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After Bankruptcy Mistakes: Navy Fed does the Right Thing; Wells Fargo Makes More Excuses. Everybody makes mistakes. Banks do, too. When you file bankruptcy, the banks you owe money to don’t always do what they are supposed to do. This is a true story of Navy Fed admitting their mistake and fixing it. Wells Fargo […]
The post Navy Fed does the Right Thing; Wells Fargo Makes More Excuses by Robert Weed appeared first on Robert Weed.
After Bankruptcy Mistakes: Navy Fed does the Right Thing; Wells Fargo Makes More Excuses. Everybody makes mistakes. Banks do, too. When you file bankruptcy, the banks you owe money to don’t always do what they are supposed to do. This is a true story of Navy Fed admitting their mistake and fixing it. Wells Fargo […]The post Navy Fed does the Right Thing; Wells Fargo Makes More Excuses by Robert Weed appeared first on Robert Weed.
Fear Of Failure To List Creditors There is a fear that many chapter 7 debtors have with regard to failing to properly list creditors. The bankruptcy code provides that creditors be given due process with regard to the bankruptcy filing. This means that creditors must be given notice of the bankruptcy so that they have+ Read More
The post Chapter 7 Debtor Brings Motion To Reopen In Aurora appeared first on David M. Siegel.
Some of our Wynn at Law, LLC bankruptcy filing clients have such tremendous anxiety over the Section 341 meeting of creditors. They’ll imagine intimidation like in the photo. For some, it’s the hang up that keeps them from filing. For others, it’s the cause of more than a few sleepless nights. I put a lot of value in the statement that 90 percent of what you worry about never comes true. The creditor meeting falls into that category.
This meeting isn’t a hearing. It’s not even in a courtroom. You’re under oath of course. However, there isn’t a judge. Here’s the two-step for taking the terror out of the topic:
First, it’s required. There isn’t a way out of it, so you go through it in order to clear the path for your financial future.
Second, most of your creditors won’t show up at all! They’re all invited by law. In reality, they know you’re represented by competent counsel and it’s usually financially unrealistic for the creditor to spend the time and staff hours to come to your hearing. The ones who do show up may just want to know about recent cash advances or revolving credit charges to find out if you were on a spree you had no intention of paying back. Or the lender on secured property (a car or house) might show to find out if you’re reaffirming the loan or giving back the property. We’ll have already talked this through in our office. No worries.
In a previous post (http://wynnatlaw.blogspot.com/2017/02/attorney-shannon-wynn-honestly-you...), I mentioned the value of honesty. If you’ve accidentally missed something, Wynn at Law, LLC can amend the filing before the meeting. Your creditors won’t think your hiding something if you aren’t hiding anything. Again, no worries. If they do show, and they do ask questions, commonly they’ll want to know things we’ve already covered in advance. For example, if you’re getting an income tax refund (http://wynnatlaw.blogspot.com/2017/01/attorney-shannon-wynn-even-in.html) or if anyone owes you money or holds property that belongs to you or if you’ve recently transferred property. None of this is an ambush because you’ve already covered it with Wynn at Law, LLC.
*The content and material in this original post is for informational purposes only and does not constitute legal advice.
The post Demystify the creditor meeting in two steps appeared first on Wynn at Law, LLC.
Some of our Wynn at Law, LLC bankruptcy filing clients have such tremendous anxiety over the Section 341 meeting of creditors. They’ll imagine intimidation like in the photo. For some, it’s the hang up that keeps them from filing. For others, it’s the cause of more than a few sleepless nights. I put a lot of value in the statement that 90 percent of what you worry about never comes true. The creditor meeting falls into that category.
This meeting isn’t a hearing. It’s not even in a courtroom. You’re under oath of course. However, there isn’t a judge. Here’s the two-step for taking the terror out of the topic:
First, it’s required. There isn’t a way out of it, so you go through it in order to clear the path for your financial future.
Second, most of your creditors won’t show up at all! They’re all invited by law. In reality, they know you’re represented by competent counsel and it’s usually financially unrealistic for the creditor to spend the time and staff hours to come to your hearing. The ones who do show up may just want to know about recent cash advances or revolving credit charges to find out if you were on a spree you had no intention of paying back. Or the lender on secured property (a car or house) might show to find out if you’re reaffirming the loan or giving back the property. We’ll have already talked this through in our office. No worries.
In a previous post (http://wynnatlaw.blogspot.com/2017/02/attorney-shannon-wynn-honestly-you...), I mentioned the value of honesty. If you’ve accidentally missed something, Wynn at Law, LLC can amend the filing before the meeting. Your creditors won’t think your hiding something if you aren’t hiding anything. Again, no worries. If they do show, and they do ask questions, commonly they’ll want to know things we’ve already covered in advance. For example, if you’re getting an income tax refund (http://wynnatlaw.blogspot.com/2017/01/attorney-shannon-wynn-even-in.html) or if anyone owes you money or holds property that belongs to you or if you’ve recently transferred property. None of this is an ambush because you’ve already covered it with Wynn at Law, LLC.
