Rochester Bankruptcy and Debt Relief

I have previously written how important it is for debtors to provide their bankruptcy attorney with accurate and complete information. Debtors have an absolute obligation under the Bankruptcy Code to disclose their assets, liabilities and income to the bankruptcy court. Once in a while, a debtor may forget a creditor or overlook an old debt. Not every debt appears on the credit report either. When a debt is omitted from the bankruptcy petition, under the Bankruptcy Code, there are several possible solutions.

Initially, if the debtor realizes that a debt was overlooked during the bankruptcy, the debtor is required to file amended schedules and identify the creditor. If this happens, the bankruptcy attorney should be notified and he will amend the schedules.

If a pre-bankruptcy debt is discovered after the bankruptcy case has been closed and discharge granted, there are a couple of possible options. In some situations, it will be necessary to request that the bankruptcy court reopens the bankruptcy case and discharge the debt. In other situations, especially in no asset Chapter 7 Bankruptcy cases, the debt is considered discharged as a matter of law, even though it wasn’t listed in the schedules. Finally, some types of debt, such as student loans, cannot be discharged under most circumstances, and will survive the bankruptcy.

The bankruptcy courts expect the debtor to provide a full and complete disclosure of both assets and liabilities. In Chapter 7 Bankruptcy asset cases and Chapter 13 Bankruptcy cases, an omission matters a great deal since listed creditors receive payments through the bankruptcy court. If a debtor deliberately fails to list a creditor, that debt is likely be declared non-dischargeable and will survived the bankruptcy. Under appropriate circumstances, courts have denied debtor a bankruptcy discharge because of the debtor’s intentional failure to list all debts or revoked already issued discharge.

If you contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

While most married people think that if they file for Chapter 7 bankruptcy or Chapter 13 Bankruptcy, they must do so with their spouse.  That is not true.

Whether one spouse or both file a bankruptcy petition, it’s their choice. It is not uncommon for one spouse to have most of the debt in his or her name only, in which case an individual filing would more appropriate. However, if both spouses are have a significant amount of debt, they should file together.

Sometimes I meet with only one spouse because the other spouse is is not willing to file for bankruptcy.  In these situations, one spouse to file the bankruptcy petition and obtain necessary relief from the bankruptcy court.

There are also some additional issues that need to be considered. Initially, if only one spouse is filing and the couple is residing together, the other spouse’s income may be relevant for the purpose of household income as reflected on Schedule I, resulting disposable income reflected on Schedule J, and that spouse’s income may also be relevant for the means test.

As far as the means test, it is necessary to determine whether there is a presumption that there is enough disposable income available to give unsecured creditors sufficient payment under a Chapter 13 bankruptcy plan, such that permitting a Chapter 7 could be considered an abuse of discretion. But even if the means test is passed, and no presumption of abuse arises, or, alternatively, if this is a non-consumer bankruptcy and the means test is not even required, abuse can still be found given the totality of the circumstances. The income and assets of the non-filing spouse are important in both those considerations. If the debtor has legal rights to share in the income and assets of a non-filing spouse or even if the practice has been between spouses to share income and assets regardless of legal rights, the bankruptcy law tells us that the debtor’s access to the non-filing spouse’s income and assets has to be considered in deciding whether the bankruptcy court would permitting a Chapter 7 bankruptcy filing.

An experienced bankruptcy attorney can analyze each consumer’s financial situation and suggest whether a married couple should file an individual or a joint petition.

If you contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, New York, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

When I prepare a bankruptcy petition in either Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, I do everything possible to make sure that every creditor is included and given a proper notice of the filing. However, once in a while, a Chapter 7 debtor realizes that he or she forgot to include a creditor after the case has closed.

If you are a bankruptcy lawyer, this occurs periodically.  I file a routine Chapter 7 bankruptcy petition, the case goes proceeds normally, the debtor gets a discharge, and, subsequently, the case is closed.  Then, sometime later, the debtor contacts me to say that a creditor was inadvertently omitted.  The debtor explains that that he simply forgot and that it was an innocent mistake. A bankruptcy lawyer may think that this should not be a big problem since the case can be reopened by motion, and an application can be brought to amend the schedule of creditors to include the omitted one.

