Bankr. E.D.N.C.: In re Sugar- Discharge Allowed After Reliance on Counsel Mitigates Sanctions Ed Boltz Fri, 09/12/2025 - 16:19 Summary Judge Warren’s most recent opinion in In re Sugar (Bankr. E.D.N.C. Aug. 15, 2025) follows remand from both the U.S. District Court and the Fourth Circuit Court of Appeals. The case began with the dismissal of Christine Sugar’s Chapter 13 in 2023, coupled with a five-year nationwide bar on refiling, after she sold her residence without prior court approval in violation of E.D.N.C. Local Bankruptcy Rule 4002-1(g)(4). At the time, the court viewed Sugar as defiant and unapologetic, making dismissal with prejudice appear justified. On appeal, however, the District Court and the Fourth Circuit (in Sugar v. Burnett, 130 F.4th 358 (4th Cir. 2025)) questioned whether reliance on advice of counsel had been adequately considered. The Fourth Circuit remanded with instructions to reassess sanctions in light of her attorney’s role. On remand, represented by new counsel, Sugar testified credibly that she had repeatedly disclosed her inheritance and contemplated sale of her house to her attorney, but was affirmatively advised she could keep and use the funds and that no court approval was needed to sell her home. The court found this advice “poor and erroneous,” and concluded Sugar reasonably relied on it. Vacating its prior order, the bankruptcy court allowed her discharge to enter and invited the Bankruptcy Administrator to review possible professional discipline. Commentary This decision continues the long-running saga of Sugar, now spanning multiple layers of appellate review. At each turn—from dismissal, to sanctions, to affirmation by the District Court, to remand by the Fourth Circuit, and finally to discharge—her case highlights the tension between local rule compliance, debtor candor, and attorney responsibility. The Fourth Circuit’s intervention is notable. Unlike its earlier refusal to extend grace to the debtor in Purdy (where a debtor’s repeated bad faith filings justified dismissal with prejudice), here the appellate court recognized that attorney advice could mitigate even seemingly blatant violations. Similarly, while In re Beasley,  Case No. 21-02322-5PWM, involved sanctioning an attorney for nondisclosure, in Sugar the focus shifted to how that nondisclosure misled both the debtor and the court. The contrast is instructive: Purdy underscores that when the debtor alone is culpable, harsh remedies like multi-year bars may be sustained. Beasley demonstrates that courts will not hesitate to sanction attorneys who conceal material information. Sugar sits uncomfortably between these poles, reminding us that when an attorney’s “crusade” or misinterpretation of local rules leads a debtor astray, punishment of the debtor herself may be inequitable. For consumer debtor attorneys, the case is a cautionary tale with two utilities: Reliance on counsel is not an absolute defense, but if documented through emails and testimony, it can mitigate sanctions and even reverse a dismissal years later. Local Rule compliance is not optional. Even if a practitioner believes a rule is inconsistent with the Code, pursuing a test case requires full and frank disclosure to the client of the risks—especially the possibility of dismissal with prejudice. The Sugar opinions (bankruptcy, district, and circuit) now join Purdy and Beasley as part of the small but growing body of Fourth Circuit consumer bankruptcy case law emphasizing professional responsibility. While debtors may ultimately receive a second chance, attorneys who misadvise or conceal face not only sanctions but potential referral to the State Bar. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document in_re_sugar.pdf (202.82 KB) Category Eastern District

When you file for bankruptcy, the bankruptcy court issues an “automatic stay.”  This stops creditors and collectors from coming after you, but can it stop everything?  Is wage garnishment covered under this automatic stay? The automatic stay you receive when you file is powerful and can stop many kinds of collections, but it does not stop all wage garnishment.  Whether a particular garnishment order is stopped or not will depend on its purpose.  If the garnishment is for a debt, then yes, it will usually stop; if it’s for child support or alimony, then it will not stop. Call our Pennsylvania bankruptcy lawyers at Young, Marr, Mallis & Associates at (215) 701-6519 for a free case review today. What is an Automatic Stay in a Pennsylvania Bankruptcy Case? When you file for bankruptcy, debt collection is automatically paused.  This is because the court automatically “stays” (stops) any collection efforts while they analyze your debt, see if you are eligible for bankruptcy, and carry out your case. This automatic stay is incredibly powerful and can give you a breather or even a new lease on life.  