New York Bankruptcy Lawyer Blog

June 22, 2009

Can I Leave New York After I File for Bankruptcy?

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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June 19, 2009

What Happends If I Can’t Make All Chapter 13 Plan Payments in New York?

by Stephen Z. Starr

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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June 10, 2009

Will I Be Able to Have Any Credit After Bankruptcy in New York?

by Stephen Z. Starr

A common question we get asked by our clients in Manhattan and other boroughs of New York is whether they will be able to get any credit after filing bankruptcy.

1. Alternatives to Credit. First of all, although credit can be convenient there are many alternatives to credit. Many of the alternatives to using credit from a financial planning and budgeting perspective are better because people who buy things using credit often spend more than people who don’t. So, the first alternative to credit is to pay cash. This may require the financial discipline of saving up enough money to buy a new or used TV before making a purchase, rather than just “paying with plastic”. People paying cash will often compare prices more carefully than those paying with credit. Another classic alternative to credit is the “lay-a-way plan.” Many retail stores and department stores offer this option. You select an item and put down a deposit and make payments each month until you have paid in full. Once you have paid in full the store gives you the item.

Sometimes you may need to use a credit card not because you are buying something, but more as a form of security deposit — such as if you are renting a car or reserving a hotel room. They want you to use a credit card to hold a reservation, although they will let you pay the charges in cash. However, many rental car companies and hotels will accept a cash deposit in lieu of credit card. Also, if you make rental car or hotel arrangements through a travel agent or reseller (such as Expedia, Orbitz, etc.) since you have pre-paid the purchase prior to travel you don’t even face this problem.
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June 2, 2009

I am Owed Money by Chrysler or GM — What are My Rights in NY?

by Stephen Z. Starr

On April 30, 2009, Chrysler and its affiliates filed a chapter 11 case in the U.S. Bankruptcy Court for the Southern District of New York. On June 1, 2009, GM and its affiliates also filed a chapter 11 case in the U.S. Bankruptcy Court for the Southern District of New York.

People and companies who are owed money from these companies have questions about what are their rights now that these companies have filed for bankruptcy. In a prior posting ( Help I am Owed Money By a Company that Has Recently Filed for Bankruptcy in New York) we have discussed the different types of claims in bankruptcy cases. In this post we will focus more specifically on the rights of creditors of Chrysler and GM.

1. Automatic Stay Prevents Collection, Litigation & Judgment Enforcement
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 arises automatically by operation of law upon the filing of a bankruptcy case. The territorial reach of the stay is nationwide (and in theory at least — worldwide — although creditors in foreign jurisdictions will not always honor U.S. Bankruptcy Court orders). The stay is automatic because no prior notice or hearing is required before the stay goes into effect.

The stay prevents dunning and collection activity by suppliers and vendors to collect unpaid pre-bankruptcy invoices. The automatic stay prevents filing of lawsuits against the debtor relating to bankruptcy claims. If a creditor has a judgment against the debtor the automatic stay prevents efforts by the creditor to perfect (such as by filing judgment liens) or enforce a judgment (such as by execution through a sheriff).
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May 22, 2009

Help I am Owed Money By a Company that Has Recently Filed for Bankruptcy in New York!

by Stephen Z. Starr

A question we often get from clients and prospective clients is what can they do if they are owed money by a company that has filed for bankruptcy protection in New York. The answer depends on why they are money, when the debt arose, and what type of bankruptcy the company has filed.

1. Hierarch of Claims — Administrative, Secured, Priority & Unsecured

In bankruptcy cases not all claims are created equal. There is a hierarchy or rank order of claims that determines who comes first in the cash waterfall.

a) Administrative Claims. These are claims related to the administration of the debtor’s case. In a chapter 11 case administrative claims includes claims for goods sold or services provided to the debtor company after the date of bankruptcy filing. In addition, administrative claims in a chapter 11 case include post-bankruptcy use and occupancy charges related to the debtor’s real estate leases, and post-bankruptcy equipment and vehicle lease fees.

b) Secured Claim. A secured claim is a claim that is secured by collateral (i.e., a claim that has a lien on property of the debtor). Some common examples of secured claims are a mortgage secured by real estate, a vehicle loan secured by a vehicle, or a bank loan secured by the debtor’s assets or accounts receivable. In addition to these examples of voluntary secured claims, a debtor may be subject to involuntary secured claims, such as for tax liens or judgment liens.

c) Priority Claims. These are certain claims incurred prior to the debtor’s bankruptcy filing that are given priority (i.e., get paid ahead of other claims) as specified in the Bankruptcy Code. Common examples of priority claims are certain pre-bankruptcy wage and commission claims, certain taxes and other obligations to the government, and spousal and child support.
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May 19, 2009

Can the NYC Marshal Take All My Possession to Enforce a Judgment?

by Stephen Z. Starr

Many of our clients and prospective clients have a very limited knowledge concerning their rights when they owe a judgment. Collectors and collection agencies manipulate people’s fear — they use intimidation and the knowledge that most people in New York do not record their telephone calls to intimidate people with blatant lies, or if not blatant lies then insinuating vague and unspecified negative consequences (such as “I would not want the NYC Marshal coming to my apartment if I owed a judgment.”).

