THE CFO website has a very useful article on restructuring businesses. The article is titled: 6 Steps to Prepare for the Next Restructuring WaveIt can be found at:https://www.cfo.com/budgeting-planning/strategy-budgeting-planning/2022/10/bankruptcy-restructuring-recession-supply-chain-liquidity-risk/Jim Shenwick, Esq [email protected] 917 363 3391

 Fox Rothchild has published an article regarding the standard for dismissal of an individual’s Chapter 7 case based on the Debtor’s pre-petition bad faith behavior. The article can be viewed at https://www.jdsupra.com/legalnews/is-prepetition-bad-faith-cause-for-45603/Jim Shenwick, Esq. [email protected] 917 363 3391

   In a detailed opinion from Judge Larson in the Bankruptcy Court for the Northern District of Texas the court found that in determining household size for purposes of a chapter 13 case, the appropriate test is the economic unit approach.  In re Poole, 2022 Bankr. LEXIS 2776, 2022 WL 5224087, Case No 21-32224 (Bankr. N.D. Tex, 30 Sept. 2022).  As of the filing of the Pooles' bankruptcy seven individuals were living in their home: the joint debtors, Mrs. Poole's mother, and sister, a nephew (age 12) and niece (age 21) and the debtor's adult son who was recovering from surgery and unable to work.  The niece is a college student and also works 30 hours/week.  Mrs. Poole's mother earns $700/month social security.  Mr. Poole's sister recently obtained new employment.  Thus these individuals helped contribute toward household expenses.  Debtors claimed a household of seven based on the heads on bed approach.  The trustee objected asserting that the economic unit approach would exclude the niece and allow only a household of six.  While not ruling on whether the niece should be included in the economic unit approach, Judge Larson went into some detail as to the alternative approaches to interpreting 11 U.S.C. §1325(b)(3)'s household size, as required to complete the means test.  Such interpretation is critical, both to compute how much has to be paid to unsecured creditors under §1325(b)(3), but also whether the plan is required to extend to five years if it does not pay unsecured creditors in full per §1325(b)(4).  The three tests for determining household size is the heads on beds approach, the income tax dependent approach, and the economic unit approach.  The heads on beds approach simply follows the household definition from the Census Bureau, the number of individuals occupying a housing unit.  Support for this approach may be found in the fact that §1325(b) references the Census Bureau's median income table, but nothing in §1325(b) incorporates the Census Bureau's definition.  Judge Larson found that this approach may over-estimate the household size, possibly including individuals transiently in the home without support from the debtors.  The income tax dependent approach examines who could be claimed as a dependent on the debtor's tax returns.  Judge Larson found that this would tend to undercount the individuals in the household.  The Internal Revenue Code narrowly defines who may be a member of the household on a tax return, setting specific requirements for dependency.  Part of the confusion on this issue is the use of the term household  under §1325(b)(2) and the term 'dependent of the debtor' under §707(b)(2).  Some courts have found that as both sections are part of a singular calculation, the terms must be read consistently.  Judge Larson rejected this argument, finding it did not provide a consistent approach.  The purpose of the Bankruptcy Code is not the same as the Internal Revenue Code, which is intended to collect revenue for the government.  The bankruptcy Code seeks an accurate assessment of a debtor's financial situation and thus what a debtor can feasibly pay over time to the creditors.1  Courts often see debtors who financially support others despite being unable to claim them as dependents on tax returns.  Ignoring this economic realty would be incongruent with the rehabilitative purpose of the Bankruptcy Code.  The economic unit approach assesses the number of individuals in the household who act as a single economic unit.  This considers 1) who is financially dependent on the debtor, 2) who financially supports the debtor, and 3) whose income and expenses intermingle with the debtor's.  This is the most flexible approach, allowing courts to adapt to each debtor's individual circumstances, though could result in a fractional number.     An example of this approach is found in the Robinson2 case where the debtor's four children spent 4 days/week with the debtor and three with their mothers.  Debtor provided for certain expenses for the children as well as child support.    Despite substantial contributions toward the children's expenses, he could not claim them as dependents on his tax returns, but counting all of them in the household per the heads on beds approach would have over estimated his household given the sharing of their expenses with the mothers.  These cases show the need for courts to have flexibility in their approach to household size.  The court sustained the trustee's objection in finding that the economic unit approach was the proper test in determining household size, but requested that the debtor and trustee determine the household size based on the economic unit approach. 1 Johnson v. Zimmer, 686 F.3d 224, 239 (4th Cir., 2012).↩2 In re Robinson, 449 B.R. 473, 475-82 (Bankr. E.D. Va., 2011).↩Michael BarnettMichael Barnett, PA813 870-3100https://hillsboroughbankruptcy.com

The first plenary session of NCBJ was a panel consisting of Professor Melissa Jacoby, Jennifer Hagle from Sidley and Austin and Judge Lisa Beckerman (Bankr. S.D.N.Y.). My overall impression of the panel was that it consisted of Prof. Jacoby asking why parties in big bankruptcy cases should be allowed to bend the rules, Ms. Hagle saying that its necessary to meet the demands of her creditor clients and Judge Beckerman trying to make sense of what parties are telling her. The Moderator, Judge Elaine Hammond, brought in the views of some of her judicial colleagues in the audience.Do Traffic Laws Apply in Large Chapter 11s? In a typical exchange, Professor Jacoby asked "Can you get an exemption from traffic laws?" Somewhat later in the program, she said  "Imagine going into a chapter 7 case and saying we don’t need a trustee, we don’t need a financial management course. We’ve got a better idea."  Ms. Hagle replied that "certainty is very strong currency."  She added that venue and jurisdiction and what judge and what precedent will apply gives creditors the ability to understand when you extend credit what’s going to happen. She also said that "risk equals money."Judge Beckerman said that from the judicial perspective she is looking at how far out is what I’m being asked to do?  