While the automatic stay is in place, creditors cannot… Collect on the debts Activate attachment or sell off your property to collect on the debt Send you new bills Call you Have collections agencies call you. If they do contact you or try to collect debts subject to the bankruptcy, then you can show them the automatic stay – or direct them to our Pennsylvania bankruptcy attorneys – and that should shut down further collection attempts. It is one of the most important parts of filing for bankruptcy, and having the automatic stay in place will be the first sign that this system is really working for you. What Does an Automatic Stay Cover? The automatic stay in your case will stop all debt collection covered under the petition. This means it stops collection on your debt, but not anyone else’s. It also only stops collection on debts that existed before the petition.  If you file your bankruptcy petition, obtain an automatic stay, and then go take out a loan the next day, it will not be halted by the stay. Does an Automatic Stay Stop Wage Garnishment? If you were already at a point where a creditor had a wage garnishment order against you, then the automatic stay should stop that.  However, it might not stop other garnishments like child support or alimony. As mentioned above, your automatic stay will only stop collection efforts for the covered debts in this bankruptcy petition.  If you signed a release for a new debt to garnish your wages after filing for bankruptcy, that certainly wouldn’t be covered. Wage garnishment also only stops if it is for a debt. Does Bankruptcy Stop Wage Garnishment for Alimony or Child Support? Wage garnishment is commonly used to enforce divorce and custody orders, making sure the person pays child support or alimony.  Automatic stays do not interfere with these payments and cannot stop wage garnishment for alimony or child support. Does an Automatic Stay Cover Withholding? If your employer withholds money from your pay for other reasons outside of garnishment, that typically will not stop with an automatic stay.  For example, if you have retirement accounts that they withhold funds for, those withholdings will continue. Some of these are not required in any way, and you may be able to ask your employer to suspend them or stop withholding while you are in a tough financial spot and need more free income. However, you can’t stop withholding for taxes.  Your employer is required to take out and pay state, federal, and local taxes.  They also cannot stop withholding Social Security or disability taxes. How Do I Know if My Automatic Stay Will Cover Certain Debts or Garnishments? The best way to understand your bankruptcy petition and automatic stay is to talk to a lawyer about it.  Our attorneys can go over your debts with you, along with any other payments or withholdings you might have questions about, and let you know whether they should be covered by the automatic stay under the Bankruptcy Code’s specific provisions. How Quickly Does the Automatic Stay Go Into Effect? The automatic stay should go into effect immediately and automatically, with nothing else to be done on your part.  The fact that you filed your bankruptcy petition should, itself, be enough proof to show any creditors that they need to stop harassing you or garnishing your wages. However, you also need to actually give creditors notice of the stay, or else they will not know it is in effect.  Talk to your lawyer about the process for doing this. What Should I Do if Garnishment Goes Through Anyway? If you have a debt that is supposed to be stopped by the automatic stay, then you have a few ways of addressing the situation.  Our attorneys can also advise you on next steps. For one, you should make sure you have a copy of the stay order so that you can contact the creditor and tell them about your stay.  They should not be garnishing wages in violation of a court order, and they can be made to reimburse you for any garnishment that should have been stayed. You can also contact your employer if you are willing.  They must have an actual order to garnish wages in the first place, and they cannot just go off of a creditor’s request.  In the same way, once there is an order in place halting garnishment, they have to stop.  They cannot continue to garnish your wages once the automatic stay is in place. In any case, though, our lawyers can also help you contact the right parties, show them the order, and help convince them to follow the law.  Automatic stays are quite powerful orders, and violating these orders can get other parties, creditors, and employers in trouble with the law. Call Our Pennsylvania Bankruptcy Attorneys Today For your free case evaluation, call Young, Marr, Mallis & Associates’ Allentown, PA bankruptcy lawyers at (215) 701-6519 right away.