The New York City Marshals’ Handbook of Regulations (available online at http://www.nyc.gov/html/doi/html/marshals/mar1.html) provides an extensive explanation of what a NYC Marshal may and may not do to enforce a writ of execution with respect to a judgment.
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May 8, 2009

How Much Interest is Allowed on a Loan in New York?

by Stephen Z. Starr

As a law firm involved in commercial debt collection and debtor-creditor matters in the New York metropolitan area (Manhattan, Brooklyn, Queens, etc.) and New Jersey, this is an issue that we face a lot. The answer, like many things involving the law, is that is depends on the facts involved. It is easier to answer to the question by describing what is not allowed.

1. What is Usury and When is a Loan Usurious?

New York makes it illegal to charge interest exceeding eighteen percent (16%) per year on loans up to $250,000. This works out to a monthly rate of one and a half percent (1.33%) per month. If a contract provides for interest above this amount it is void and unenforceable, unless it is subject to an exception. For example, credit cards and car loans issued by national banking associations (they usually have “N.A.” after their name) are subject to an exception contained in federal law that exempts them from this restriction. (It doesn’t make sense that you are subject to this restriction and the bank are not — but the banks have better lobbyists than you do.)
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April 27, 2009

Prebankruptcy Exemption Planning

by Stephen Z. Starr

The purpose of a personal bankruptcy is to get a “fresh start” by obtaining a discharge (wiping out) of debt. To assist debtors in obtaining their fresh start the law allows them to keep a modest amount of property. The property that an individual is allowed to keep in bankruptcy is known as “exempt” property.

New York has opted out of the federal exemption scheme contained in the Bankruptcy Code which means that an individual in New York is only allowed to claim exemptions available under New York law, plus certain federal exemptions other than those contained in the Bankruptcy Code.

Except for the homestead exemption, the exemption scheme in New York has not been updated in a long time and the exemptions are not pegged to inflation or the consumer price index (CPI).
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April 18, 2009

How Long Does Bankruptcy Take in New York?

by Stephen Z. Starr

This is a question that we get asked a lot by our clients and prospective clients. The answer is “that depends” – it depends on what chapter (type) of bankruptcy we are talking about.

1. Duration of a Chapter 7 Bankruptcy Case
When someone asks how long will a bankruptcy take, they really mean how long is my involvement as debtor (person filing bankruptcy) going to be. The goal of a personal bankruptcy case is to get a discharge. From the debtor’s perspective that can be viewed as the end of the typical bankruptcy case, although the actual case may continue on without affecting the debtor (as discussed further below).

In the typical chapter 7 case involving an individual there are really only three dates we care about. The first is the date the bankruptcy petition is filed with the Bankruptcy Court because that starts the case (and the automatic stay). The second important date is the meeting of creditors, which is usually scheduled about four week after the meeting of creditors. The third date is sixty days from the date first scheduled for the meeting of creditors. That is the very earliest that a debtor is eligible to get her or her discharge (order wiping out debts). However, in actual practice the discharge order takes the Clerk time to process so that the discharge is routinely entered 70-90 days after the date first set for the meeting of creditors. So this means that the length or duration of a typical chapter 7 bankruptcy case is about 100 – 120 days Continue reading

April 12, 2009

Consignment and Bankruptcy

by Stephen Z. Starr

Consignment arrangements are very common in certain industries that are active in New York City, such as for sale of jewelry, fine art and antiques. In a consignment transaction the consignor (owner) of the merchandise gives it on consignment to the consignee for resale. The consignee does not have to pay the consignor until the goods are actually sold and the consignee has received payment. Some common example of this are a wholesale jeweler who consign loose stones or jewelry to a retail jewelry store, an artist who consign a painting to an art gallery, or an antique furniture owner who consign it to an antique shop for resele.

1. What is a consignment?

Under a consignment arrangement the consignor retains title and ownership of the consigned goods until they are sold by consignee. Unlike a regular sale the consignee does not have an obligation to pay for the goods until they are actually sold. In addition, in a consignment arrangement if the goods do not sell the consignee can usually return them to the consignor. The goods received on consignment do not form part of the assets of the consignee – and remain property of the consignee.
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