*The content and material in this original post is for informational purposes only and does not constitute legal advice.
When Wynn at Law, LLC works with bankruptcy clients, we emphasize brutal honesty benefits them more than it would embarrass them. Bankruptcy isn’t meant to shame a debtor. It’s meant to help the debtor move out from under an unmovable mountain of bills. Honesty can be thought of as a carrot and stick.
The first way honesty benefits you is that full disclosure is required in the process. This isn’t negotiable. All debts. All assets. All income. You can’t intentionally hold something out or even omit something by accident. If the court or creditors find that you withheld debts or income, you may lose your bankruptcy discharge.
That’s the stick. The consequences could be as severe as facing an FBI investigation. Omission is still fraud even if it really is by accident that you left something out. The penalties you may face from missing debts or assets far outweigh the potential positives.
The carrot is that by being honest with yourself about your spending habits you can make changes needed to emerge from a bankruptcy on great footing. This honest self-evaluation of your spending missteps is a benefit of a bankruptcy filing, not a judgment about your shortcomings. Not everyone spends their way onto the Wynn at Law doorstep. A sudden and massive medical bill can wipe out years of being a responsible budgeter and credit card customer. But it also throws a light on all of your spending including your insurance, which may have been your only spending misstep. Wynn at Law, LLC is not an insurance agent or financial planner, but maybe you will want to consider one coming out of the filing.
Maybe you’re overspending on vacations or vehicles. Maybe it was a job loss and no rainy-day fund. Maybe it was just a matter of getting in too far, too fast with all those attractive revolving credit offers. Bankruptcy helps you see the pitfalls to avoid in your financial future. We are not here to judge. We are here to help.
*The content and material in this original post is for informational purposes only and does not constitute legal advice.
The post Honestly, you have to be honest appeared first on Wynn at Law, LLC.
When Wynn at Law, LLC works with bankruptcy clients, we emphasize brutal honesty benefits them more than it would embarrass them. Bankruptcy isn’t meant to shame a debtor. It’s meant to help the debtor move out from under an unmovable mountain of bills. Honesty can be thought of as a carrot and stick.
The first way honesty benefits you is that full disclosure is required in the process. This isn’t negotiable. All debts. All assets. All income. You can’t intentionally hold something out or even omit something by accident. If the court or creditors find that you withheld debts or income, you may lose your bankruptcy discharge.
That’s the stick. The consequences could be as severe as facing an FBI investigation. Omission is still fraud even if it really is by accident that you left something out. The penalties you may face from missing debts or assets far outweigh the potential positives.
The carrot is that by being honest with yourself about your spending habits you can make changes needed to emerge from a bankruptcy on great footing. This honest self-evaluation of your spending missteps is a benefit of a bankruptcy filing, not a judgment about your shortcomings. Not everyone spends their way onto the Wynn at Law doorstep. A sudden and massive medical bill can wipe out years of being a responsible budgeter and credit card customer. But it also throws a light on all of your spending including your insurance, which may have been your only spending misstep. Wynn at Law, LLC is not an insurance agent or financial planner, but maybe you will want to consider one coming out of the filing.
Maybe you’re overspending on vacations or vehicles. Maybe it was a job loss and no rainy-day fund. Maybe it was just a matter of getting in too far, too fast with all those attractive revolving credit offers. Bankruptcy helps you see the pitfalls to avoid in your financial future. We are not here to judge. We are here to help.
*The content and material in this original post is for informational purposes only and does not constitute legal advice.
The Automatic Stay Once your chapter 13 bankruptcy case is filed, there are a series of processes and events that take place. Each of these events are required and mandated by the United States Bankruptcy Code and assist in the smooth process of chapter 13 for all parties involved. The first thing that happens is+ Read More
The post What Happens Once My Chapter 13 Bankruptcy Is Filed? appeared first on David M. Siegel.
Please Note:
The information in this web site is not intended to constitute legal advice or to create an attorney-client relationship. It is also important to note that the information contained in this article may be outdated.
It is very important that you obtain legal advice from an experienced bankruptcy attorney regarding your particular situation. Consultation before you take action will certainly cost you less than what it will cost to fix your unintentional errors.
Filing bankruptcy for one company may bring the assets of another company owned by the same family or group into the bankruptcy of the first. In a recent decision, In re Cameron Construction & Roofing Co., Adv. P. No. 15-1121, 2016 WL 7241337 (Bankr. D. Mass. December 14, 2016), the Bankruptcy Court made the assets of an entity not in bankruptcy available to creditors in the bankruptcy proceeding (applying substantive consolidation).