Law Review: McLaughlin, Christopher- NC School of Government Tax Foreclosures: An Overview Ed Boltz Thu, 09/11/2025 - 20:50 Summary McLaughlin’s bulletin provides North Carolina counties with a primer on tax foreclosure. Local governments can use either: Mortgage-style foreclosure (G.S. 105-374) – a full civil action, with attorney’s fees chargeable to the taxpayer. In rem foreclosure (G.S. 105-375) – a streamlined, judgment-based process with a capped $250 administrative fee. The article covers lien priority, redemption rights, surplus distribution, and the mechanics of sales and upset bids. It also notes that counties may foreclose even against tax-exempt organizations (if taxes accrued before the exemption) or property owned by debtors who previously went through bankruptcy, once the automatic stay no longer applies. Commentary For consumer debtor attorneys, the key intersection is with bankruptcy and constitutional law: Automatic stayin Bankruptcy – McLaughlin states foreclosure can resume once a bankruptcy ends by dismissal or discharge. But under § 362(c), the stay continues against property of the estate until case closure (or abandonment), meaning a county may need stay relief even post-discharge. Counties rarely press this distinction, but debtor counsel should. County motions for relief – Counties, like any secured creditor, can seek stay relief under § 362(d), though cost often deters them. This can buy debtors critical time to cure arrears or negotiate.  This option is not presented in the article. Tyler v. Hennepin County – The Supreme Court made clear that keeping more than is owed in taxes is a taking. North Carolina already requires that surplus proceeds from the initial foreclosure sale be turned over to the clerk of court for distribution. But what about the subsequent sale scenario? Under G.S. 105-376, if a county is the high bidder and takes title, it holds the property “for the benefit of all taxing units” and may later dispose of it. Current law lets the county keep any surplus above taxes when it later resells. After Tyler, that practice may be constitutionally suspect. The Court’s reasoning—that equity beyond the tax debt is still the homeowner’s property—suggests that if the county resells for more than the taxes owed, the excess belongs to the former owner, not the county. Consumer attorneys should be prepared to argue that Tyler extends to this scenario. A county cannot avoid the Takings Clause by first bidding in the taxes, taking title, and then capturing the homeowner’s equity on resale. Just as Minnesota could not legislate away surplus equity, North Carolina counties cannot sidestep it through G.S. 105-376. Practical leverage – Even if courts have yet to apply Tyler this way, raising the issue can help debtor counsel negotiate with counties—particularly in hardship cases or where a homeowner has substantial equity at risk. Takeaway McLaughlin’s bulletin outlines the procedural mechanics counties rely on, but in a post-Tyler world, debtors and their attorneys should not assume counties can lawfully pocket resale profits after acquiring property for back taxes. That question is ripe for litigation, and until resolved, consumer attorneys should press Tyler arguments whenever equity remains in a foreclosed home. With proper attribution,  please share this post.    To read a copy of the transcript, please see: Blog comments Attachment Document tax_foreclosures_an_overview.pdf (483.42 KB) Category Law Reviews & Studies

W.D.N.C.: Black v. Brice-Upholds Business Judgment Rule, Rejects Caremark Claim Ed Boltz Tue, 09/09/2025 - 16:43 Summary: Schletter, Inc., a Delaware-incorporated solar racking manufacturer based in Shelby, NC, lost market competitiveness when its FS Uno system fell behind the competition. CEO Dennis Brice, after months of analysis and with approval from its German parent company, launched a new “G-Max” product intended to be cheaper, lighter, and easier to install. To meet aggressive delivery deadlines in contracts with steep liquidated damages, development was rushed, no testing was performed, costs and production capacity were misjudged, and customers struggled with installation. The product rollout failed, customer claims mounted, and Brice was terminated in 2017. Schletter filed Chapter 11 in 2018. Post-confirmation, Plan Administrator Carol Black sued Brice for breach of fiduciary duty under Delaware law, arguing he acted for the benefit of the German parent (continuing licensing fees) rather than the debtor, and that ignoring “red flags” about the G-Max launch constituted a Caremark oversight breach. The bankruptcy court granted summary judgment for Brice, applying the business judgment rule. On appeal, the district court