She said "I did hedge funds. If it’s bothering me, it’s way out there."  She also said that she asks three questions:Is there any basis for this? Who is this going to harm? What is going to happen if I don’t approve it? Judge Beckerman said she also looks at whether she is being faced with a "faux emergency."  She also said that she is wary of parties who make a big ask on the first day and it is essentially a first round of negotiation with the court.  She added that "sometimes the parties are testing you." She addressed how to know when the sky is falling. She said that when the debtor is down to $250,000 in cash and they can't get by on cash collateral, there is little choice other than to approve the financing. However, she said that when she is told that everyone is in agreement, she is looking at who is being left out of the deal and who is going to get damaged if they are not part of the financing.Ms. Hagle asserted a very realpolitik view of large cases. She said that for lenders, "certainty is currency" (which was actually the second time she used that phrase) and that for a creditor's committee, time and expense and delay are its currency.Prof. Jacoby returned to defend the role of rules. She said that "the exception shouldn’t swallow the rule" and asked whether a  subset of private parties should be able to get together and override rule of law and say this is the only way to get this done. She added that as a matter of policy, the benefits of bankruptcy are a subsidy and that private parties have the ability to capture the big government subsidies that government offers.  Judge Beckerman said that she looks at the story I’m being told. When I probe I ask is that really accurate? Did people really have a negotiation session or is there something suspicious? She looks for validation. Was the company marketed for a year? Was this the only purchaser that came forward? Did they explore financing? Ms. Hagle stressed the need for integrity in the process. She said that having an independent director or directors mans that they must have real independence. Having an investigation means having a real investigation.  One of the judges (Judge Beckerman or Judge Hammond I believe) said that there are things that we will routinely approve and there are things we don't. She stressed the importance of the Delaware first day guidelines and the efforts of other courts to lay out some hard and fast rules. One of the speakers (I think Ms. Hagle) said that she was all for due process as long as it's not on the first day. There was plenty of room for due process on the second day. (I think that was a joke).There was also a discussion about the role of the judge in putting the brakes on overly aggressive requests. Sometimes the judge needs to suggest to the parties that they take a break and go out in the hall. Judge David Jones was given as an example of a judge who will independently review the assumptions in the bank's spreadsheet. However, Ms. Hagle asked "What is the judge's role in trying to renegotiate what has already been negotiated?" She also said that you can give someone all the time in the world except that the economics are already baked in. If there is funny business going on (my words, not hers), the Committee had an obligation to track it down after the fact. Bleedover Into Smaller CasesAnother topic beyond whether traffic laws apply in Delaware and New York was whether we are developing divergent systems. While there was some agreement that we are developing one system for mega cases and one for everyone else, there was some discussion about bleedover into smaller cases.Someone (from the audience I believe) asked whether lawyers who do small cases and consumer cases get to be as creative as lawyers in the mega cases? Someone (probably Prof. Jacoby) raised the specter of the exception swallowing the rule. Lawyers in other cases are going to look for precedents in the big cases.   Judges have to be willing to say "that was a very bespoke set of circumstances" that led to that result.Judge Hammond echoed that lawyers in smaller cases are picking up on what they see the big cases doing. She said that it’s not just pro ses that pick up things on the internet. She added that it goes to fees as well. She has seen counsel for chapter13 debtors requesting $700 per hour. (Note: There are practical limits here. I could charge as much as a third year associate in New York, but where would I find the client who could pay that much?)Tort Cases and Equitable Mootness Ms. Hagle pointed out that the mass tort cases might be different than the melting ice cream cases. In the Purdue Pharma case, the court was told that without third party releases, there would be no billions going to tort victims. The District Court said no and called their bluff. The panelists pointed out that the mass tort cases run the risk that the legislature steps in to fix the problem. A legislative fix was presented as only one step worse than the Supreme Court ruling on a case. Professor Jacoby argued that equitable mootness allows for the law to get remade without the involvement of the legislature.  She said the rules have changed. They haven’t changed because of Congress or the Supreme Court or even that much from circuits.  Equitable mootness is a big carve out of circuit courts doing their job. Overall the circuits may want to leave things going the way they’re going. Do they want to resolve these issues? To the extent there are concerns about what’s going on in big cases, circuits have some responsibility. Is it constitutional? Where did this come from? Judge Beckerman said that some circuits are more willing to look at substantive issues in confirmation. She pointed to the Fifth Circuit's recent Highland Capital case as one where the court reversed a confirmation order in part notwithstanding equitable mootness. She pointed out that the Fifth Circuit has a lot of big cases. Prof. Jacoby argued that  the Fifth Circuit is different than the 2nd or 3rd circuits when it comes to equitable mootness.Ms. Hagle noted that the Supreme Court has repeatedly passed on taking on equitable mootness.  They have not wanted to spend their time on it. However, she said that the landscape is changing and what is changing it is the mass tort cases. She argued that these cases were not crisis driven, but rather public policy driven.  She said that in the mass tort context there is a lot more willingness to grant stays pending appeal (which avoids equitable mootness).  