In Cameron, there were two companies controlled by one person; one a roofing company and the other a real estate company. Each entity filed separate tax returns, issued separate W-2 forms to employees, and filed annual reports. To the outside world they appeared to be two separate entities, so why did the bankruptcy court find it appropriate to combine the assets?
- The founder of the companies exercised control over both entities
- Employees performed services for both companies, with no delineation between the two entities
- One entity paid above market rent to the other, with no written lease arrangement
- Neither company had any corporate records such as meeting minutes, votes or resolutions approving any transactions between the two entities
What should family business enterprises do to avoid this result? It is simple: use good business practices. Operate as though there are two wholly unrelated companies by following all rules, laws or regulations related to the operation of a business. :
- separate and distinct board of directors for each entity
- have regularly scheduled board of directors meetings, and minutes should be taken at each meeting.
- Make sure all related party transactions are formally reviewed, documented, and approved, either in meetings or by written consent.
- All arrangements between related entities be at at market rates (rent, services, etc) and the payments are clearly identified.
- If an employee is working for multiple entities – track their time and payments.
This might be expensive, but it certainly is a wise business practice, even if bankruptcy is in the cards for any of the entities.
The post Family Run Business and Bankruptcy appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
February 2, 2017
As a result of Uber’s and Lyft’s technological disruption of the transportation services market, the value of New York City taxi medallions has significantly decreased. In 2014 taxi medallions were being sold for approximately $1.3 million dollars, Current Taxi & Limousine Commission sales reports from December 2016 and data from taxi medallion brokers indicate that the current value of taxi medallions is approximately $400,000-$600,000. And according to a recent piece in Bloomberg News, over 80 percent of Capital One Financial Corp.’s loans for taxi medallions are at risk of default.
Many entrepreneurial immigrants and other individuals pursuing the American Dream and financial security purchased taxi medallions by borrowing money from banks or finance companies. Many of these loans were at an 80% loan to value ratio, and as a result of the decline in taxi medallion value, the debt securing the taxi medallions exceeds the value of the taxi medallions, giving the medallions a negative value. To use a term from real estate financing, these taxi medallions are “underwater.” Banks and the taxi medallion financing companies require that the borrower sign a Promissory Note, a Security Agreement and a UCC–1 financing statement so that the banks or the financing companies would be a secured creditor. Additionally, the borrower would be personally liable to repay the loan to the bank or financing company, and in some instances the medallion owner may have pledged other assets that they own as collateral for the loan, such as their house.
As a result of the decrease in value of taxi medallions, many medallion owners owe substantially more to the bank or financing company than the medallion is worth: a typical example would be an individual who owns a medallion subject to a loan of $1,000,000 and the medallion presently has a fair market value of $500,000 -$600,000, resulting in a deficiency or shortfall of $400,000-$500,000, which the medallion owner would have to repay to the bank or finance company if the medallion were sold. Most medallion owners don’t have sufficient assets to cover this deficiency, creating a financial catastrophe for the medallion owner.
There are over 13,000 New York City taxi medallions. The New York City Taxi & Limousine Commission sales reports indicate that six medallions were sold in December 2016. Two were estate sales (meaning that the medallion owner died and their estates sold the medallion) and four were foreclosures (meaning that the medallion owner could not repay the loan and the bank or financing company foreclosed pursuant to New York State Uniform Commercial Code law to obtain possession of the financed taxi medallion). If we assume that in an average year 5% of taxi medallions are sold or transferred, that would mean that there should be about 700 medallion sales a year or 58 per month. But if December 2016 was a representative month, medallion sales have nearly ground to a halt!
Why so few taxi medallion sales? One answer to this question may be that with the new technology of Uber and Lyft, few individuals see a viable financial future as a taxi medallion owner and driver. Another potential factor is that medallion owners may be hoping that the market will correct itself in the future and their medallions may increase in value over time, hopefully equal to or greater than the amount of the loan associated with the medallion. As we all know, “hope springs eternal” and this strategy may be the equivalent of “kicking the can down the street” – delaying or pushing off a problem that will not go away.
The purpose of this article is to present medallion owners with strategies to deal with the reduced or diminished value of the taxi medallion that they own under New York State Debtor and Creditor Law and the federal Bankruptcy Code. There are five possible strategies:1.
- The medallion owner can continue to make loan payments and hope that the value of the medallion increases over time and the increased value will allow for a sale of the medallion in the future, which will generate enough money to pay off the medallion loan. As discussed above, as a result of Uber, Lyft and other transportation service technologies, it is doubtful that the value of taxi medallions will ever return to its previous high valuations.