affirmed: Wholly-owned subsidiary status – Under German corporate practice, the unissued 5% treasury shares didn’t change that Schletter Germany held 100% of outstanding stock. Brice’s fiduciary duty was to the parent, so licensing fee decisions could not be a loyalty breach. No Caremark claim – Alleged “red flags” (lack of testing, risky contract terms, inadequate capacity) were hindsight critiques of business risk, not evidence of knowing illegality or bad faith. Business judgment rule applied – The decision to launch G-Max was a rational attempt to address competitive decline, and nothing rebutted the presumption of good faith. Because the business judgment rule shielded Brice, the court did not address his indemnification clause defenses. With proper attribution,  please share this post.    To read a copy of the transcript, please see: Blog comments Attachment Document black_v._brice.pdf (266.43 KB) Category Western District

M.D.N.C.: Brown v. First Advantage Background Services Corp. & Ashcott, LLC- Default Judgment for FCRA as to Liability not Damages Ed Boltz Mon, 09/08/2025 - 17:34 Summary: When Charles Brown applied for a long-haul truck driving job with a FedEx contractor, he did what every applicant expects—passed the interview and drug test—only to have his offer rescinded after a background check falsely claimed he had felony convictions. The root cause: Defendant Ashcott, LLC, hired by First Advantage to run criminal records searches,  (Good Grief!) matched another “Charles Brown” from Philadelphia (with a different middle name and Social Security number) to him, and reported that the match was based on Brown’s *full* name and SSN—something that simply could not be true. Brown sued both First Advantage and Ashcott under the Fair Credit Reporting Act (FCRA). After settling with First Advantage, he pursued a default judgment against Ashcott. The court found Ashcott properly served, that its conduct violated § 1681e(b) by failing to follow reasonable procedures to assure maximum possible accuracy, and that the error was a proximate cause of Brown’s lost job and emotional distress. However, damages were another matter. Brown asked for $100,000 compensatory (for a year’s lost wages and distress) and $100,000 punitive damages. Evidence showed he had other employment until April 2023 and some income thereafter, so his lost wage calculation did not match reality. The court granted default judgment *as to liability*, denied punitive damages for lack of evidence of a willful violation, and set the matter for a damages hearing unless Brown supplements his proof to account for other income during the relevant period. Commentary: The opinion is a tidy reminder for consumer advocates that FCRA liability is not just about “false” reports—it’s about whether the background screener reasonably matched the data. Here, Ashcott claimed a perfect match on SSN when the middle name and SSN were actually different. That misstatement essentially doomed them once they defaulted. From a practice standpoint, this case illustrates: The importance of damages proof: Even with liability conceded, a plaintiff must prove actual damages with specificity, especially if there was other income or mitigation. Bankruptcy attorneys are well familiar with similar challenges when proving lost wages in discharge injunction or stay violation actions. The uphill battle for punitive damages: Without facts showing reckless disregard or intentional misconduct, courts will not presume willfulness from mere negligence. Parallel lessons for bankruptcy cases: Consumer debtors wrongfully denied employment due to inaccurate credit or criminal background reports may have viable FCRA claims, but those claims must be backed by documentary proof of lost earnings and clear causation—especially if those damages will be property of the estate and subject to trustee oversight. The factual irony here is that, had there been a Chapter 13 case, the false report’s economic harm (which would not be protected as under the personal injury exemption)  could have impacted the debtor’s ability to fund a plan—yet the litigation and any recovery could also have been estate property. This makes a strong argument for debtor’s counsel to consider FCRA claims not just as side litigation, but as tools to protect the debtor’s fresh start and preserve plan feasibility. With proper attribution,  please share this post.    To read a copy of the transcript, please see: Blog comments Attachment Document brown_v._first_advantage.pdf (112.31 KB) Category Middle District

