There is help available during this trying time. The federal Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) passed on March 27, 2020  provides for temporary mortgage and rent relief. Your state government, as well as private mortgage lenders and servicers, are also offering mortgage and rent relief programs. If you are struggling to pay your mortgage or rent due to income loss from the Coronavirus pandemic, you will likely qualify for some temporary relief, but bear in mind that this relief is very short-lived. When this crisis passes, you must evaluate your financial situation honestly. Can you afford your home? If the answer is no, you might consider filing bankruptcy or applying for a mortgage modification. These options can sometimes help you reduce your mortgage payments or perhaps allow you to stay in your home. However, if you simply cannot afford to keep your property, you can surrender the property in bankruptcy and walk away with no debt. The Law Office of David Offen has helped thousands of clients reorganize their mortgage debt. Why wait? While taking advantage of one or more of the numerous relief programs available to homeowners, call us at 215-625-9600  and talk with us about your long-term finances. Your initial consultation is free of charge – what do you have to lose, except your debt itself? We can help you make your home more affordable. Relief for Homeowners with Federally-Backed Mortgages Struggling Homeowners’ Right to Forbearance The CARES Act provides that federal mortgage lenders Freddie Mac and Fannie Mae offer monthly mortgage payment forbearance to borrowers experiencing financial hardship due to the coronavirus and mandated social distancing. “Forbearance” means you do not have to pay, or that you will pay a reduced amount. The available forbearance term is 180 days, extendable for another 180 days if necessary, for a total of twelve months. Late charges and other penalties will not accrue. Keep in mind that you will eventually have to pay what you skipped and that this program does not erase mortgage payments, it only delays them. You must apply for forbearance, so don’t just stop paying because then you will incur late fees and penalties. Call your lender if you’ve lost income due to COVID-19 and can’t afford your mortgage. It may take a while to get someone on the phone because there are a lot of Americans in the same boat as you right now, but it will be worth it if you are approved for temporary forbearance under the CARES Act. Think of the stress relief. Make sure that when you talk with your lender or servicer, you get written documentation of the relief you’ve been granted just in case an administrative error occurs. Lenders and servicers are overburdened right now trying to help all of the many financially-distressed homeowners, so protect yourself from possible errors and problems with your account by getting everything in writing. Foreclosure Moratorium Under the CARES Act Foreclosures are suspended and prevented under the CARES Act for 60 days after March 18, 2020. If you were in an active foreclosure proceeding, that proceeding will be suspended for this period of time. Also, during this time, a new foreclosure action cannot be filed against you if otherwise your lender or servicer would be able to file under the foreclosure rules in your state. This prevents new foreclosure lawsuits, foreclosure judgments from being entered, and sheriff sales from happening until 60 days after March 18, 2020, unless the federal government passes more legislation extending that term. What to Do if You Are in Foreclosure Right Now You were struggling to pay your mortgage before, and now you are in even worse financial shape due to COVID-19-related job loss or reduction in hours. The CARES Act bought you some time in your home, but this is very temporary. Now is the time to take stock of your situation and take action, while you’ve been granted a breather. Call us or email us and and our experienced Philadelphia mortgage foreclosure attorneys will help you figure out how to solve your mortgage problem. For Others, There May Be Relief through Your Mortgage Servicer or Your State Some private lenders are granting forbearance for up to 120 days. Contact your lender or servicer to find out if you are eligible for deferred mortgage payments. State governments are taking the initiative as well. For example, in Pennsylvania, the state Attorney General created a relief program for those with private mortgages, based on the CARES Act federal loan relief. According to the Philadelphia Inquirer, PNC, Citizens Bank, Dollar Bank, First Commonwealth Bank, and OceanFirst Bank are participating in the program. Borrowers can apply for the following relief: At least a 90-day grace period for mortgage payments. A 90-day grace period for other loans, like auto loans. A 90-day window in which late or overdraft fees are not charged. A 60-day moratorium on foreclosure, eviction, or motor vehicle repossession. If a borrower takes advantage of any federal or state relief, there are no negative credit consequences. Again, if you’ve taken advantage of any of the relief offered by your lender or servicer or by your state, now is the time to assess your situation and find out what your options are for resolving your mortgage problem. Let us help you figure this out – call today for your free, no-obligation consultation. Mortgage Forbearance for Landlords Means Eviction Suspension for Renters For those who own rental property or multi-family property, there is also mortgage relief. The Federal Housing Finance Agency (FHFA) is providing mortgage forbearance for landlords if they agree to suspend evictions for non-paying tenants. This provision helps and protects both landlords and tenants during the COVID-19 crisis in that renters don’t have to worry that they don’t have the income to pay rent, and landlords don’t have to worry that they are not receiving enough rent to pay their mortgage. How Bankruptcy Might Help You Afford to Keep Your Home Filing bankruptcy might be the answer for homeowners and renters who: Could afford the mortgage or rent if they didn’t have to pay their credit card debt every month. Could afford the mortgage or rent if their medical debt was discharged. Could afford the mortgage if given a long-term opportunity to catch up with their mortgage, rent, alimony, or child support arrears. Call us at (215) 278-4519 to schedule your free consultation. Think of this period of temporary mortgage and rent relief as a time to think about how you want your financial future to look. We can help you discover your best option, and take action to make it happen.   The post How to Get Mortgage and Rent Relief During the COVID-19 Crisis appeared first on David M. Offen, Attorney at Law.

