Blogs

Debt Relief Offered By The City of Chicago Every once in a while the City of Chicago will offer a debt relief program or amnesty program with regard to parking tickets and red light tickets. The most recent version of this program is going to last from November 15, 2015 through December 31, 2015. However,+ Read More
The post City Of Chicago’s Parking Ticket Relief Is Nothing Compared To Chapter 13 appeared first on David M. Siegel.

1. Observe your form of organization.

• Make sure your form of entity is properly set up and continues to remain in existence, or the principals will be personally liable
• Pay your annual filing fees so your entity remains in existence, or the principals could then become personally liable. 

      2. Pay attention to details.

• If you set up a corporation as your business entity, make sure that you sign the documents with your title as an officer (i.e. as “President”, “Vice-President” etc.).  Do not sign a business document personally.
• Keep records, on site and off site, of business events such as issuance of stock, bonds, notes and capital contributions
• Ex. If a friend or family loans money to your entity, do you have an executed promissory note which states the interest rate, who is the borrower, the repayment terms, etc.?
• Have you set up an accounting system/program such as Quickbooks and do you know how to use it?
• Do you have a budget for your venture?
• Do you know your “burn rate”?
• Have you prepared and reviewed an Income Statement and Balance Sheet? 

      3. Guaranties

• There are two types of guaranties that small businesses will usually enter into: (a) a general guaranty and (b) a “good guy” guaranty
• A guaranty is a written agreement by a third party or entity to pay the debts of an individual or entity (primary obligor) who fails to pay its debts as they mature
• As an example, if the entity wants an American Express corporate credit card, the principal(s) will need to guaranty payment to American Express if the entity does not make that payment.
• “Good Guy” guaranties are generally used for office leases. It is a limited form of guaranty that provides that the principals agree to pay the debts for the Tenant, if the Tenant fails to pay base rent or additional rent, until (i) the Tenant pays its rent arrears, (ii) vacates the space in broom clean condition and (iii) gives the keys back to the Landlord.

       4. Responsible Person Taxes are sales taxes or employees’ share of employment taxes (FICA and FUTA) that are collected by an entity and not paid over to the tax authorities

• The responsible person is generally an officer of the corporation and the taxing authorities will conduct an audit to determine who the responsible person(s) are after the business closes or fails.
• Responsible Person Taxes are also not dischargeable in personal bankruptcy
• Note the principals of a defunct entity are not liable for general corporate income tax liabilities that were not paid by the defunct entity.

      5. Fraudulent Conveyances

• NYS Debtor and Creditor Law and the Bankruptcy Code provide that if an individual or a business does not have sufficient capital to conduct its business, then they cannot transfer property for no consideration (gift) to family, friends or third parties. If they do, a creditor or the bankruptcy trustee can commence litigation to unwind the transaction.
• Hint: The best time to do “asset protection planning” is before one gets into trouble!

      6.  Small Corporation and LLC Wages for Employees

• Section 630 of the New York Business Corporation Law renders every privately held corporation’s ten largest shareholders personally liable, jointly and severally, “for all debts, wages or salaries due and owing to any of [the corporation’s] . . . laborers, servants or employees other than contractors, for services performed by them for such corporation.”  N.Y. Bus. Corp. Law § 630(a)
• Limited Liability Company Law § 609(c) provides similar treatment to laborers, servants and employees of a LLC
• Accordingly, if you are running a small business that is failing, make sure that you pay monies due your employees before the business closes or you may be personally liable for those monies.

       7. Closing a business (letting it go inactive or in windup mode) v. a Chapter 7 bankruptcy filing

• Closing a business benefits:  Lower administrative costs and possible to do without the help of professionals.
• Closing a business detriments: Belief by vendors or creditors that assets or inventory were not properly sold or accounted for, lawsuits, no accounting by a bankruptcy trustee and no “automatic stay” which results from an entity filing for bankruptcy protection 
• Chapter 7 bankruptcy filing benefits: Protection from creditor actions via the automatic stay, orderly payment of creditors if assets are available for distribution, and an orderly liquidation of company assets. The business closes after the Chapter 7 bankruptcy petition is filed with the bankruptcy court.  
• Chapter 7 bankruptcy filing detriments: Filing fee ($335), administrative cost for professionals, preparing schedules and reports for the bankruptcy trustee and meeting with the bankruptcy trustee (341 hearing) and possible bankruptcy trustee litigation (adversary proceeding).