She said that it’s just different than when you have the  DIP exploding. Judge Beckerman said that she does not make decisions thinking about whether she is going to get overturned. People make decision based on what they think right decision is. Prof. Jacoby said that mass tort cases and equitable mootness are a terrible combination. She said that in the Third Circuit oral argument on the Johnson and Johnson/LTL case, J & J's lawyers were asked whether it was better to resolve these mass tort cases through the bankruptcy system or the Multiu-District Litigation system. While this was not central to the issue of whether LTL filed in bad faith, it showed that the courts are thinking about how these cases get resolved. Judge Beckerman added that the appellate court has to look at commercial reality.Take-AwaysI thought the dynamic of this panel was interesting. You had the academic saying "stop, you can't do this" and the practitioner saying "we must do this" while the judge was left in the middle as the umpire trying to call balls and strikes in a setting where the strike zone is getting fuzzier. This panel focused on issues that came up throughout the conference. Is bankruptcy a better way to resolve mass tort claims? Has equitable mootness become a monster gobbling up appellate review? Will practitioners go so far that they push Congress into taking ill-advised action?The benefit of NCBJ is to hear what people are talking about at a high level. I think there was a recognition here (and in other programs) that some aspects of bankruptcy practice are going too far and may end up snapping back. I have a section in a law review article I am working on that talks about the revolt of the Article III judiciary against third party releases. Third party releases are one area where practice may be getting out ahead of the language of the code. However, at the opposite end of the spectrum, equitable mootness is an area where the Article III judiciary are arguably shirking their duty. I also think that Jennifer Hagle (the panel's equivalent of Gordon Gecko) had a point that it is one thing to bend the rules in the name of economics and be candid that is what is happening. And there is a role for the judiciary to impose limits and call the  lender's bluff. For example, a firm rule that chapter 5 causes of action are not subject to adequate protection liens will keep lenders from making that ask. On the other hand, the mass tort cases are clearly different and call for a different approach. Very often these are companies with a good business model who just can't handle the cost of litigation. It is not the case that the business will shut down unless the DIP lender's demands are met. As will be discussed in other articles from the conference, there is a major philosophical debate going on about whether the bankruptcy system or the MDL (multi-district litigation) system is better equipped to handle mass tort cases and whether the Bankruptcy Code as written furnishes the flexibility necessary to make it the better system.  Author's Note: My summary of this (and other programs) is only as good as my ability to listen and take notes at the same time. I apologize in advance if I have misquoted anyone. I have rearranged the order of some topics to make the summary flow better.

Besides sweeping away the competition in ballroom dancing competitions and having been a law school dean at a young age, Prof. Nancy Rapoport is known as the teacher who can make ethics interesting.  She gave the keynote address for the Commercial Law League luncheon titled Brave New World--Ethics Issues That We Never Knew We Had. Prof. Rapoport talked about how the pandemic changed us and the way we practice law. She pointed out that because of the pandemic we did things we didn't know we could do and did without things that we thought we had to have. Virtual platforms such as Zoom and Webex make it possible to connect remotely but pose their own challenges. She solicited stories from the audience and got the following.During the Gold's Gym case, there was an auction conducted by Zoom. There were two staid American bidders and a German contingent. The Germans were doing the auction from a hot tub. When they won the auction and jumped up to celebrate, the other participants were relieved to see that they were wearing swim trunks (although one was wearing a Speedo).In another case, a trustee was not so fortunate. A debtor was doing his 341 meeting from his phone in bed. When he shifted his position, the trustee saw more of the debtor than he cared to. In another case, a doctor was participating in a Zoom hearing when natured called. He forgot to turn off his camera when he went to use the restroom. An alert courtroom deputy warned the doctor's lawyer before things got too graphic.Prof. Rapoport said that the first rule of virtual connections is that you must wear clothes.This led to the obligatory reference to Comment 8 to ABA Rule 1.1:To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology, engage in continuing study and education and comply with all continuing legal education requirements to which the lawyer is subject.Failure to keep up with technology can lead to some humorous results, such as the attorney who didn't know how to turn off the cat filter on his Zoom and had to tell the judge that he was not a cat or the attorney whose vocal settings were sped up so that he sounded like a chipmunk. However, episodes like this do not make you look good in front of your client.In some cases technology can lead to temptations to cheat in ways that people would not do in person. Someone from the audience mentioned a case where they could see the shadow of cue cards being shown to the witness. Prof. Rapoport recommended asking the following questions during virtual depositions or hearings:Who is in the room with you?What electronic devices do you have turned on?Is your email turned on?In one virtual trial I was involved in, a married couple was testifying from the same room and using the same camera. The judge had to caution them to stop correcting each other's testimony. Virtual practice provides new opportunities for the unauthorized practice of law. Rule 5.5(a) states:A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction, or assist another in doing so.What happens if a lawyer licensed to practice law in Texas begins practicing from his vacation home in New Mexico where he is not licensed? What happens if an attorney attending NCBJ in Florida appears for a WebEx hearing in Texas from his Florida hotel room?  