Can I Clear My Medical Debt by Filing for Bankruptcy in Arizona? There is no shortage of information about how health care expenses have spiraled out of control. Life-saving drugs cost thousands of dollars a month in some cases, and a single surgery can cost more than the price of a house. Insurance may cover some of that, but most insurance will not cover all of it. You may still owe tens of thousands of dollars for medical care, even if you have health insurance. If you don’t have health insurance, you could lose everything trying to pay off your medical bills. Fortunately, you do have options other than struggling in debt for years or selling off everything you own to pay for your medical expenses. Filing for bankruptcy in Glendale may be able to help you get rid of your medical expenses or to make them more manageable to pay. You should talk with a Glendale bankruptcy attorney to find out exactly how bankruptcy can help your particular circumstances. Chapter 7 Bankruptcy Filing for Chapter 7 bankruptcy in Phoenix can get rid of your medical expenses entirely. Chapter 7 bankruptcy discharges, or erases, all unsecured debt – which is debt that is not backed by some property as a promise in case of default. Doctors, hospitals, and other medical providers do not have the right to seize your home or personal property if you do not pay them. They are unsecured creditors, which means they have only your word that you are going to pay. Before you can file for Phoenix Chapter 7 bankruptcy, you have to qualify. You must pass a means test, which looks at your income in comparison to the average, as well as other factors. If you do not pass the means test, you cannot file for Chapter 7, and you cannot completely liquidate your medical debts. If you do qualify for Chapter 7, there is no limit on how much medical debt you can discharge. You could have hundreds of thousands of dollars in medical debt, and it can all be cleared when the bankruptcy is closed, which typically takes only a few months. Chapter 13 Bankruptcy If you cannot file for Chapter 7 bankruptcy, you can still get some relief from medical debt by filing for Chapter 13 bankruptcy in Mesa. Under Chapter 13, a debt repayment plan is created for you based on your ability to pay. You can put all your medical debt into a three- to five-year repayment plan. You will pay a lower monthly payment, avoid late fees and other penalties, and then likely have your debt dismissed when the repayment plan is over. Filing for Mesa Chapter 13 bankruptcy will put an end to the calls and letters you receive from your debtors, and it will give you an end point for paying off your debt. You also have the option to pay less of your debt than you would if you were just paying the bills as they came in. Filing for Chapter 7 or Chapter 13 bankruptcy in Phoenix can provide you with great relief from overwhelming medical debt. You might get immediate relief from all debt with Chapter 7, or you might reduce the burden by putting your debt into a manageable repayment plan under Chapter 13. You should talk to a bankruptcy attorney serving Phoenix to determine which chapter of bankruptcy would be best for your financial circumstances and your goals. Your Arizona bankruptcy attorney can help you understand the best course of action to take to reach your goals as quickly as possible. The bankruptcy attorneys at My AZ Lawyers are ready to help you get the maximum debt relief possible through bankruptcy, whether you are struggling with medical debt or some other kind of debt. We may be able to help you get total liquidation through Chapter 7, or we may help you get on an affordable debt repayment plan through Chapter 13. If you own a business, we can also help you explore the business bankruptcy options. We serve both individual and business clients through the Mesa, Glendale, Tucson, and Phoenix areas. Call our bankruptcy law office today to schedule a consultation with a reputable and committed bankruptcy attorney to learn about your options for debt relief. Arizona Offices: Mesa Location: 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: (480) 448-9800 Email: [email protected] Website: https://myazlawyers.com/ 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 Can I Clear My Medical Debt by Filing for Bankruptcy in Arizona? appeared first on My AZ Lawyers.

