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Here at Shenwick & Associates, our summer is busy with (among other matters), representing clients in adversary proceedings. An adversary proceeding is a lawsuit that is brought within a bankruptcy proceeding and based on conflicting claims, usually between the debtor (or the bankruptcy trustee) and a creditor or other interested party. Adversary proceedings are governed by special procedural rules under Part VII of the Federal Rules of Bankruptcy Procedure.
Typically, an adversary proceeding is commenced when a business files for reorganization under Chapter 11 of the Bankruptcy Code, and then the case is voluntarily or involuntarily converted to a liquidation under Chapter 7 of the Bankruptcy Code. A Chapter 7 bankruptcy trustee is then appointed. Under § 546(a) of the Bankruptcy Code, the bankruptcy trustee has until the earlier of: (1) the later of two years after the entry of the order for relief, or one year after the appointment or election of the first trustee if the appointment or election occurs before the expiration of the two year period after the entry of the order for relief, or (2) the time the case is closed or dismissed, to commence an adversary proceeding.
Typically, the claims a trustee makes against a defendant in an adversary proceeding are for fraudulent transfers (transfers of the debtor's assets to a third party, with the intent to prevent creditors from reaching the assets to satisfy their claims) under § 548 of the Bankruptcy Code and state law (i.e. New York Debtor and Creditor Law, which has a six year statute of limitations) and preferential transfers (transfers made prior to a bankruptcy filing to a creditor by a debtor to the exclusion or detriment of its other creditors) under § 547 of the Bankruptcy Code and state law. A trustee will usually send the defendant a demand letter for recovery of the debtor's assets to voluntarily settle the claims before filing a complaint and commencing the adversary proceeding.
Adversary proceedings are highly specialized in both their procedural rules and the analysis of the merits of the substantive claims for relief against a creditor or other party. If you're involved in bankruptcy litigation or think you may be (i.e. one of your vendors appears to be having financial difficulty), please contact Jim Shenwick.
Bringing you the most up-to-date news, tips and blogs throughout the web. Here’s your Bankruptcy Update for July 30, 2013 DMX Files For Bankruptcy Detroit bankruptcy sends tremors through China ‘Real Housewives’ Stars Indicted On Bankruptcy, Fraud And Tax Charges
Bankruptcy exemptions play a significant role during the filing process. They help debtors obtain protection for their assets and personal property against creditors. In short, exemptions provide legal options for debtors to keep their possessions during and after bankruptcy. Chapter 7 bankruptcy exemptions help determine what you can keep, while Chapter 13 bankruptcy exemptions help [...]
Great review of The Hard Gospel's new release, which by the way you must download!
I wanted to do a proper review of The Hard Gospel’s The Commandments Of Morality, but, since I had the honor of getting to go in do some guest vocals on a couple of the tracks during their recordin…
Until recently Oregon single bankruptcy filers with more than $800 worth of jewelry were at risk of losing anything in excess of $800 to the Chapter 7 Trustee. Though this amount was doubled for married filers, the exemptions did not provide much in the way of protection for families holding bracelets or necklaces handed down through generations, or the married couples who had made a real point of saving up to buy marriage rings decades before they had even gotten in debt.
About eight years ago, a Chapter 7 Trustee in Portland actually demanded a wedding ring from a woman at her Meeting of the Creditors; he literally took the ring from her finger.
I am pleased to report that with Oregon’s recent adoption of the federal bankruptcy exemptions, it is now unlikely that anyone will lose jewelry in an Oregon Chapter 7 bankruptcy ever again. The Jewelry exemption has been increased to $1450 for a single person and that amount is doubled for marrieds.
Even filers owning jewelry with a present value in excess of these amounts are still protected because they can use the Wildcard and home equity exemptions to protect another $11,000($22,000 for marrieds) or so in jewelry equity. In essence, unless you are holding the Hope diamond or have a few Faberge eggs, you ice is well protected. From now on, it’s just not an issue.
The original post is titled Keeping Jewelry in Bankruptcy in Oregon under Federal Exemptions , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .
Until recently Oregon filers could depend on their state bankruptcy exemptions to protect up to $3000 in household goods. Truthfully protection of household goods does not come up all that often in bankruptcy proceedings. After all, once you buy something and take it home, the resale value is usually pennies on the dollar. That said, many Oregon filers genuinely worried that the Chapter 7 Bankruptcy Trustee might come to their home, inspect their furniture, the contents of their garage, the kids’ toys, etc. and opt to sell off some of the filers’ treasured family heirlooms.