However, there have been a great number of cases on this issue, with divergent theories and conclusions. Some have held that the case can be reopened, and some have held that it can’t. Some bankruptcy courts routinely grant debtors’ motions to amend schedules to list previously omitted creditors.  Some cases focus on whether there is prejudice to creditors or whether there was fraud.

Some courts will refuse to permit the case to be reopened, because they believe omitted debts are non-dischargeable.  Yet other courts will refuse to permit the case to be reopened because they believe that omitted debts are automatically discharged even if they are not listed, and therefore reopening the case serves no purpose.

There are two possible approaches that courts can take in addressing this issue. Under the “mechanical approach” courts have denied motions to reopen no-asset cases, finding that the debt owed to an omitted creditor is discharged “as a matter of law.”  Under this approach, there is no reason to reopen a bankruptcy case, provided that it is a no-asset case and the debt is not otherwise excepted from discharge.

Under the “equitable approach,” courts consider whether the debtor’s omission was the result of fraud, recklessness or intentional design, or if it would prejudice the creditor’s rights.  Good faith is an important element.  Courts adopting this approach have held that motions to reopen no-asset cases to list omitted creditors should be liberally granted.

For most garden variety situations where the debtor omits a typical credit card debt and advises the attorney within a few years, the courts will probably be unwilling to permit counsel to reopen the case to add the creditor, asserting that, under the mechanical approach, the debt is dischargeable.  In such cases, the bankruptcy attorney should consider sending a certified letter to the creditor stating that the debt has been discharged, together with copies of the notice of commencement and order of discharge.

However, in situations where the creditor raises objections to this approach, the bankruptcy lawyer should be prepared to file a motion to reopen, in which case the court will probably consider the various factors in the equitable approach.

If you contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

Periodically I meet with debtors who either have a personal injury law suit pending, or may have a potential personal injury case.  Personal injury lawsuit issues can complicate a bankruptcy since there are limitations on the debtor’s ability to receive a personal injury award, as well as different procedural hurdles imposed by the bankruptcy code.

Initially, personal injury lawsuits and causes of action are assets of Chapter 7 Bankruptcy estate.  Under New York’s bankruptcy exemptions, the debtor can exempt the first $7,500 in net proceeds, but anything over and above that belongs to the bankruptcy estate and would be administered by the bankruptcy trustee.  Since personal injury lawsuit or causes of action are assets, it is critical that the bankruptcy lawyer includes the debtor’s personal injury lawsuit or cause of action in the bankruptcy petition.  If the debtor fails to include a potential cause of action in the bankruptcy petition, that may cause a dismissal of the personal injury action.  According to New York cases, if a plaintiff in a personal injury lawsuit filed a Chapter 7 Bankruptcy petition but failed to list a potential cause of action for personal injuries, then the plaintiff lacks standing to bring the personal injury action.

If the personal injury case or cause of action is included in the petition, the bankruptcy trustee will decide whether the case is valuable enough to administer.  The bankruptcy lawyer is expected to provide the trustee with copies of the pleadings.  Most trustees will consider the right to sue for a relatively small injury as being of “inconsequential value to the bankruptcy estate” and may decide to abandon the trustee’s interest in the cause of action.  Generally, if a personal injury case will not result in any significant non-exempt recovery, then the trustee will not care about administering it.  If the trustee determines that the case has value in excess of the exemption, he may want to administer the personal injury claim as an asset of the bankruptcy estate.

The Bankruptcy Code requires that all attorneys who render services to a debtor must be approved by the court.  A trustee may employ as special counsel under a contingency fee arrangement, any attorney who has represented the debtor in pre-petition litigation, when it is in the best interests of the bankruptcy estate and the attorney has no interest adverse to that of the debtor or the estate. Theoretically, the trustee can hire any attorney of the trustee’s choosing to represent the debtor in the personal injury lawsuit, and can even take the case away from the existing personal injury attorney.

The automatic bankruptcy stay imposed by Section 362 of the Bankruptcy Code does not stay any actions brought by the debtor.  The automatic stay only acts to stay actions brought against the debtor including cross-claims, counter-claims and third-party claims.