In politics, it is sometimes said, what did the president know and when did he know it. As it turns out this analysis is helpful in determining whether a lawyer should face sanctions under Rule 9011 as well. In the case of In re Dernick, No. 18-32417 (Bankr. S.D. Tex. 5/22/20), the fact that "there [we]re a fair number of complex and confusing details at play" was enough to prevent the motion in question from being objectively frivolous.What HappenedTwo individuals filed Chapter 11 and hired  lawyer AA (not his real initials).  AA filed a Motion to Disqualify law firm FG from representing one of their creditors, Dernick Encore, LLC. The motion alleged that FG had previously represented the Debtors in substantially related matters and were in possession of relevant confidential information.Dernick Encore responded and said that FG had not represented the Debtors and that the prior representations were not substantially related to FG's current representation of Dernick Encore. After a two day evidentiary hearing, the Court denied the Motion and allowed Dernick Encore to file an application for fees and costs. Dernick Encore sought to recover fees of $101,704.00. The Debtors objected that the Court lacked sufficient authority for fee shifting. The Court then issued a Show Cause Order for the Debtors and lawyer AA to show cause why they had not violated Rule 9011(b).Subsequently, the Debtors retained new counsel and lawyer AA withdrew. The Court conducted a hearing on the Order to Show Cause over the course of three days. While the Show Cause Order was under advisement, the Debtors, Dernick Encore and several other parties went to mediation and reached a settlement. Following approval of a motion to compromise, the Debtors were released from the Show Cause Order. That left the issue of whether lawyer AA was subject to sanctions.The Court's RulingThe Court concluded that because Derrick Encore had not filed a Motion for Sanctions, that the Court could not order lawyer AA to pay Derrick Encore's attorneys' fees. However, the Court still had power to award sanctions under Rule 9011 and its inherent authority. If this is confusing, it is because it is. Rule 9011 authorizes sanctions in two contexts. First, there are party initiated sanctions which require a safe harbor notice. Second, there are Court initiated sanctions which are triggered by an order to show cause which must describe the specific conduct which the respondent is alleged to have committed. Apparently the relief which can be granted with regard to Court-initiated sanctions are different than when sanctions are party-initiated.This brought the Court to the merits of whether lawyer AA had violated Rule 9011(b). The Court stated that a pleading could violate Rule 9011 if it met one of the four subsections of Rule 9011(b), which the Court described as the frivolousness clause or objective component and the improper purpose or subjective component. In order to avoid violation of the frivolousness clauses, the lawyer must (i) perform a reasonable preliminary investigation and (ii) conclude that the legal papers filed are grounded in "both a nonfrivolous legal theory and well-founded factual contentions and/or denials that, at a minimum, have a reasonable possibility of having evidentiary support after further investigation and discovery."  The court's inquiry "should focus on the merits of the motion gleaned from the facts and law known or available to the attorney at the time of filing."  Opinion, p. 11.Failure to conduct a reasonable investigation will not protect the attorney even if he had a good faith belief that the motion was sound. Reasonableness depends on "the time available for investigation, whether Mr. [AA] had to rely on Debtors for information as to the underlying facts, whether the Motion was based on a plausible view of the law, and may depend on the extent to which factual development necessitates discovery."  Opinion, p.. 12.In order to disqualify an attorney there must be (i) a prior representation and (ii) a substantial relationship between the prior representation of the Debtors and the current representation of Dernick Encore.FG had represented the Debtors previously in connection with their status as minority shareholders of a company called Cinco Resources, Inc. However, FG's engagement letter stated that it was limited to filing answers for the minority shareholders and would be completed once the answers were filed. It also stated that continued work would be contingent on timely payment of their invoices (which did not happen). To further complicate things, another one of the minority shareholders asked FG to perform various tasks related to other companies and to bill the matter to the Cinco Resources Minority Shareholder matter.  