bankruptcy

May 14, 2020

OVERVIEW OF COVID-19 BUSINESS BANKRUPTCY RELIEF

As a result of the COVID-19 pandemic, Congress amended the Bankruptcy Code and passed the “Coronavirus Aid, Relief, and Economic Security Act” also known as the “CARES Act”, which was signed into law by the President on March 27, 2020. Specific amendments were made to Subchapter V of Chapter 11 of the Bankruptcy Code to change and expand the availability of small business bankruptcy relief. Subchapter V is a relatively new section of the Bankruptcy Code that became effective earlier this year prior to the COVID-19 outbreak to make it easier for small businesses to successfully reorganize under Chapter 11 of the Bankruptcy Code. Under the regular provisions of Chapter 11 there are significant challenges and obstacles for small business debtors to successfully reorganize in Chapter 11.

The new Subchapter V was enacted on August 23, 2019 as part of the Small Business Reorganization Act (“SBRA”), which became effective on February 19, 2020. Under SBRA the debt limit or cap for debtor eligibility for Subchapter V small business debtors was $2,725,625. Under the CARES Act this has been increased to $7,500,000. However, the CARES Act contains a sunset provision, and will expire one year after March 27, 2020. So after March 27, 2021 the SBRA eligibility limits will go back down to $2,725,625.

Both individuals and business entities (such as corporations or LLCs) are eligible to file as small business debtors under SBRA (as modified by the CARES Act). However, at least half of the debtor’s total debt must come from business activity. So for an individual debtor who has a mix of business and consumer debt (i.e., non-business related debt for personal, family and household reasons), as last 50% of the total debt must be business related.

March 5, 2018

How Can You File for Bankruptcy in New York if You Can’t Afford to Pay a Bankruptcy Lawyer?

by Stephen Z. Starr

Chapter 7 bankruptcy is the most common type of personal bankruptcy and is used to wipe out most types of debts (with certain exceptions). But, what do you do when you have serious creditor problems, such as collection calls, collection lawsuits, and/or wage garnishments, but can’t afford to file a chapter 7 bankruptcy?

Woman-Carrying-Boulder_3-5-18_istock-photo-300x200
Do you end up like the person in the image above struggling to try to carry a huge debt burden with no end in sight? Thankfully, there is a solution. As pointed out in an interesting article that appeared in ProPublica by Paul Kiel, a challenge people face is they want to file bankruptcy but lack money to hire a bankruptcy attorney. The article points out that in the southern part of U.S. more people file 13 bankruptcy than in other parts of the country because in chapter 13 bankruptcy they can pay the bankruptcy attorneys’ fees off over time out of their earnings.

Chapter 13 bankruptcy has been covered in previous blog posts here. At Starr & Starr, PLLC we typically use chapter 13 bankruptcy to help people in New York City (Manhattan, Bronx, Queens, Brooklyn and Staten Island), Westchester, Nassau and Suffolk Counties save their homes, catch up on back rent, and/or catch up with car payments. However, we have some clients who want and need to file bankruptcy but don’t have enough money to pay the fees and costs associated with a Chapter 7 bankruptcy, even if we give them a pre-filing installment plan with payments over time. For those clients chapter 13 bankruptcy can be a way to allow them to file now and pay the attorneys’ fees over time out of their earnings through their chapter 13 plan. This can be particularly useful for clients whose bank accounts are frozen or have a pending wage garnishment (which stops once the bankruptcy is filed).

February 2, 2018

New Chapter 13 Trustee Krista M. Preuss, Esq. Appointed for the Southern District of New York

by Stephen Z. Starr

For the information of our clients with pending chapter 13 cases in the Southern District of New York and the bankruptcy community at large we are sharing the following information: effective February 1, 2018, Jeffrey L. Sapir has retired as Chapter 13 Trustee for the Southern District of New York. Krista M. Preuss has taken over all of the chapter 13 cases that were formerly administered by Mr. Sapir in the Southern District of New York (which is New York County (Manhattan), Bronx County and Westchester County. A copy of the notice sent out by the new Chapter 13 Trustee can be read here: Notice of Change of Chapter 13 Trustee_effective 2-1-2018

VERY IMPORTANT INFORMATION REGARDING PLAN PAYMENTS:

Trustee will Accept Payment Electronically. The new Chapter 13 Trustee will accept electronic payments through TFS Bill Pay. You can sign up for this at https://www.tfsbillpay.com. We strongly suggest that all our Chapter 13 bankruptcy clients sign up for this. It will make their lives easier.

September 13, 2017

Explanation of Amended Discharge Orders Being Entered by US Bankruptcy Court SDNY

by Stephen Z. Starr

Since the end of August 2017 through today we have been receiving electronic notice from the U.S. Bankruptcy Court for the Southern District of New York (SDNY Bankruptcy Court) of the filing of Amended Discharge of Debtor Order of Final Decree in our clients’ previously closed (and successful) chapter 7 personal cases. To date we have received hundreds of these notices from the Court in cases going as far back as 2006. The Court has mailed out copies to the debtors (our clients) as well as the service list in each case. Some of our bankruptcy attorney colleagues have reported they are experiencing the same thing.

We are starting to receive calls and emails from concerned clients wondering what this is all about. The SDNY Bankruptcy Court has not posted any information about this on its website. For that reason I decided to make this post to address this issue for the benefit of our clients and public at large. I have attached a redacted copy of the Amended Discharge of Debtor Order of Final Decree with the case specific information redacted: Amended Discharge of Debtor Order of Final Decree.

For all the hundreds of clients that Starr & Starr, PLLC has successfully represented in personal bankruptcy cases over the years, please be aware that you have nothing to worry about. You may view this as a technical correction that the SDNY Bankruptcy Court is doing. It does not change any of the advice we previously provided our clients. For more information continue reading below. Continue reading