The greatest unknown in a personal injury case filed by the bankruptcy debtor, is what interest the bankruptcy trustee will take in the case.  Debtor’s bankruptcy attorney would do well to contact the trustee at the earliest opportunity to get an idea of the trustee’s intentions with respect to the personal injury lawsuit.

If you contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

Late at night, most people are sleeping.  However, sometimes circumstances arise when someone needs to file either a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy before the stroke of midnight, in the middle of the night, or early in the morning.  Therefore, occasionally I file bankruptcy petitions late at night.

Sometimes, there are clients who come to me at the very last minute, when there may just be hours to spare before a scheduled foreclosure sale.  In such cases, the bankruptcy petition needs to be filed as soon as possible because the minute the petition is filed, the “automatic bankruptcy stay” goes into effect, effectively preventing the sale from going forward.  Lawyer’s ability to file an emergency bankruptcy cases is an important part of effective bankruptcy representation.

The reason I am able file bankruptcy petitions in the middle of the night is because all of the bankruptcy filings are done by electronic case filing (otherwise known as “E.C.F.”).  By using E.C.F., the petitions and other bankruptcy documents are filed over the internet electronically, directly into the bankruptcy court’s computers.  As a result, I can file a bankruptcy petition at any time.

The local rules do not require that the debtor file all of the supporting schedules at the time the case is initially filed.  The case can be commenced by filing just the two-page bankruptcy petition together with a list of creditors and their addresses either in the form of the matrix or by filing the schedules of creditors.  The debtor must also pay the filing fee.

The local rules permit the debtor to file the remaining schedules and forms within the next few days.  If the remaining schedules and supporting documents are not filed during the applicable time periods, the Bankruptcy Court has the right to automatically dismiss the case.  One requirement of a normal bankruptcy filing that cannot be waived in an emergency filing is the consumer credit counseling course. However, with consumer credit counseling courses available over telephone and internet, an emergency course provider can be found and a course can be completed at almost any time of day and night.

I prefer not to file emergency petitions, but sometimes it is necessary, and it is a part of the service I offer.   Sometimes, I receive calls from the debtors who believe their house is about to be sold at a foreclosure sale.  However, many of them confuse a motion return date in the foreclosure proceeding with the actual sale date.  Before preparing an emergency filing, I always verify that there is a need to file bankruptcy as soon as possible.

If you contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

I spend a fair amount of time in 341 hearings.  While waiting for my bankruptcy cases to be called, I listen to the trustee asking debtors and their lawyers questions about bankruptcy petitions.  In my experience, one thing that always that gets bankruptcy trustee worked up, are incomplete or inaccurate bankruptcy petitions.  Because the bankruptcy petition is signed by the debtors who, by signing it, certify its accuracy, debtors’ failure to read their bankruptcy petitions and lack of awareness of factual errors or omissions that they contain may cause significant problems.

While a completed bankruptcy petition usually runs between 30 and 40 pages, it is not an exciting read, and contains plenty of legalese, as well as recitals of the debtors’ financial assets, income, expenses,a a list of all the creditors.  However, by signing it, the debtor certifies that he/she not only read it, but that all information contained in the petition is true and correct, just as if the debtor testified to that information under oath.  At the beginning of every 341 hearing, the trustee asking the debtor if he/she read the bankruptcy petition before having signed it, reviewed it with his/her bankruptcy attorney, and if everything in the petition is true and correct.

Trustees get very upset at debtors because their petitions weren’t accurate or complete.   A typical debtor would tell the trustee, “I didn’t notice a mistake or omission and it needs to be corrected,”  but later admit they did not read the petition carefully.  When the bankruptcy petition is missing important information and that information could have been easily corrected by the debtor, the debtor’s credibility is greatly reduced.  If the petition is completely inaccurate, the trustee can allege that the debtor was engaging in fraudulent and deceptive conduct.

In my practice, I insist that my clients read every page of their petition and review it with me before they sign it.  Even if the client want to rely on my work, the petition has to be read by every client who must understand its contents.

If you are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a bankruptcy lawyer.