Dernick Encore paid the bill for the other services rendered.Attorney AA concluded that FG had continued to represent the minority shareholders (including the Debtors) through 2015. The Court stated:The Court finds credible Mr. [AA]’s testimony that his review of the record before him raised reasonable concerns about [FG]’s scope of representations with respect to Debtors. While the Court carefully combed through the trial record and found certain points where Mr. [AA] could have been more investigative in his inquiry before filing his Motion, the Court’s job is not to direct counsel on how to prosecute their motions. Rather, the Court is guided by Rule 11 and Rule 9011, which cautions that sanctions run the risk of chilling zealous and creative advocacy, as well as potentially meritorious claims that circumstances make difficult to prove. In reviewing the record, the Court notes that there are a fair number of complex and confusing details at play, especially regarding Debtors’ numerous businesses, Debtors’ dealings with CRI and DRI, and Debtors’ dealings with various law firms, either individually or through their companies. Taking the record in toto, the Court is not convinced that Mr. [AA]'s Motion was objectively frivolous. The interrelatedness of Debtors’ companies and the timing of representations would certainly give any competent attorney pause, and the Court does not find that Mr. [AA]'s Motion approached frivolous levels under Rule 9011(b).Opinion, pp. 16-17. The Court also found that the motion was not filed for an improper purpose. The Court reasoned that if the motion was objectively nonfrivolous, it could not have been filed for a subjectively improper purpose. This raises the question of whether the improper purpose test adds anything to the rule beyond the objective test. Thus, Judge Rodriguez declined to impose sanctions under his Show Cause Order.What Does It Mean?I see at least three takeaways from this case.The first is that if a party wants to recover its attorneys fees, it should send a safe harbor letter (which must include a copy of the proposed motion). Had Dernick Encore sent a safe harbor letter, the Debtors might have reconsidered going ahead with their disqualification motion. Instead, the company incurred over $100,000 in legal fees which it was unable to recover.The second is that the initial investigation is crucial. Here, lawyer AA reviewed enough documents to constitute a reasonable inquiry. Had he merely relied on his clients' word, he might likely have lost. While bankruptcies move quickly, asking the client for documentation (and then actually reviewing that documentation) is good defense for the lawyer, particularly when the motion is likely to be contentious. Finally, it takes a thoughtful judge to deny relief on his own order to show cause.Hat tip to Matt Garcia for sending me the opinion. Note: I did not use the name or initials of the lawyer in question. Publicizing an order granting sanctions can be a further punishment to the lawyer. However, where sanctions were denied, there is no good reason in publicizing the name of someone who was not sanctioned.  

  In reversing a bankruptcy court decision, the 1st Circuit BAP found that a $18,000 uncashed check for a loan from the Debtor's 401k was property of the estate, and was not exempt.  Ostrander v. Brown (In re Brown), 2020 Bankr. LEXIS 1340, BAP No MS 19-024 (21 May 2020).  Debtor had borrowed the $18,000 from her 401k in July 2018, and had not cashed the check as of the date she filed chapter 7 on 6 August 2018.  At the meeting of creditors in September 2018 the debtor acknowledged the loan and check, and that the monthly deductions on her paycheck were repayment for such loan.  The debtor did not separately schedule the check in her schedules or separately claim the check as exempt; asserting through the case that the exemption in the 401k encompassed the funds represented by the check.  On 27 February 2019 the trustee filed a motion for turnover, requesting that the debtor turn over the check to the estate, asserting that the check was 'non-exempt' property of the estate.  The debtor objected, asserting that the check was still part of the 401k plan.  The trustee asserted that the funds could not be excluded from the estate under §541(c)(2) as they had been distributed to the debtor, and were within her possession and control when the case was filed.  The bankruptcy court denied the motion, finding that the funds remained in an account of a third party until the check was cashed, and that such account was exempt.    The trustee appealed.  The BAP first examined the turnover statute: §542(a).  This statute requires turnover of property the trustee may sell if 1) the property is in the possession, custody, or control of a noncustodial third party; 2) that it is property of the estate; and 3) that it is property of the type the trustee could sell or lease or that the debtor could exempt; and 4) that the property is not of inconsequential value to the estate.  The only issue contested is whether the check is property of the estate.  The appellate court found that under §541(a) and §542 every conceivable interest of the debtor is within the reach of §541(a) but noted §541(b) can exclude property subject to a restriction on the transfer of a beneficial interest in a trust that is enforceable under nonbankruptcy law.  