ABA Formal Opinion 495 addresses this issue:Model Rule 5.5(b)(1) prohibits a lawyer from “establish[ing] an office or other systematic and continuous presence in [the] jurisdiction [in which the lawyer is not licensed] for the practice of law.” Words in the rules, unless otherwise defined, are given their ordinary meaning. “Establish” means “to found, institute, build, or bring into being on a firm or stable basis.”2 A local office is not “established” within the meaning of the rule by the lawyer working in the local jurisdiction if the lawyer does not hold out to the public an address in the local jurisdiction as an office and a local jurisdiction address does not appear on letterhead, business cards, websites, or other indicia of a lawyer’s presence.3 Likewise it does not “establish” a systematic and continuous presence in the jurisdiction for the practice of law since the lawyer is neither practicing the law of the local jurisdiction nor holding out the availability to do so. The lawyer’s physical presence in the local jurisdiction is incidental; it is not for the practice of law. Conversely, a lawyer who includes a local jurisdiction address on websites, letterhead, business cards, or advertising may be said to have established an office or a systematic and continuous presence in the local jurisdiction for the practice of law. As Prof. Rapoport summarized it, you can take your hat to a new locale but you can't hang out a shingle there.Remote work offers new opportunities for breach of privacy. If you are working on your laptop at Starbucks, can other people walk by and see what you are doing? If you are counselling a client and have Alexa or Siri turned on, can those electronic devices overhear your conversation? If you are sharing your screen on Zoom, be sure that you are not sharing more than you intend to. I had a hearing once where an attorney accidentally shared his outline for questions instead of an exhibit.It is not enough for attorneys to guarantee their own security of confidential information. The ABA rules include the duty to supervise. That means that a firm should establish rules for attorneys working remotely and monitor that they are being followed.While many younger attorneys enjoy the ability to work remotely, there is a darker side. Remote attorneys may experience more anxiety and isolation leading to substance abuse. Supervising attorneys need to do regular check-ins with their remote associates to make sure they are doing ok. Prof. Rapoport also raised an interesting issue as to how we train young associates when many of the tasks they used to do, such as drafting contracts can now be done through Artificial Intelligence. Hopefully the answer is to engage associates with more meaningful substantive work and less routinized drudgery. You can find Prof. Rapoport's slides here.   

    An issue that arises occasionally in chapter 13 practice occurs when a debtor filed under chapter 13, but then changes their mind and wants out of bankruptcy, despite a request from another party to convert the case to chapter 7.  The great majority of cases appear to support the debtor's absolute right to dismiss the case, including a recent decision from the 9th Circuit B.A.P.  In TICO Constr. Co. v. Van Meter (In re Powell), 2022 Bankr. LEXIS 3019, BAP No. NV-22-1014-FLB (21 October 2022).   Here TICO Construction sought to convert Mr. Powell's chapter 13 case to chapter 7 asserting that the debtor was abusing the bankruptcy process, and was ineligible to be a debtor under chapter 13.  TICO had filed an adversary under §§523(a)(4) and (6) to hold that their debt was nondischargeable, alleged that Powell transferred assets to his ex-wife prior to filing through a marital settlement agreement, and objected to the homestead exemption.  Asserting he was tired of the litigation, Mr. Powell submitted a motion to dismiss under 11 U.S.C. §1307(b).  TICO opposed asserting abuse of the system including a sham divorce, and that Powell was over the unsecured debt limit for chapter 13.  The bankruptcy court held that bad faith and debt limits are irrelevant to the debtor's right to dismiss the chapter 13 case. The 9th Circuit BAP initially examined the language of the statute.  11 U.S.C. 1307(b) provides that the court 'shall' dismiss a case upon request of the debtor unless the case was previously converted.  While a few cases hold bad faith can preclude the voluntary dismissal1, the BAP found that Law v. Siegel, 571 U.S. 415, 134 S.Ct. 1188, 188 L.Ed.2d 146 (2014) overruled cases finding that §105 allows the bankruptcy court to override explicit mandates of the Bankruptcy Code.  Thus, §1307(b)'s plain text requiring the court do dismiss a chapter 13 that had not been previously converted upon request of a debtor.   The BAP found that the debt limit argument did not change the result.  If TICO's argument prevailed, it would create a new exception to §1307(b) not contained in the Bankruptcy Code.  §1307(b) does not limit the right to dismiss to eligible debtors.   The BAP went on to note that the §109(e) debt limits are not jurisdictional.2  1 See In re Jacobsen v. Moser (In e Jacobson), 609 F.3d 647, 660 (5th Cir. 2010)  (asserting discretion to convert for cause under §1307(c) where debtor acted in bad faith or abused the system and filed a request to dismiss in response to the motion to convert); Mitrano v. United States (In re Mitrano), 472 B.R. 706, 710 (Bankr. E.D. Va. 2012) (right to dismiss limited to good faith debtors); In re Johnson, 228 B.R. 663, 668 (Bankr. N.D. Ill. 1999) (right to dismiss can be trumped in some circumstances by a motion to convert under §1307(c).↩2 Note a decision from the Southern District of Florida to the contrary, finding that §109(e) eligibility goes to the question of bad faith, and denied a motion to dismiss and converted a case on the trustee's motion for exceeding the debt limit and lacking regular income.  In re Letterese, 397 B.R. 507 (Bankr. S.D. Fla. 2008).↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703813 870-3100https://hillsboroughbankruptcy.com 

 Chapter 7 vs. Chapter 13 Bankruptcy: Which Is Best for You? See the informative article at https://wtop.com/news/2022/10/chapter-7-vs-chapter-13-bankruptcy-which-is-best-for-you/For those people with questions about chapter 7 bankruptcy please contact Jim Shenwick,Esq. [email protected] 917 363 3391

Holiday Expenses & Bankruptcy What You Need To Know About Filing Bankruptcy Before Holiday Season With the holiday season just around the corner, many Arizona families may be expected to shoulder the accompanying costs using credit cards and other lines of credit. But with inflation increasing the cost of living, and the market declining with that trend projected to continue into the future, this could create a pressure cooker situation of debt. Many clients come to us after the holiday season regretful of overspending on gifts, meals, flights, and decorations. Bankruptcy might be able to help, but it does come with some limitations. To learn more about the possible considerations and issues that could arise from a post-holiday bankruptcy filing, call 480-448-9800 to schedule your free consultation with an experienced member of our bankruptcy team. Chapter 7 or Chapter 13 Bankruptcy Regardless of your reason for filing bankruptcy, the first step is to determine whether you should file Chapter 7 or Chapter 13. The chapter you file could also impact how any debts you have remaining from the holidays are treated. You may be eligible for one, both, or