M.D.N.C.: Brown v. First Advantage Background Services Corp. & Ashcott, LLC- Default Judgment for FCRA as to Liability not Damages Ed Boltz Mon, 09/08/2025 - 17:34 Summary: When Charles Brown applied for a long-haul truck driving job with a FedEx contractor, he did what every applicant expects—passed the interview and drug test—only to have his offer rescinded after a background check falsely claimed he had felony convictions. The root cause: Defendant Ashcott, LLC, hired by First Advantage to run criminal records searches,  (Good Grief!) matched another “Charles Brown” from Philadelphia (with a different middle name and Social Security number) to him, and reported that the match was based on Brown’s *full* name and SSN—something that simply could not be true. Brown sued both First Advantage and Ashcott under the Fair Credit Reporting Act (FCRA). After settling with First Advantage, he pursued a default judgment against Ashcott. The court found Ashcott properly served, that its conduct violated § 1681e(b) by failing to follow reasonable procedures to assure maximum possible accuracy, and that the error was a proximate cause of Brown’s lost job and emotional distress. However, damages were another matter. Brown asked for $100,000 compensatory (for a year’s lost wages and distress) and $100,000 punitive damages. Evidence showed he had other employment until April 2023 and some income thereafter, so his lost wage calculation did not match reality. The court granted default judgment *as to liability*, denied punitive damages for lack of evidence of a willful violation, and set the matter for a damages hearing unless Brown supplements his proof to account for other income during the relevant period. Commentary: The opinion is a tidy reminder for consumer advocates that FCRA liability is not just about “false” reports—it’s about whether the background screener reasonably matched the data. Here, Ashcott claimed a perfect match on SSN when the middle name and SSN were actually different. That misstatement essentially doomed them once they defaulted. From a practice standpoint, this case illustrates: The importance of damages proof: Even with liability conceded, a plaintiff must prove actual damages with specificity, especially if there was other income or mitigation. Bankruptcy attorneys are well familiar with similar challenges when proving lost wages in discharge injunction or stay violation actions. The uphill battle for punitive damages: Without facts showing reckless disregard or intentional misconduct, courts will not presume willfulness from mere negligence. Parallel lessons for bankruptcy cases: Consumer debtors wrongfully denied employment due to inaccurate credit or criminal background reports may have viable FCRA claims, but those claims must be backed by documentary proof of lost earnings and clear causation—especially if those damages will be property of the estate and subject to trustee oversight. The factual irony here is that, had there been a Chapter 13 case, the false report’s economic harm (which would not be protected as under the personal injury exemption)  could have impacted the debtor’s ability to fund a plan—yet the litigation and any recovery could also have been estate property. This makes a strong argument for debtor’s counsel to consider FCRA claims not just as side litigation, but as tools to protect the debtor’s fresh start and preserve plan feasibility. With proper attribution,  please share this post.    Blog comments Attachment Document brown_v._first_advantage.pdf (112.31 KB) Category Middle District

Loan modification and bankruptcy are two different approaches to addressing the threat of foreclosure. Loan modification might only pause foreclosure, while bankruptcy might stop it altogether, and is typically the better option for debtors in extreme financial distress. Loan modification is not always an option, either. You cannot modify your mortgage without the bank’s approval, and the bank does not have to change the loan terms. While our lawyers may suggest loan modification if you are facing temporary financial hardship, we may suggest bankruptcy if a sheriff’s sale is looming. Bankruptcy is also a more effective way to prevent foreclosure for homeowners with debts other than mortgage debt. Bankruptcy is only effective at stopping foreclosure when homeowners choose the right chapter, which our lawyers can help ensure. Call Young, Marr, Mallis & Associates today at (215) 701-6519 for a free case evaluation from our Pennsylvania bankruptcy lawyers. When is a Loan Modification Better for Stopping Foreclosure in Pennsylvania? Instead of going to court for a bankruptcy case, loan modification allows homeowners to negotiate with lenders and alter their existing mortgage contracts. While lenders aren’t always willing to engage in loan modification, our lawyers can see if it is the right option to stop foreclosure in your