In Patterson v. Shumate, 504 U.S. 753, 112 S.Ct. 2242, 2246, 119 L.Ed. 2d 519 (1992) the Supreme Court found that ERISA restrictions are the type of nonbankruptcy law restrictions that exclude ERISA qualified pensions plans from property of the estate.  However, once funds are distributed, loaned, or withdrawn from an ERISA qualified plan, they lose such protection and become property of the estate.1  Thus the BAP found that the check having been distributed from the 401k was now property of the estate.  The BAP then looked to whether the funds were exempt.  Initially the court noted that the debtor never raised the argument that the trustee failed to timely object to the exemption.  Even if such argument had been raised, the BAP found that the trustee's motion for turnover was in effect an objection to exemptions since it mentioned the trustee's position that the funds were not exempt, and gave notice that he was objecting to the exemption.  Also, the debtor never separately scheduled the check as an asset or as exempt.  As the trustee never adjourned the meeting of creditors, and the deadline for such objection to exemptions under Fed. R. Bankr. P. 4003(b)(1) is 30 days after conclusion of the meeting of creditors, such objection was timely.  Finally the BAP found that an exemption under §522(d)(12) must satisfy two requirements: 1) the amount sought to be exempted must be retirement funds, and 2) those funds must be in an account that is exempt from taxation under the relevant provisions of the tax code.  A number of cases have held that funds withdrawn from a retirement account lose their exempt character if not placed in another account exempt from taxation under the tax code.2  The BAP found that the funds were distributed on 12 July 2018 (the decision is not clear but presumably that is the date the check was issued) and that as of the date of the filing of the bankruptcy the check was in the possession or control of the debtor.  The funds were not rolled over into another tax exempt fund within 60 days of the distribution to her, thus as of the date the case was filed the funds were no longer "in" one of the tax exempt funds listed in §522(d)(12).  The case appears to imply the result may have been different if the debtor had rolled them over into a tax exempt funds, even after the filing, if such rollover was within 60 days of the date of distribution to debtor.  The court rejected the debtor's argument that funds distributed from a 401k via check remain in the account until the check is cashed, citing In re Merillat, No. 14-10896, 2014 U.S. Dist. LEXIS 63548, 2014 WL 1846105, at *6-8 (E.D. Mich. May 8, 2014); In re Whittick, 547 B.R. 628, 636 (Bankr. D.N.J. 2016)  This case raises a number of concerns.  Generally, if a debtor wrote a check prior to filing bankruptcy but such check has not cleared as of the date of filing, the courts consider such funds to remain property of the estate.  This heads I win tails you lose approach to retirement checks seems contradictory.  Further, one must query what happens if the check is destroyed prior to filing, and a new check issued after filing.  It also would seem to follow from the decision that if a check is lost and reissued, and the reissued check is not deposited in a new tax exempt account until more than 60 days after the initial check was issued, arguably such funds could never qualify as exempt: a result which seems at odds with ERISA and Patterson v Shumate.1 In re Weinhoeft, 275 F.3d 604, 606 (7th Cir. 2001).↩2 In re Sullivan, 596 B.R. 325, 332-33 (Bankr. N.D. Tex. 2019).↩Michael BarnettLaw Offices of Larry Heinkel, PA506 N Armenia Ave.Tampa, FL 33609-1703813 600-5889https://myfloridabankruptcylawyer.com

Miriam Goott, a bankruptcy attorney at Walker & Patterson at her home in Houston, Friday, May 8, 2020.Photo: Karen Warren, Houston Chronicle / Staff photographerHouston attorney Miriam Goott, who represents small businesses in their bankruptcies, likes telling potential clients: “I hope to never see you again.” That’s because she’s worked out a deal with their creditors or helped them solve a problem that avoided bankruptcy altogether.“Half the time, I play the role of a therapist,’’ she said. “What they perceive to be this huge problem generally isn’t. It’s typically one or maybe two creditors that are really the issue.”Some attorneys predict a wave of bankruptcies in the months ahead, as the economic toll of the oil bust and the pandemic create long-term struggles for the area’s economy, according to a University of Houston Bauer College of Business forecast. Plus, the CARES Act made it even easier for small businesses to file for bankruptcy.GROWTH OPPORTUNITY: Law firms with bankruptcy practices positioned to do well in downturnBankruptcy may provide much-needed relief for small businesses but it’s more of a last resort than a first resort. The good news is, for many borrowers struggling to make payments, a bankruptcy may not even be necessary.Goott focuses her practice at Walker & Patterson on consumer and small business bankruptcy.