in rare situations, neither. Chapter 7 bankruptcy clears unsecured nonpriority debts, the most common being medical bills, credit cards, and personal loans. If you’re overwhelmed with credit card debt from the holidays, this probably sounds great. But there are limitations to discharging credit card debt with bankruptcy- see more below. Additionally, you need to make sure you are eligible to file for Chapter 7 bankruptcy before you start making plans to discharge debts with it. It is only available to those whose income is below the state median or who pass the Means Test. If the debtor doesn’t meet these income limitations, has property they want to save from repossession, or other circumstances are present, Chapter 13 may be a better solution to holiday-induced debt. Chapter 13 bankruptcy is known as a wage earner’s bankruptcy because it arranges all of the debtor’s disposable income into a reorganized debt payment plan that lasts three or five years. This gives someone who has fallen behind on a secured debt, like a mortgage or a car payment, more time to catch up while protected from repossession. It is also an option for those whose income is too high for Chapter 7. Talk to a Phoenix bankruptcy attorney to learn more about the unique benefits offered by Chapter 13 bankruptcy. Credit Card Limitations in Bankruptcy If there were no limitations on discharging credit card debt in bankruptcy, many people would open up as many credit cards as they could and max them out immediately before filing. To prevent this, there are credit card debt discharge limitations meant to prevent debtors from intentionally opening lines of credit with the plan to discharge them in bankruptcy. These limitations are set forth by 11 U.S.C. § 523. Luxury purchases totaling $800 or more in the 90 days before your filing won’t be included in the discharge. The same goes for cash advances of $1,100 or more in the 70 days before filing bankruptcy. Essentially, you can’t spend thousands of dollars on holiday gifts and festivities and discharge it a couple of months later in bankruptcy. Your creditor will need to object to their debts being discharged if they believe you have violated the bankruptcy guidelines. Your defenses against their objections will be heard at an adversary proceeding. You may want to consider hiring a Peoria bankruptcy attorney for this hearing if you haven’t retained one for your case already. If your creditor(s) is successful at the adversary proceeding, their debt will remain untouched by your bankruptcy discharge. Luxury vs. Necessity An argument can almost always be made that a purchase was a necessity rather than a luxury. Things like gas and groceries for regular activities are necessities, while things like flights and hotels aren’t considered necessities by the court. Some holiday gifts could be considered necessities- for example, giving your child off-brand shoes they need for sports is more necessary than buying your child the newest and trendiest Nikes. Likewise, gifting your spouse something like a new blender or piece of furniture would be more necessary than an expensive watch or jewelry. What If I Purchased Gifts on a Payment Plan? For some larger gifts, you may have the option to pay for the item in installments after receiving the item. Common examples include furniture, appliances, cell phones, and other technological devices. If you file for Chapter 13 bankruptcy, these will be secured debts that must be paid off in your payment plan. The plus side is that it means you get to keep financed assets in a Chapter 13 bankruptcy.  However, you could run into issues if you financed holiday presents and file bankruptcy before paying off their balances. Some creditors may let it slide, especially if you were close to paying off the debt. But sometimes, the lender will repossess the asset, which can be awkward and inconvenient. Can I Ever Get Another Credit Card After Bankruptcy? If credit cards are a major part of your financial strategy, filing for bankruptcy comes with serious drawbacks. You will lose all of your credit cards when your bankruptcy petition is filed. You will not be able to use credit cards for the duration of your bankruptcy. A Chapter 7 bankruptcy usually lasts 3 to 6 months, and a Chapter 13 bankruptcy lasts 3 or 5 years. You will need to apply for new credit cards after your case has been discharged (or dismissed). After your bankruptcy is discharged, you likely won’t be short on offers to open new lines of credit. Many lenders send out offers to bankruptcy debtors once their cases have been discharged. But just because your mailbox will be full of the credit card offers after your case has been discharged doesn’t necessarily mean that they will be good ones. Make sure to read all of the fine print on any offers you receive for lines of credit after bankruptcy. They could have unfavorable terms like high-interest rates, annual fees, and more. Opening up new credit cards with poor terms and accruing balances on them will land you right back in the situation you were in before bankruptcy. However, making timely payments on new credit cards can also help improve your credit score after your case has been discharged. But credit cards aren’t the only option available to post-bankruptcy debtors looking to increase their credit scores. To learn about more steps you can take to rebuild credit after bankruptcy, call our firm for your free consultation at 480-448-9800. Contact Our Arizona Law Team For Your Ideal Bankruptcy Results Bankruptcy doesn’t have to be the stressful and embarrassing experience that it is often portrayed to be. The guidance of a compassionate and skillful bankruptcy firm can help you feel confident knowing you have made the best choice for your situation, and you have the control to create a positive credit history post-bankruptcy. Many people come to us simply for information about bankruptcy, assuming they don’t have the financial resources to afford an attorney. At My AZ Lawyers, our professional bankruptcy team prides itself on offering flexible, affordable payment options for Arizona families struggling with debt. To learn more, as well as to see if you qualify for our zero-down filing option, call 480-448-9800.   Arizona Offices: Mesa Location: 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: (480) 448-9800 Email: [email protected] Website: https://myazlawyers.com/ Phoenix Location: 343 West Roosevelt, Suite #100 Phoenix, AZ 85003 Office: (602) 609-7000 Glendale Location: 20325 N 51st Avenue Suite #134, Building 5 Glendale, AZ 85308 Office: (602) 509-0955 Tucson Location: 2 East Congress St., Suite #900-6A Tucson, AZ 85701 Office: (520) 441-1450 Avondale Location: 12725 W. Indian School Rd., Ste E, #101 Avondale, AZ 85392 Office: (623) 469-6603 The post Holiday Expenses & Bankruptcy appeared first on My AZ Lawyers.

