preventing asset forfeiture in bankruptcy

When a Rockland County resident is considering filing a bankruptcy petition, one of the first questions is whether creditors can compel the forfeiture of certain assets, most commonly a car or the family home. The answer to the question is generally more positive than most people realize.

First, the laws of the United States and New York identify certain assets as exempt from the claims of creditors. A debtor must choose from one list or the other. Regardless of which list is used, exempt assets can include the homestead, up to a certain amount, a motor vehicle up to a specified value, reasonably necessary clothing, household goods and furnishings, household appliances, pensions, the tools of the debtor's trade or profession and a portion of earned but unpaid wages. Some items are not exempt, such as a second vehicle, a second home or cabin, collections of stamps and other valuable items and cash on hand. These assets will remain in the debtor's possession after the bankruptcy proceeding is completed.

Rapper seeks bankruptcy protection, citing $7.7 million in debt

Many residents of Rockland County may assume that all popular musicians are rich and that none of them comes close to needing bankruptcy protection. However, the recent bankruptcy filing of female rapper "Da Brat" belies this myth and provides a peek into the finances of an otherwise successful musician.

According to court documents obtained by a music publication, the rapper owes a total of $7,782,249.57, but has assets totaling only $108,700.65, leaving her $7,674,548.92 in the hole. The largest debt is a judgment for $6.4 million owed to a woman who successfully sued Da Brat for assault after Da Brat hit her with a bottle in a nightclub. Da Brat also owes $1,255,128 to Sony Music, $12,000 to Ally Bank, $2,284 in credit card debt and $2,294 to the Georgia Department of Revenue. She also owes an undetermined amount to the Internal Revenue Service.

Developer turns to bankruptcy to save Washington Heights project

Most residents of Rockland County and New York City view bankruptcy solely as a means for eliminating burdensome debts. However, a bankruptcy proceeding can often be used for other purposes, as a recent filing in the bankruptcy court in the Southern District of New York has demonstrated.

Rutherford Thompson acquired a site in the western Washington Heights neighborhood in 2006 with the intention of constructing a 23-story 114-unit residential condominium building. The recession put his initial plans on hold, and he has recently been attempting to sell the site. One of his lenders, Amalgamated Bank, purchased all of the $30 million debt against the site and scheduled a foreclosure auction. The auction threatened to end Thompson's interest in the project without providing any compensation.

Can creditors make an objection to the discharge in Chapter 7?

New Yorkers who have been overcome by debt and are seeking a discharge by filing for bankruptcy should be aware of certain factors that could impact the success or failure of the case. For individual debtors without property and assets that can be used to settle their secured debts, Chapter 7 is generally the best alternative. However, it is imperative to understand the rules when filing for bankruptcy under Chapter 7 and that there is no guarantee there will be a discharge. Knowing when creditors have the right to object to the discharge is key to avoiding these pitfalls and clearing the debt.

With Chapter 7, objections can be lodged by several entities. That includes a creditor, the trustee overseeing the case, or the U.S. trustee. When the case is filed, creditors are given various pieces of information. Included in that is the date at which the objection must be filed. For there to be an objection, the creditor is required to make the complaint prior to that deadline. This will spur a lawsuit called an "adversary proceeding."

Study shows rise in elderly people filing for bankruptcy

In New York and across the nation, older people are increasingly finding themselves facing overwhelming debt they are unable to repay. At a time when they should be looking forward towards retirement, these problems are causing concern about how they are going to retain their home, keep their property and even survive. While older people will frequently believe negative perceptions about bankruptcy, it is a way to get back on stronger financial ground and move forward with their lives without the everyday worry about bills. For those who are experiencing financial turmoil, it is important to know what steps to take to file.

Studies have indicated that people who are 75 and older have decided to file for bankruptcy at three times the rate when comparing 1991 to 2016. During that same time-frame, there was a 200 percent increase in filings for people age 65 to 74. Part of the issue is the growing number of elderly people in society as a whole as they tend to live longer than they did in the past. But the study shows that this is only a minor part of the financial struggles older people experience.

Rockland firm sued to prevent discharge of debt based on fraud

The United States Bankruptcy Code excludes several types of claims from the discharge provisions. Perhaps the most common exception is a debt obtained by fraud. The code states that a discharge in bankruptcy does not apply to a debt "for money, property [or] services . . . to the extent obtained by false pretenses, a false representation, or actual fraud. . . ." A Rockland steel fabricating company is now being sued by a Florida firm for allegedly making fraudulent statements that induced it to ship steel.

The dispute began in 2011 when the Rockland firm, Solutions in Stainless, Inc., d/b/a United Stainless &* Alloy, ordered two shipments of stainless steel from the plaintiff Taunton Metals. According to the allegations of the complaint, Solutions did not pay for the product, but when Taunton brought suit, Solutions agreed to pay the full amount plus attorneys' fees.

The treatment of executory contracts in bankruptcy

Most businesses in Rockland County attempt to avoid dealing with a business that has filed for bankruptcy under either Chapter 7 or Chapter 11. The chances of being paid for goods and services is obviously reduced if the other party is a bankruptcy petitioner. One of the most serious risks is to have a contract with a debtor rejected, even though the debtor is legally obligated to perform according to the contract. Such contracts are known as "executory contracts," and they receive special treatment under the Bankruptcy Code.

The Code does not define executory contracts, but the definition that is most commonly used by the courts states that "an executory contract [is] an agreement, including leases, where performance is remaining on all parties to the agreement-and can be enforced by a court." Real estate leases are among the most common examples of an executory contract.

Hotel investors look to bankruptcy to save the business

Many New York businessmen look on bankruptcy as the end of a business, but some investors look to bankruptcy as the only path to resurrecting the business. A prime example of using bankruptcy to save a business instead of dismember it was recently provided by the TIME Nyack Hotel.

The hotel was touted as the first "luxury life style hotel" in the Hudson River Valley when it first opened in a renovated warehouse in Nyack in 2016. Now, the hotel has an appraised value of $33 million and debts of $40 million.

Westchester construction firm files Chapter 11 petition

Firms who file bankruptcy petitions offer many different reasons why they are in financial peril. In a recent filing in White Plains federal court, the president of a construction firm based in Armonk, NY, blames lack of revenue for the firm's inability to pursue legal claims and recover money allegedly owed to it.

Verrino Construction Services Corp. was founded in 2000. It has operated as a contractor, subcontractor and construction manager on commercial and residential projects in Westchester and New York City. VCS filed a Chapter 11 petition asking for protection against claims that exceed $1 million. In its filing, the firm listed a total of 20 unsecured claims that total nearly $1.5 million, including $389,758 to Funding Circle USA, $239,315 to Breeze National, $193,876 to Independence Carting, and $189,331 to Chase Bank.

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