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Bankruptcy Can Now Help Millions with Student Loans! Are you nine months or more behind on your student loans? You are not alone. Typically, ten million Americans are at least nine months behind. And another million fall into that default category each year. In early November 2022, the Biden Administration cast you a lifeline. For […]
The post New! For Millions, Bankruptcy Help with Student Loans! by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.
Bankruptcy Can Now Help Millions with Student Loans! Are you nine months or more behind on your student loans? You are not alone. Typically, ten million Americans are at least nine months behind. And another million fall into that default category each year. In early November 2022, the Biden Administration cast you a lifeline. For […]
The post New! For Millions, Bankruptcy Help with Student Loans! by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.
ABC has a very helpful article about "Student loan forgiveness update: What borrowers need to know after federal court struck down program". The article can be found at https://abc7ny.com/will-student-loans-be-forgiven-biden-forgiveness-loan-update/12451011/
Jim Shenwick, Esq 917 363 3391 [email protected]
WCNC has an article titled "Better to connect-What small business owners need to know about repaying loans tied to pandemic relief from the SBA" EIDL Loans. SBA EIDL loan repayment begin this month! As the article notes many borrowers will be unable to repay their EIDL loans.The article can be found at https://www.wcnc.com/article/money/pandemic-sba-small-business-loan-money-local/275-ba12435e-ca7e-48d8-9cad-1c251bbdf706Borrowers who cannot repay their loans, should contact Jim Shenwick, Esq. [email protected]917 363 3391 for assistance with these problems.
Forbes has an article about the consequences of filing for personal bankruptcy. The article can be found at https://www.forbes.com/advisor/debt-relief/bankruptcy-consequences/Individuals with questions about personal bankruptcy can contact Jim Shenwick Esq. [email protected] 917 363 3391
When a bankruptcy petition is filed, section 362(a) of the Bankruptcy Code states that the bankruptcy petition provides a stay on the commencement or continuation of an action or proceeding against the debtor.An "Automatic Stay" provides relief to the debtor by stopping all litigation and collection efforts against him, giving him pause and time to reorganize his finances.After bankruptcy filing, creditors who wish to continue litigation against the debtor must file a motion to lift the stay in Bankruptcy Court. The most common bankruptcy motion is a motion to lift the stay.Last week, we filed two motions to lift the stay, one for a landlord and one for a creditor, so they could finalize an eviction and foreclosure.The law stayed litigation and landlord tenant actions during the pandemic, now creditors and landlords are free to pursue litigation, resulting in increased bankruptcy filings and motions to lift the stay.The Second Circuit Court of Appeals recently decided a Motion Lift Stay case, In re Fogarty, 39 F. 4th 62 Court of Appeals, 2nd Circuit 2022 which demonstrates the complexity and questions that can arise in lift stay practice.Debtor Eileen Fogarty owned a 99% interest in 72 Grandview LLC, which in turn owned a residential property that Fogarty occupied as her primary residence. Bayview Loan Servicing LLC initiated a foreclosure action in which both 72 Grandview LLC and Fogarty were named as defendants. After Bayview obtained a judgment, Fogarty filed a Chapter 7 bankruptcy petition and Bayview proceeded with the foreclosure sale without seeking relief (i.e. filing a motion for relief from the automatic stay) from the bankruptcy court.Fogarty then sought sanctions against Bayview arguing that Bayview willfully violated the automatic stay. The bankruptcy court denied Fogarty's motion, but the district court reversed that decision and Bayview appealed to the 2nd Circuit Court of Appeals.
The 2nd Circuit ruled that Bayview violated the automatic stay based on the fact that the debtor was a named party in the foreclosure proceedings (even if the debtor held only a possessory interest in the property) and Bayview was aware that Fogarty had filed a bankruptcy petition.The takeaway from the Fogarty case, is that a creditor must proceed with cause after a Debtor files for bankruptcy and when in doubt a creditor should file a motion to lift stay before foreclosing on property. Creditors that have questions regarding Motions to Lift Stay can contact Jim Shenwick, Esq [email protected] 917 363 3391.
The client runs a decent sized construction operation. Revenues in excess of a quarter million per year.
But he has no accounting system. He just takes his bank statements, receipts and chicken scratch notes to the tax man once a year to crank out a tax return.
No monthly bank account reconciliations.
No computerized records.
No accounting journals or ledger reports.
The entire system is basically a daily glance at the banking account balance and then just fly by the seat of his pants. It’s dancing on a hot plate.
Who needs paid this week? What blows up if I don’t pay it today? Do workers walk off the job? Do suppliers stop extending credit? Will the tax people start garnishments?