Choosing to file for bankruptcy can be a difficult but necessary decision for individuals struggling financially. When you decide to file for bankruptcy, an automatic stay might go into effect, giving you the immediate relief you need to move forward. In bankruptcy cases, an automatic stay places a pause on certain actions by creditors. When an automatic stay is in effect, creditors are not allowed to engage in certain debt collection efforts. Not all debts are protected by an automatic stay. Although an automatic stay can last for the duration of your bankruptcy, that doesn’t mean it will. Creditors can motion for an automatic stay to be lifted, making you vulnerable to harassment. In order to keep an automatic stay in effect throughout bankruptcy, hire an experienced attorney to represent you. Our lawyers are here to help you regain financial stability by filing for bankruptcy. For a free case evaluation with the Pennsylvania bankruptcy lawyers at Young, Marr, Mallis & Deane, call today at (215) 701-6519 or (609) 755-3115. What is a Bankruptcy Automatic Stay? For those struggling to handle their debts and financial difficulties, filing for bankruptcy may be the solution. In most cases, as soon as debtors file a claim with help from a bankruptcy attorney, an automatic stay will go into effect. But what is an automatic stay, and what does it mean for your bankruptcy case? In a bankruptcy claim, an automatic stay essentially pauses certain debt collection efforts by creditors. This is relief immediate and requires no additional paperwork on behalf of bankruptcy filers. Once you have filed for bankruptcy in federal court, an automatic stay will go into effect provided you meet the necessary criteria. When an automatic stay goes into effect, creditors are no longer permitted to contact you regarding certain debts. They will be paid in due time, whether by liquidating your assets or through a repayment plan, the specifics of which will be determined during your bankruptcy case. With an automatic stay in place, creditors will no longer be allowed to call or harass you regarding certain outstanding debts. An automatic stay can provide instant relief to debtors regarding certain debt collection efforts. Remember, this perk only goes into effect once you have filed for bankruptcy in your state. Hire a Cherry Hill bankruptcy lawyer to use an automatic stay to your advantage and ease the stress surrounding your debts. Your attorney can help you file for bankruptcy and get an automatic stay so that creditors’ debt collection efforts cease. It’s also important to note that while an automatic stay is in effect, creditors cannot bring litigation against you, continue wage garnishments, or engage in other similar actions. You will also be safe from home foreclosure efforts, eviction, vehicle repossession, disconnection of utilities, and more. To learn more about how an automatic stay can help you get relief from financial difficulties, hire a lawyer right away. Does an Automatic Stay Apply to All Debts? Automatic stays are only effective against the collection efforts of certain debts. Learning which of your debts are covered by an automatic stay and which are not is important. Otherwise, you may be under the impression that you no longer have an immediate financial liability to a creditor, causing you to fall further into financial instability. After an automatic stay has gone into effect for your bankruptcy case, speak to your attorney. Your lawyer can explain which of your debts are covered and which are not. There are exceptions to automatic stays, which don’t protect against collection efforts for certain debts. Often, these are “non-dischargeable” debts. For example, an automatic stay cannot and will not stop any litigation attempting to establish or collect alimony or child support. The IRS is also allowed to demand tax returns and perform audits on debtors when an automatic stay is in place. Automatic stays are not likely to affect criminal cases involving debt issues either. Liability for certain loans, like those from job-related pensions, are also unlikely to be affected by an automatic stay. Remember, certain non-dischargeable debts are unaffected by an automatic stay. That means you may remain immediately liable for payments to creditors despite an automatic stay being in place. To learn which debts are covered by an automatic stay and which are not, speak to your bankruptcy attorney. It is crucial to remain abreast of your debt liability and prevent it from worsening. How Long Can an Automatic Stay Last? In the best-case scenario, an automatic stay will last for the duration of your bankruptcy. Generally, the length of an automatic stay will depend on the specific type of bankruptcy you choose to file for, either Chapter 7 or Chapter 13. Learning how long an automatic stay is likely to last is important so that you know what to expect during bankruptcy. Generally, an automatic stay will remain in effect throughout an entire bankruptcy, with exceptions. If you filed for Chapter 7 bankruptcy, which allows filers to pay their debts by liquidating their assets, an automatic stay might last anywhere from three to five months. Because Chapter 7 bankruptcy allows for faster repayment of debts, an automatic stay for a Chapter 7 filer may be quite short. If you file for Chapter 13 bankruptcy, an automatic stay may last anywhere from three to five years. Chapter 13 bankruptcy doesn’t require liquidation of assets and instead allows debtors to pay creditors via a court-approved repayment plan. Depending on the size of your debts and your current income, an automatic stay and a Chapter 13 bankruptcy may last several years. It is important for debtors to understand that each bankruptcy case is unique. While an automatic stay will likely go into effect if you file for either Chapter 7 or Chapter 13 bankruptcy, it may affect your case differently than others. Ask an attorney for insight to better anticipate how long an automatic stay may remain in effect as you attempt to regain financial stability. An experienced