By Ann Carrns
Disputing mistakes found on your credit report has become a bit easier because of expanding electronic options for challenging errors.
The three major credit bureaus have long provided online channels for challenging inaccuracies, but some consumer advocates advised against using that option because the systems didn’t allow for the inclusion of supporting documents.
That is changing, however, because the bureaus now offer consumers the ability to upload documents, like bills you have paid or letters you have written. (Equifax, for instance, said it added the document upload option in late 2013.)
“Now that you can upload documents, it allows for a more robust dispute online,” said Chi Chi Wu, a lawyer with the National Consumer Law Center. The center previously warned consumers against using the bureaus’ online dispute systems, but it now says that it can be a viable option for those who want to have errors removed quickly.

Errors in credit reports are a problem because they may lower your credit score, the three-digit number that serves as a summary of your credit history. That can possibly result in a higher interest rate on a loan or even denial of credit. A study by the Federal Trade Commission in 2012 found that about a quarter of consumers had errors in their credit reports. A smaller proportion — about 5 percent — had errors that could significantly lower their credit scores, but that still means millions of people are affected.
Consumer credit scores are calculated from data in credit reports, which are provided by the three big credit bureaus: Experian, TransUnion and Equifax. The reports are compiled using information supplied by lenders and credit card companies where you hold accounts.
In addition to the bureau systems, at least one online credit management site, Credit Karma, is now promoting a free tool that allows users to dispute some mistakes with a few clicks.
Users of the site can obtain a free credit report weekly and, if they spot an error, click a “dispute” button to start a challenge. The site has been testing the service for months, and it is now making it available to all users, said Kenneth Lin, the founder and chief executive of Credit Karma. In testing, he said, the site handled 600,000 disputes, and 87 percent resulted in a change to a member’s credit report.
There are some caveats. The service currently works only with TransUnion credit reports. That means you may not catch errors on reports prepared by Experian or Equifax.
Also, the site allows challenges only for inaccuracies that don’t typically require supporting documentation to correct. For errors that require documentation — like corrections to inaccurate personal information — users need to contact the bureau directly.
The site’s services, including the dispute tool, are offered free, but to use them you must register and provide personal information, including your Social Security number. The site has access to your credit report and uses it to make suggestions about managing your finances, like suggesting a loan with a lower interest rate. If you choose to apply for such a loan, the site earns a referral fee from the lender.
Here are some questions and answers about credit reports:
■ How can I check my credit report for errors?By law, you are entitled to a free copy of your credit report once a year from the three main credit bureaus. To get the report, visit www.annualcreditreport.com.
■ What if I want to file a dispute on paper?The credit bureau websites provide instructions if you want to go that route, which consumer advocates still recommend, if you think your dispute is complex and could potentially result in legal action. (If that is the case, Ms. Wu advises, use certified mail with a return receipt option.) The Federal Trade Commission offers sample letters on its website.
■ What if I am unhappy with the result of my dispute?You can add a note to your credit file. You can also file a complaint with the Consumer Financial Protection Bureau on its website.
Copyright 2015 The New York Times Company.  All rights reserved.

Bankruptcy Attorney Jordan E. Bublick is a Miami, Florida  has over 25 years of experience in filing Chapter 13 bankruptcy (reorganization of mortgages and other debt) and Chapter 7 Bankruptcy cases (discharge of debt). He has filed over 8,000 bankruptcy cases. Jordan E. Bublick has been a member of the Florida Bar since 1983 and is a graduate of the Ohio State University College of Law (JD) and the New York University School of Law (LL.M.).

Chapter 7 Bankruptcy 

Chapter 7 bankruptcy is generally used by people who desire to discharge unsecured debt and who have little non-exempt property.

Chapter 13 Bankruptcy 

Chapter 13 bankruptcy is used to reorganize mortgages and other secured debt as well as to discharge unsecured debt.

Chapter 13 bankruptcy is often used to stop a foreclosure action and proposed a plan of reorganization. Due to the decreased real estate values in South Florida, often a junior mortgage lien may be avoidable as an "unsecured debt."

Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com