But the business is good, right? Money is rolling in. Big projects lined up. If we can just get this next job done then things will start to straighten out. Then we can hire the good accountant. That bookkeeper who cleans up the details. After all, accounting is just a detail. It’s an afterthought. It’s what you do when all the real work is done. Don’t worry honey, I’ll get to that later.
Yet, we never seem to turn that corner, do we? Things never quite get organized. And even though we know this is the wrong approach, we can’t ever stop the madness of flying blindfolded. Budgets. Planning. Profit and Loss analysis. Is the project actually making us money? Does it just leave us in more debt? Yes, bills need paid, but are we making progress or just working to pay overhead?
At what point do you stop the madness? When do we stop driving blindly on twisting roads at night?
Your shoebox system is not working. You have no system.
Just stop.
Image courtesy of Flickr and Don DeBold
Yahoo is reporting that in October Individual Chapter 13 Bankruptcies Increase 27 Percent Over Last Year. The article can be found at https://lnkd.in/erj-t-4m
Jim Shenwick, Esq [email protected] 917 363 3391
THE CFO website has a very useful article on restructuring businesses. The article is titled: 6 Steps to Prepare for the Next Restructuring Wave
It can be found at:https://www.cfo.com/budgeting-planning/strategy-budgeting-planning/2022/...
Jim Shenwick, Esq [email protected] 917 363 3391
There is a marriage penalty in bankruptcy law. Unmarried couples receive favored treatment, especially on the six-month income calculation called the Means Test.
A married debtor who lives with his or her spouse must list all gross income of their spouse on the income schedules. However, an unmarried debtor who lives with a partner must only show that person’s regular contribution to the household income.
This difference represents a significant disparity of treatment. Unless the bankruptcy trustee investigates the income of a debtor’s partner, a debtor may be able to claim their income is below median income levels and thereby qualify for Chapter 7, even if the partner has a six-figure income.
All Income vs. Regularly Contributed Income:
Reporting all income versus just reporting regularly contributed income. That difference is massive.
Bankruptcy Form 122-A is where we report a debtor’s household income received in the prior six months. This form determines who may enter the gates of Chapter 7.
Notice how Form 122-A requires a debtor to list the gross income of his or her spouse on Column B, however there is no requirement to list the gross income of a live-in partner, even if the debtor and his or her partner share children, real estate, debts, bank accounts and other financial obligations.
What is required is that a debtor report all regular income contributed to the household by the partner. But how can we be sure the debtor is reporting the correct contribution? Why is a live-in partner who is basically a spouse in every way treated so differently? How is this difference in treatment fair or proper?
Difficulty in Measuring Non-debtor Partner’s Contribution to Income:
Measuring the “contribution” of the debtor’s unmarried partner is difficult. The partner is not filing bankruptcy and is not the client of the bankruptcy attorney. Getting information from such individuals can be difficult.
How is the bankruptcy attorney able to accurately measure the income of the debtor’s partner? The unmarried partner signs no documents to verify income. The partner may very well maintain a separate bank account and the debtor may actually be unaware of the partner’s true income level.
So how does the attorney measure the contribution? We look to several factors:
- Bank Statements. We examine the deposits listed in the debtor’s bank statements and the expenses paid by the debtor from these accounts.
- Monthly Bills. Attorneys gather information on the total household rent, utility, food, insurance and educational expenses.
- Educated Guess: If the total monthly expenses of a household is, for example, $3,000 and the bank statements of the debtor show $1,500 of payments towards this total, it is reasonable to assume the debtor’s partner is regularly contributing the remaining $1,500.
Fairness Issues:
What if the debtor is paying the majority of household bills but the non-debtor partner earns a significantly higher income that they keep in their separate bank account? This arrangement has the effect of minimizing the “regular contribution” towards household income that is disclosed on the Means Test. Is that fair and correct?
The means test does have a Marital Deduction for expenses of the non-debtor spouse, but those expenses are limited to completely separate expenses and cannot include expenses of the household. For example, if the non-debtor spouse pays for an expensive medical treatment, that expense cannot be claimed as a marital deduction since it is limited by the household expense limits of Form 122-A. However, if the non-debtor spouse contributes a large amount to their 401(k) account that deduction is allowed since it is not a shared fund. These distinctions tend to be technical.
The bankruptcy marriage penalty is stiff. Married debtors are more likely to be forced into filing a 5-year repayment plan in Chapter 13. Unmarried debtors can manipulate the system to report only “regularly contributed” income of their partner and thus qualify for Chapter 7 cases by hiding income from the court.
It seems like the US Trustee should focus more efforts to ensure the treatment of married couples is no different than the treatment of unmarried couples who share children, homes, accounts and debts together.
Image courtesy of Flickr and Shelley Rich
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