With the recent adoption of the federal exemptions, prospective Oregon bankruptcy filers can now breathe a sigh of relief. The protection for household goods has been increased from $3000 to $11,525. In addition, the wildcard and homestead exemptions can now be applied as well to protect another $11,000 in household goods for single filers and another $22,000 for married filers.
What this means is that your stuff is now protected. You keep it all.
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The original post is titled Federal Bankruptcy Exemptions in Oregon and Your Household Stuff , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .
Filing for bankruptcy can help you keep your assets legally without having them seized by creditors to satisfy an outstanding balance or past due debt. Yet, some who file think they need to hide or withhold information about their personal property in order to retain it. This action may lead to bankruptcy fraud charges, hefty [...]
On August 22, 2013, David Shaev will be presenting at the Consumer Bankruptcy Informational Workshop, a presentation of City Bar Justice Center of the New York City Bar and the U.S. Bankruptcy Court for the Eastern District of New York.
The event will be held at the New York City Bar, 42 West 44th Street, New York, New York from 6:00pm – 8:30pm.
Joining David will be fellow New York City bankruptcy attorneys Sheldon Barasch and Rachel Blumenfeld.
The event is free and open to the public, but registration is required.
Topics to be covered are:
- Types of Bankruptcies available;
- Requirements and costs for filing bankruptcy;
- Advantages and Disadvantages to filing bankruptcy;
- Alternatives to filing bankruptcy; and
- Information about the long-term effects of a bankruptcy Discharge.
For more information or to register, contact the Pro Se Office at the United States Bankruptcy Court for the Eastern District of New York at (347)394-1738.
I hope you can make it for this informative and free session.
Free New York Bankruptcy Information Event – All Are Welcome was originally published on Consumer Help Central. If you're seeing this message on another site, it has been stolen and is being used without permission. That's illegal, a violation of copyright, and just plain awful.
Up until recently Oregon car owners who wished to file bankruptcy had cause for concern. Under the Oregon exemptions, single filers could protect only $3000 in car equity and married filers could protect only $3000 each or $6000 for one vehicle.
Oregon car owners who wished to file Chapter 7 Bankruptcy with more car equity than allowed under the miserly Oregon exemptions faced the prospect of having their cars sold off during the pendency of their bankruptcy case. With Oregon’s recent adoption of the federal exemptions, car owners can now breathe a sigh of relief.
Under the federal exemptions, an Oregon bankruptcy filer can now use the federal car exemption to protect up to $3450 in car equity and this amount can be doubled for married filers. In addition to these protections, a single Oregon bankruptcy filer can stack wildcard and home equity exemptions to protect an additional $11,225 and married filers can stack these exemptions to protect an additional $22450 in car equity.
Unless you are a single bankruptcy filer and you have more than $15,000 in car equity or you are married and have more than $30,000, you are safe. Losing cars in Chapter 7 used to be commonplace. It is now difficult to imagine anyone losing their car in bankruptcy ever again.
The original post is titled Good News for Oregon Consumers and Their Cars in Bankruptcy , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .
A defaulted federal student loan isn’t the end of the world.
Let’s say you fell behind on your student loans. Way behind.
So far behind that you went into default on your federal loans. But times got better, and you were able to rehabilitate those loans and resume payments.
Later on, you find yourself in a financial crunch again. One thing leads to another, and you default again.
What’s to be done?
Rehabilitation – A One Shot Deal
In the world of consumer finance and debt, you can fall behind on a loan and then catch up again. Fall behind again and you catch up again.
For all their faults, private creditors and collectors are forgiving in that way. They want their money, and are content to get it when you’ve got it.
In the world of federal student loans, however, the landscape is different. If you default once and rehabilitate your federal student loans, you can’t do it again.
Consider Consolidation
You can’t rehabilitate the federal student loan, but you may be able to consolidate the loan if you agree to repay the loan under either the Income Contingent or Income Based Repayment Plan.
There is, however, a catch. You can’t consolidate a defaulted federal student loan under these circumstances:
- If a judgment has been issued against a defaulted loan (unless the judgment order has been vacated); and
- If you are trying to consolidate defaulted Direct Consolidation Loans and do not include at least one additional eligible loan in the consolidation.