case. Suppose your mortgage is the only loan you have defaulted on, and you have a long-standing history of making timely payments to your lender. If we do not have to worry about repaying other debts as well, we can focus on negotiating new mortgage terms that both you and the lender can live with, if the lender is willing. With a loan modification, you and your lender agree to changes, but you must continue making your mortgage payments as scheduled. Because of this, loan modification is generally only suitable for those facing temporary financial hardship, and do not require a total temporary stay on mortgage payments. Lenders don’t have to agree to loan modification, so it isn’t an option for all homeowners facing foreclosure in Pennsylvania. It’s also only well-suited for particular situations, so our lawyers may not recommend it in your case. When is Bankruptcy Better for Stopping Foreclosure? Bankruptcy first stops foreclosure by putting an automatic stay on all payments. Rather than renegotiating terms with your lender and continuing to make payments, you’ll receive a pause on all mortgage payments as we navigate your bankruptcy case and create a repayment plan. Foreclosure Letter Received If you have already received a notice of foreclosure from your bank, you may need to file for bankruptcy to prevent foreclosure. At this point, the bank may not be willing to discuss loan modification seriously. It can proceed relatively quickly with foreclosure if you do not file for bankruptcy or “cure” your mortgage, meaning make all outstanding payments. Ongoing Financial Hardship If you’ve begun defaulting on your mortgage loan because of ongoing financial hardship, bankruptcy may be the best option to stop foreclosure in your case. Illness, death, and divorce can significantly change a homeowner’s income and ability to pay their current mortgage for the foreseeable future. If you don’t expect your financial situation to change any time soon, allow our lawyers to file a bankruptcy petition on your behalf in Pennsylvania. Loan Modification Request Denied Your lender has no obligation to discuss loan modification. Even if this is your first time defaulting on your loan and you approach the lender immediately after falling only slightly behind, the bank may still deny your request. When this happens, the best option to protect your house from foreclosure may be to file for bankruptcy, which can offer a long-term solution to your problem. Impending Sheriff’s Sale Once you get notice of a sheriff’s sale, the automatic stay from a bankruptcy case may be the only way to stop foreclosure and keep your house. The lender must give you at least a 30-day notice of a sheriff’s sale of your home. Although 30 days is not a long time, our Pennsylvania bankruptcy lawyers can prepare and file a bankruptcy petition within this timeframe. As long as the automatic stay goes into effect before the sheriff’s sale concludes, the bank cannot move forward with taking and selling your home. Additional Debts Even if you are relatively up to date with your mortgage payments, having other debts could put you at risk of losing your home. Other creditors might seek repayment by any means possible, potentially forcing you into a sale. While this is not the same as foreclosure, it does yield a very similar result. Loan modification may not be an option if you have other debts that must be addressed, but filing for bankruptcy can be. What Type of Bankruptcy is Better for Stopping Foreclosure? Not all bankruptcy chapters for consumers are as effective at stopping foreclosure. While virtually all bankruptcy cases receive an automatic stay, Chapter 13 addresses debt differently and is best suited for preventing foreclosure altogether. You might not permanently stop foreclosure if you file Chapter 7 bankruptcy. This bankruptcy chapter liquidates the debtor’s assets to repay creditors, such as mortgage lenders. For most debtors, their biggest asset is their home, so Chapter 7 is not the best for protecting their house. Pennsylvania doesn’t have a homestead exemption that lets debtors exempt their homes from liquidation, making filing Chapter 7 very risky if you’re facing foreclosure. Chapter 13 is preferred for stopping foreclosure. Chapter 13 forces the lender to negotiate a new payment plan, which may even result in a total restructuring of the mortgage, making it more affordable for the homeowner. There is no risk of asset liquidation during Chapter 13 bankruptcy, provided that debtors complete their repayment plans in full. Get Help with Your Bankruptcy Case in Pennsylvania Today Call Young, Marr, Mallis & Associates at (215) 701-6519 for a free case discussion with our Philadelphia, PA bankruptcy lawyers.