Bucks County bankruptcy lawyer can assess your case and all its factors and estimate how long an automatic stay will last. Can Creditors Lift an Automatic Stay? While automatic stays can provide instant relief for debtors and remain in effect for the duration of bankruptcy, they are not guaranteed to last. In fact, automatic stays can be lifted if a creditor has reason to request so. To prevent that from happening, hire an experienced bankruptcy attorney who can help you navigate your claim. In certain circumstances, an automatic stay might be lifted, meaning filers no longer have protection from certain debt collection efforts. When an automatic stay is removed, creditors can then restart debt collection efforts, leaving you vulnerable to harassment and litigation from creditors and debt collectors. In order to lift an automatic stay, creditors must file a motion of relief from the automatic stay. If successful, you will become responsible for paying certain debts immediately. Regardless of whether or not you are preparing a repayment plan or are in the process of liquidating your assets, creditors who have been relieved from an automatic stay might begin hounding you for payments. You may wonder why creditors would want an automatic stay lifted when they will be paid back through a bankruptcy case. Certain creditors, namely secured creditors like mortgage lenders and car lenders, are more likely than others to file a motion of relief from the automatic stay. Secured creditors generally have a bigger stake in the game, so to speak. They either want to get paid immediately or repossess your property by getting an automatic stay lifted. Depending on your payment history to certain creditors, a motion of relief from the automatic stay may be more or less likely to succeed. Remember, once an automatic stay is lifted, you are vulnerable. Without an automatic stay, you won’t have the time you need to take a breath and organize your finances. An experienced attorney can fight against a motion of relief stay to ensure you remain protected from persistent creditors while in bankruptcy. Can Debtors Unintentionally Lift an Automatic Stay? Unfortunately, debtors might lift an automatic stay in a bankruptcy case without even realizing it. Failure to meet certain benchmarks or follow through with your intentions can cause an automatic stay to be lifted automatically. Automatic stays can also be lifted without request from a creditor if a debtor fails to follow through with their statement of intentions during a Chapter 7 bankruptcy case. A statement of intentions in a Chapter 7 bankruptcy case is a document where debtors list all secured debts and identify how they will amend them. Debtors can choose between the following four options when setting an intention regarding their debts: Surrender the property Redeem the property Reaffirm the debt Retain the property Each option comes with pros and cons and the choices you make will depend on your personal finances. Once you have set your intentions for dealing with your secured debts, you must take the necessary steps to see them through within the next month. If you have not done so within 30 days, an automatic stay will be lifted, leaving you vulnerable to creditors. To prevent this from happening, hire an experienced bankruptcy attorney. Will You Get an Automatic Stay if You Have Previously Filed for Bankruptcy? An automatic stay can provide you with the immediate relief you need to regain your footing while heading into bankruptcy. Because of that, an automatic stay is a privilege of sorts. If you’ve never filed for bankruptcy before, you can benefit from an automatic stay so long as you follow the rules of your bankruptcy. However, if you’ve previously struggled financially and filed for bankruptcy, you might become ineligible for an automatic stay. Prior bankruptcies can affect your eligibility for an automatic stay. If you filed for bankruptcy in the past year and file again, an automatic stay for your current case will only remain in effect for 30 days. After that point, it will be automatically lifted unless your Philadelphia bankruptcy lawyer files a successful motion to extend the automatic stay in time. If you have filed for bankruptcy multiple times in the past year, you will not be granted an automatic stay without provocation. To get a stay on debt collection while under bankruptcy, your attorney must file a motion to impose the automatic stay. Otherwise, debt collectors will not be prevented from harassing you about payments during your bankruptcy case. What Happens if a Creditor Violates an Automatic Stay? Automatic stays exist to protect debtors from harassment as they attempt to regain financial stability. If a creditor violates the rules of an automatic stay while it is in place and continues to contact you about outstanding debts, inform your bankruptcy attorney. Violating an automatic stay can come with serious consequences for creditors. An automatic stay can provide relief for debtors, even temporarily. If a creditor chooses to violate an automatic stay, tell your lawyer. Willfully violating an automatic stay can make a creditor liable for certain costs, like attorney’s fees and other damages. Violating an automatic stay can also make a creditor liable for punitive damages in some cases. Filing for bankruptcy is a responsible choice to make when dealing with financial struggles. This is why filers are rewarded with automatic stays. Ignoring a stay on debt collection and proceeding to harass debtors trying to regain their footing is not permitted. If a creditor attempts to contact you in any way about debt collection without your attorney present, inform your lawyer. They may have violated the automatic stay, opening them up to severe consequences. Call Our Attorneys About Your Bankruptcy Case Today If you need to regain your financial stability by filing for bankruptcy, your attorneys can help. For a free case evaluation with the Chester County bankruptcy lawyers at Young, Marr, Mallis & Deane, call today at (215) 701-6519 or (609) 755-3115.