If your defaulted student loan is a FFEL Loan or Direct Loan, you may be liable for collection costs as well as any collection costs of up to 18.5% of the principal and interest outstanding on the defaulted loan.
Federal Loans Eligible For Consolidation
Not all federal student loans are eligible for consolidation, however.
You must have at least one Direct Loan or Federal Family Education Loan (FFEL) loan in order to consolidate under the Direct Loans program.
Even if you have a number of loans, you can consolidate under the Direct Loans program if at least one of them is a Direct Loan or FFEL Loan.
Chapter 13 Bankruptcy As An Option
If your loan is in default and you can’t consolidate under the Direct Loans program, maybe Chapter 13 bankruptcy can help you.
Under Chapter 13 bankruptcy, all of your debts (not just student loans – all of them) are put under the control of the U.S. Bankruptcy Court.
Each month you pay an agreed-upon amount of money to the Chapter 13 bankruptcy trustee appointed in your case, and that trustee distributes the money to your creditors – including your federal student loan lender. At the end of the case, which last 3-5 years depending on your household income and a few other factors, most of your debts are wiped out.
Your federal student loans, however, will not be wiped out at the end of your Chapter 13 bankruptcy case. In that way, you can look at Chapter 13 as a way of forcing a temporary repayment plan on your federal student loan servicer.
In order to qualify for Chapter 13 bankruptcy, you must have regular income as well as the ability to make payments of some sort. It doesn’t need to be a huge number each month, but if you’re running the in negative each month then Chapter 13 isn’t going to work for you.
The Downside Of Chapter 13 Bankruptcy
Using Chapter 13 bankruptcy as a way to handle your defaulted federal student loans isn’t a perfect solution. In fact, here are some of the downsides you need to know about:
- the case runs for 3-5 years depending on your household income;
- during the time that you’re in Chapter 13 bankruptcy, you will need to turn over a portion or all of your tax refunds each year to the trustee for distribution to your creditors;
- interest on your federal student loans continues to accrue during your Chapter 13 case, so your balance may not go down by a significant amount of money by the end of the case; and
- you will not be able to use new credit or borrow money while you’re in Chapter 13 unless you get permission from the court to do so.
The Benefits Of Chapter 13 Bankruptcy
There are, however, lots of benefits to filing for Chapter 13 bankruptcy. They are:
- force a repayment plan of your federal student loans based on what you can afford;
- stop collection activities against you for the period of time that you’re in Chapter 13;
- prevent wage garnishments, bank account freezes and judgments from going forward against you;
- maintain the ability to keep a roof over your head and food on your plate without continuing to slide further behind in your federal student loan obligations;
- wipe out many of your other debts at the end of the Chapter 13 case, which may make it easier to catch up on your student loans over time; and
- if your financial situation doesn’t improve by the end of the case, you can file another Chapter 13 to handle your remaining student loan debt.
Legal Fees For Chapter 13 Bankruptcy
This is a big question for most people – Chapter 13 sounds great, but how am I going to pay for it?
Fair question.
In some places, our Chapter 13 legal fees are set by the court (in Los Angeles Chapter 13 cases, for example, we are limited to charging $4,000 for the basic work involved).
In New York, our fees are based on your situation and what we reasonably expect to do in order to get your the help you need. That usually runs about $6,500.
On top of those fees, there are court filing fees that come to $281. There’s also a credit counseling certification process as well as a financial management certification that you’ll need to do, and they usually come to about $50 combined.
How Legal Fees Get Paid
Your goal is to get this handled as quickly as possible, and we want to help. That’s why we allow you to pay most of your fees through the Chapter 13 Plan.
That means we will stand in line with your other creditors and get paid a little bit each month our of your monthly payments.
It makes sense for you because you get into court more quickly, and you have the peace of mind knowing that we don’t get paid if the case isn’t successful.
Consider Your Options
As you can see, a defaulted student loan isn’t the end of the world. Whether it’s consolidation or Chapter 13 bankruptcy, there are ways to avoid the government’s collection efforts.
I’m happy to help either way, and when we talk it will largely be about mapping out these options and seeing which one works best for you.
What To Do If You Default On Your Federal Student Loans After Rehabilitation was originally published on Consumer Help Central. If you're seeing this message on another site, it has been stolen and is being used without permission. That's illegal, a violation of copyright, and just plain awful.
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