There are various ways in which a person or multiple people may own a home. Perhaps one of the most common ways is tenancy by the entirety. In short, this type of homeownership occurs when a married couple jointly owns a home. The great thing about tenancy by the entirety is that your home may be completely shielded from creditors if you file for bankruptcy. The way tenancy by the entirety works is that both spouses who own a home together own 100% of the home. They do not each own 50% of the house. Each spouse owns 100% of the home together. This means that if only one spouse files for bankruptcy, creditors cannot seize the home because it is 100% owned by the other spouse, who has no involvement with the creditors. This kind of protection is typically only extended to married couples, including same-sex married couples. Your attorney can help you claim this protection when you or your spouse files a petition for bankruptcy. Contact our Pennsylvania bankruptcy lawyers for a free, confidential case review by calling Young, Marr, Mallis & Associates at (215) 701-6519. How Tenancy by the Entirety Works in Pennsylvania Bankruptcy Cases When filing for bankruptcy, you might be very concerned about what could happen to your house. Depending on how you file, your properties and assets, including your house, may be seized and liquidated to pay your debts. However, if you own a home in a tenancy by the entirety with your spouse, your home may be protected from creditors. When a married couple purchases a home together, they do not split ownership 50/50. Instead, both are legally considered to own 100% of the house. As such, if only one spouse files for bankruptcy, creditors may not seize the home because the other spouse also owns it entirely. Creditors may not seize assets that 100% belong to someone else. If you own your home with your spouse, be sure to discuss tenancy by the entirety protections with your bankruptcy attorney. While you might not be able to protect all your assets, you might be able to protect your home. Who Benefits from Tenancy by the Entireties Protection? Again, there are different ways in which more than one person may own a home together. Generally, only married couples may take advantage of tenancy by the entirety protections, if they purchased it together while already married. Same-sex married couples should also be eligible for this protection. Unfortunately, this protection may not cover those who own a house together but are not married. If you file for bankruptcy and there is a co-owner of your home, such as a friend or sibling, discuss it with them and your attorney. How to Claim Tenancy by the Entirety Protection in a Pennsylvania Bankruptcy Case If you file for bankruptcy and want to claim tenancy by the entirety protection, you should discuss this with your lawyer. This type of protection may not be automatic, and creditors must be informed about who owns the home. You may need to include this information when you file your initial bankruptcy petition. Depending on how you file, our Allentown, PA bankruptcy lawyers may need to provide a complete list of your assets, accounts, and property. When we do, we must include details about joint ownership, including properties occupied by tenants by the entirety. Limitations on Protection for Tenancy by the Entirety in Pennsylvania Tenancy by the entirety may only apply to assets jointly owned by a married couple. If you and your spouse jointly own your house, you may be considered tenants by the entirety, and you each own 100% of the home. If only you file for bankruptcy, your creditors cannot force a sale of your house to pay your debt. However, assets or properties that are not jointly owned may not be so protected. For example, suppose you own your home and your spouse moved in with you after getting married, but your spouse does not legally own the house. In that case, the house would not be shielded from bankruptcy proceedings under tenancy by the entirety protection. Your home or other assets may similarly be left unprotected if your spouse also files for bankruptcy with you. In that case, any assets you own together may be fair game for creditors, including your house. How Do I Know if I Qualify for Tenancy by the Entirety Protections? If you are unsure whether you can protect your home using a tenancy by the entirety protection, you should talk to your lawyer before you file your petition. Are you married? This protection typically only applies to married couples, including same-sex married couples. If you own a home with a partner but are unmarried, you may need to explore other legal options. Have you and your spouse comingled assets, or do you have separate finances? Often, when one spouse files for bankruptcy, the other spouse may be affected if they share assets and accounts. For example, if you file for bankruptcy because of credit card debt, but your spouse is also named on these accounts, they may have to file with you. In that case, certain assets might not be protected. What to Do if You are Not Protected by Tenancy by the Entirety? If you find that your home is not protected, you may consider taking advantage of federal homestead exemptions. Under federal law, you may exempt up $31,757 of your home’s equity from the bankruptcy process. This is doubled if you and your spouse file for bankruptcy together. Unfortunately, Pennsylvania does not offer any homestead exemptions, and the federal option may be your only choice. The homestead exemption might not help you keep your home, but it may protect some of the value from the sale. Call Our Pennsylvania Bankruptcy Lawyers for Help Today Contact our Philadelphia, PA bankruptcy lawyers for a free, confidential case review by calling Young, Marr, Mallis & Associates at (215) 701-6519.