How Often Can You File For Bankruptcy In Arizona? Arizona Bankruptcy Guide: How Often Is It Allowed? There’s a myth that an individual can only file for bankruptcy once in their lifetime, but this isn’t true. There are no limits on how many times a person can file for bankruptcy. However, there are restrictions on the timing between multiple bankruptcy filings. In order to avoid the court believing you to be a bad faith filer and to help yourself obtain the full benefits of bankruptcy, it’s crucial to comply with these restrictions. If you’re unsure about the timing of filing for bankruptcy, contact an experienced Phoenix bankruptcy lawyer to discuss your situation. How Long Do I Need To Wait To File Bankruptcy After Receiving a Discharge? A common situation is when an individual files for bankruptcy, has their debts successfully discharged, and then accrues new debt that also needs to be discharged. Specific timing requirements apply to these situations. If you filed a Chapter 7 bankruptcy and received a discharge: You will need to wait at least eight years from the date of the previous filing in order to discharge another Chapter 7 bankruptcy, or You will need to wait at least four years from the date of the previous filing in order to discharge a Chapter 13 bankruptcy If you filed a Chapter 13 bankruptcy and received a discharge: You will need to wait at least six years from the date of the previous filing in order to discharge a Chapter 7 bankruptcy, or You will need to wait at least two years from the date of the previous filing in order to discharge another Chapter 13 bankruptcy The timing of a second bankruptcy filing after a Chapter 13 bankruptcy discharge can become more complicated if you paid off all or most of your debts, so consult with a Tucson bankruptcy attorney to understand how the regulations apply to your situation. If you have had multiple bankruptcies already discharged, you will need to carefully examine the necessary waiting periods. However, eight years is the longest waiting period that can apply. If it has been longer than eight years since your last bankruptcy discharge, you do not need to wait to apply again. Filing Bankruptcy vs. Receiving a Discharge An important consideration is that these waiting periods do not prevent you from filing for bankruptcy; they only determine whether your bankruptcy is eligible to be discharged. For many people, the main reason for filing for bankruptcy is to obtain a discharge and be relieved of overwhelming debt. The bankruptcy filing may have no value if they are ineligible to have their debts eliminated. However, there are some situations where filing for bankruptcy can be beneficial even if you do not receive a discharge. For example, if you are behind on your mortgage payments and a foreclosure is looming, filing for a Mesa Chapter 13 bankruptcy can give you the opportunity to catch up on your payments. Even if you don’t get a discharge, the bankruptcy was still useful because you were able to catch up on your mortgage payments. In these cases, talking with your attorney about your options can be extremely helpful and enable you to file for bankruptcy strategically. If My Previous Bankruptcy Case Was Dismissed, When Can I File Again? Another common situation is when an individual files for bankruptcy, is unable to complete the bankruptcy for some reason, and the case is dismissed without any debt discharge. If you still need your debts to be discharged, you may want to file for bankruptcy again. This is possible, and you’ll be able to work with more narrow timing restrictions: You will only need to wait 180 days to file again if: Your case was dismissed because you willfully did not abide by court orders or did not appear in court as requested, or You requested and obtained a voluntary dismissal of your case after a creditor asked for relief from the automatic stay The 180 day waiting period only applies if one of these conditions is met. If not, you can file a second bankruptcy petition immediately. What Other Considerations Should I Know? If you have filed a bankruptcy petition that might be dismissed and you want to be sure you can file again without the waiting period, it’s critical that you avoid mistakes that can make you subject to the 180 day waiting period. This includes ignoring court orders, failing to show up in court, or failing to do anything that is needed to move your case forward. Your Glendale bankruptcy lawyer will advise you throughout this process. Sometimes your failure to comply is not considered “willful,” in which case you may not be subject to the waiting period. For example, if you are unable to make a payment to your Chapter 13 bankruptcy because your income changed for reasons outside of your control, that may not be considered willful. Other situations can become more complicated, but your Chandler bankruptcy attorney can provide guidance. Are You Wondering Whether You Can File For Bankruptcy? The attorneys at My AZ Lawyers have helped many people just like you navigate the complexities of Arizona bankruptcy filings. We can evaluate your eligibility for bankruptcy, help you understand your best options, and develop a unique strategy to help you maximize the benefits of bankruptcy. Schedule your free, confidential consultation by calling our office today!     Arizona Offices: Mesa Location: 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: (480) 448-9800 Email: [email protected] Website: https://myazlawyers.com/ Phoenix Location: 343 West Roosevelt, Suite #100 Phoenix, AZ 85003 Office: (602) 609-7000 Glendale Location: 20325 N 51st Avenue Suite #134, Building 5 Glendale, AZ 85308 Office: (602) 509-0955 Tucson Location: 2 East Congress St., Suite #900-6A Tucson, AZ 85701 Office: (520) 441-1450 Avondale Location: 12725 W. Indian School Rd., Ste E, #101 Avondale, AZ 85392 Office: (623) 469-6603 The post How Often Can You File For Bankruptcy In Arizona? appeared first on My AZ Lawyers.