- The medallion owner can stop making loan payments and surrender the medallion to the bank or finance company or allow the bank or finance company to foreclose or repossess the medallion under New York State law. There are several problems with this strategy. First, the bank or finance company will commence an action against the medallion owner to collect their debt. Second, after the foreclosure or repossession, the bank or finance company is allowed to seek a deficiency judgment (the difference between the amount due on the medallion loan and the value of the medallion at auction or its value at the time of repossession including legal fees and court costs) against the medallion owner. Under New York State law a judgment is enforceable for 20 years (statute of limitations) and the bank or finance company will be able to: (a) garnish the medallion owner’s wages; (b) place a lien and levy on any financial accounts owned by the medallion owner; and (c) docket the judgment against any real estate owned by the medallion owner. Third, the bank or finance company will report “relief of indebtedness income” to the Internal Revenue Service pursuant to section 108 of the Internal Revenue Code, and practically speaking the amount of the deficiency judgment (calculated above) would be deemed to be income to the medallion owner (unless an exclusion pursuant to this provision can be found). Fourth, the judgment will be reported to credit reporting agencies, the medallion owner’s credit report score will decrease and the medallion owner will be unable to obtain a loan from another bank or finance company while the judgment is outstanding.
- The medallion owner can stop making loan payments to the bank or finance company and attempt an “out-of-court workout” with the bank or finance company. Under this scenario, the medallion owner would hire an attorney to negotiate a consensual return of the medallion to the bank or the finance company and any other consideration or money negotiated between the parties. The benefits of this approach are as follows: First, this arrangement is consensual and there will be no litigation between the medallion owner or the bank and finance company. Second, a judgment will not be entered against the medallion owner. Third, the amount of relief of indebtedness income that would be reported to the Internal Revenue Service pursuant to section 108 of the Internal Revenue Code would be minimized. Under this scenario, the bank or the finance company would ask for an Affidavit of Net Worth (a statement of assets and liabilities made under oath) from the medallion owner to determine what assets the medallion owner could use pay the deficiency to the bank or the finance company if the value of the medallion is substantially less than the value of the outstanding balance of the loan.
- The medallion owner can file a chapter 7 personal bankruptcy. Chapter 7 personal bankruptcy is known as a “Liquidation and Fresh Start”. The medallion owner would hire a bankruptcy attorney, provide financial information to the attorney, who would then prepare a bankruptcy petition for the medallion owner and file the bankruptcy petition with the bankruptcy court. The medallion owner would go to court for a meeting of creditors with the bankruptcy attorney and then obtain a Discharge from the bankruptcy court, discharging or eliminating the loan or monies due to the bank or financing company. Under this scenario, the chapter 7 bankruptcy trustee could attempt to sell the taxi medallion or it would be surrendered to the bank or the financing company. The good news for the medallion owner is that if a debtor files under chapter 7, there is no relief of indebtedness income to the medallion owner. Additionally, with guidance from an experienced attorney, the medallion owner will be able to repair their credit in approximately a year to 18 months. However, if the medallion owner owns other valuable property or assets (such as a house, co-op, condominium or vacation property), the bankruptcy trustee has the right to sell or liquidate those assets to repay creditors. With respect to the family house, co-op or condominium unit, the medallion owner would be able to claim a homestead exemption (in the New York metropolitan area) of $165,550 for himself or herself and $165,550 for their spouse (if they are married and both parties reside in the house, co-op or condominium). Additionally, the chapter 7 bankruptcy filing would negatively impact the debtor’s credit report score. A medallion owner should consult with an experienced bankruptcy attorney before going down the path of a chapter 7 personal bankruptcy filing.
- Finally, the medallion owner can file a chapter 13 personal bankruptcy. Chapter 13 bankruptcy is a form of personal bankruptcy for individuals who own valuable property that they want to keep at the conclusion of the bankruptcy case, and requires that the debtor to make three to five years of payments out of their disposable income (future income minus necessary living expenses) to the bankruptcy trustee, who then makes distributions to the creditors in the case. The chapter 13 bankruptcy filing could be used by a medallion owner who wants to keep the medallion and continue to make payments to the bank or financing company, or it could be used to return the medallion to the bank or financing company and allow the debtor/medallion owner to keep the other assets or property that they own, provided that they make all of the payments scheduled in their chapter 13 plan. A chapter 13 bankruptcy filing is more favorable for credit reporting purposes then chapter 7 bankruptcy.
As you can see, there are many strategies under New York State law and federal bankruptcy law that can be utilized by a medallion owner who owns a medallion that’s underwater. Just as there is no such thing as “a one sized shoe that fits all,” each potential strategy discussed above must be reviewed and evaluated by an experienced bankruptcy and workout attorney who has reviewed the medallion owner’s financial situation and understands the medallion owner’s desired outcome. At Shenwick & Associates, we have represented medallion owners and other debtors, and are extremely experienced at doing workouts and bankruptcy filings for both individuals and companies. Those interested in setting up a meeting with Jim Shenwick can call him at (212) 541-6224 or email him at jshenwick at gmail dot com.
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