 Inc. is reporting that business bankruptcy filings increased by 30%. The article can be found at https://www.inc.com/melissa-angell/small-business-bankruptcies-surged-30-percent-this-past-year-will-tariffs-accelerate-that/91221717Michael Hunter of EPIC is quoted in the article as stating that the cause of this increase is a constellation of factors: including higher interest rates, inflation, record debt, and global geopolitical uncertainty. Interestingly, Mr. Hunter also states that bankruptcy filing will continue to rise for the rest of 2025 and 2026.Most small businesses file under Subchapter V (of chapter 11) which is  simpler and  more affordable than chapter 11. The Subchapter V debt limit is presently $3,424,000.00.-Subchapter V provides a simplified reorganization process with shorter deadlines, such as a plan filing deadline within 90 days of the bankruptcy filing-Subchapter V cases eliminate certain expenses such as no United States Trustee quarterly fees and no creditor committees unless ordered for cause.-Only the debtor may file a reorganization plan in Subchapter V-Subchapter V does not require a separate disclosure statement, reducing administrative burden and costs.-Subchapter V eliminates the "absolute priority rule," allowing owners to retain equity even if creditors are not paid in full, and permits confirmation without creditor class acceptance as long as the plan is fair and equitable.- A Subchapter V Trustee is appointed to assist the debtor and facilitate negotiations with creditors, but does not operate the business.Clients or professionals with questions about business reorganizations or Subchapter V should contact Jim Shenwick, EsqJim Shenwick, Esq  917 363 3391  [email protected] Please click the link to schedule a telephone call with me.https://calendly.com/james-shenwick/15minWe help individuals & businesses with too much debt!

Don’t sit on your Bankruptcy Eligiblity: It’s a moving target In January, Larry came to talk to me about Chapter 7 bankruptcy eligiblity. He had a car repossession and about $25,000 in charged off credit cards. He was planning to get married and hoped to buy a house in a few years. His fiancé warned him they could never buy a house if he didn’t fix his credit. Great, I promised, we can do a Chapter 7 bankruptcy to do exactly what you want. Last month, in August, he came back, ready to go. But meanwhile, he had lost his Chapter 7 bankruptcy eligibility. In February, Larry got as $4.00 an hour raise. He lost Chapter 7 bankruptcy eligiblity. How Did Larry Lose Eligiblity? In January, Larry was making $34.00 per hour. But in February, he got a raise to $38.00 an hour. In Virginia, as of April 2025, $77,420.00 is the cut-off for automatic eligibility for a single person, no children. His raise put him over the limit. Instead of clearing all his debts, he’ is forced to keep paying through the bankruptcy court in Chapter 13 for another five years! Instead of being easily eligible to get a mortgage in two years (assuming enough family income), he’d need one of the few lenders who will work with him to get court approval. That can be a trap!  Because Larry needs to show the court he can now afford to buy a home, the Chapter 13 trustee can say, Larry now can afford a bigger bankruptcy payment. (Getting a mortgage in Chapter 13 is not hopeless. Here are two lenders who reach out to people in Chapter 13 bankruptcy: NEXA and Peoples Bank. I don’t know much about either one.) Conclusion Trump says his casino bankruptcies are “brilliant.” Some people say that bankruptcy should be a last resort. On the other hand, Donald Trump says using the bankruptcy laws can be “brilliant.” Either way, when you get to that point, remember that bankruptcy eligiblity can be a moving target. Whether a billiant move or a last resort, don’t misss your chance. PS Being over the Income Cut Off Isn’t Always the End of Chapter 7 Bankruptcy Eligiblity Being a few dollars an hour over the cut off for automatic eligiblity doesn’t always means you can’t file Chapter 7.  We do dozens of those ever year.  But there needs to be unusual budget factors to help you pass the means test. Those budget factors that can help you get approved for Chapter 7 can include: Child support Help for elderly family Back taxes Major, on-going medical expenses A really, really big car payment Larry didn’t have any of those. When he lost his automatic income eligiblity, he was stuck in Chapter 13.   The post Bankruptcy Eligiblity is a Moving Target appeared first on Robert Weed Virginia Bankruptcy Attorney.