“I don’t feel comfortable filing a bankruptcy until we know we’ve exhausted all our options,’’ she said. Why? Bankruptcy can help beleaguered business owners sleep at night, but it also comes with risks.Personal bankruptcy will have a significant impact on credit and borrowing costs in the future. Businesses have to open their books to public scrutiny and there are reputational risks as well.“It’s different to hear your CPA filed bankruptcy than maybe your hairdresser,’’ Goott said. Plus, bankruptcy is expensive. Goott charges as little as $10,000 to $15,000 for a business Chapter 7, or liquidation, and fees can run as high as $300,000 for a complicated Chapter 11, or reorganization. Some law firms charge millions for complex, big-business reorganizations.Taking stockFor a small business, the first step to avoid bankruptcy is to get a handle on its financial situation. That’s easier said than done, given the current uncertainty in the economy. But secured creditors are going to be running projections anyway, said Patrick Hughes, a bankruptcy attorney and partner at Haynes Boone in Houston.Estimate operating costs and revenues for the next 12-week to 1-year periods, taking a look at the business’ capital structure and tax obligations, he said. “What does it take to survive in the near term?’’ Hughes said. “It’s a sobering exercise. It’s disheartening. Sometimes, you realize cuts have to be made.”A big mistake small businesses make is failing to pay taxes. What starts as a business obligation quickly becomes a personal liability, as owners will be on the hook and even criminally responsible, bankruptcy lawyers said. Make sure some cash is set aside in case the business does need to file for bankruptcy.A handle on debtThe details of loan terms matter. Go to creditors, focusing on secured creditors first.“Your primary concern is the lifeblood assets of your business,” Hughes said. “If you’re a trucking company, you don’t want a lender to declare a default and exercise remedies against your trucks.”Creditors may be hardheads and won’t want to work with you. But they are more likely to take aggressive steps if you’re not upfront and transparent about the state of your business, he said.“If your lender doesn’t have confidence because the debtor has gone turtle and won’t give information, they’re going to be more aggressive in how they handle that,’’ Hughes said.TOMLINSON’S TAKE: Reopen Texas economy cautiously, second COVID-19 wave would devastateYour creditors may not be willing to negotiate. But lenders usually don’t want to foreclose on assets in a bad economy. If your business is viable and has a track record of making payments on time, generating revenue and attracting customers, that will work in your favor, Hughes said.Goott frequently gets on the phone with creditors and negotiates a solution. Sometimes, she tells creditors that if they don’t negotiate, the debtor is going to file for bankruptcy. Sometimes, she just needs to tell creditors the reality of someone’s business and the chances of collecting on the debt.One of Goott’s clients, for example, was personally liable for the debts of the business, and an ex-business partner was successful in obtaining a judgment in court. Goott was able to negotiate a payment plan over a 12-month period that lowered the interest rate on the debt.Her one piece of advice: get the agreement in writing. When you’re relying on a verbal agreement, creditors can change their minds. Bank employees move on and you’re stuck with someone who doesn’t acknowledge the agreement. Or the employee might not have had the authority to offer a modification in the first place.Litigation riskUnsecured creditors are a different matter. They can sue you; they can get a judgment. In Texas, certain assets are exempt from most judgments, including the owner’s residence, car and retirement accounts. Creditors can garnish bank accounts, however. If that hasn’t happened yet, you may want to wait and see what happens, Goott said. An unsecured creditor may sell your debt to a collection agency. Or they may go out of business. You may never get sued.Of course, efforts to avoid bankruptcy may be unsuccessful. If creditors simply won’t negotiate and start lawsuits and the process of acquiring assets of the company, or even personal assets, it’s possible to hand over the keys, or negotiate a transfer outside of bankruptcy. You might be able to get an injunction in court, although that’s rare, Hughes said.A bankruptcy filing can be useful because it triggers a stay — basically, the courts block landlords and creditors from evictions or seizing assets while the case winds its way through the court system.Congress passed the Small Business Reorganization Act last year, making it easier and less costly for small businesses to file. For example, business owners normally have to pay creditors in full under a Chapter 11 reorganization to retain ownership. But a small business Chapter 11 allows small businesses to pay less than 100 percent in exchange for shelling out three to five years of the business’ disposable income instead.No creditors’ committees are allowed, which helps lower the cost of the bankruptcy.The CARES Act, which passed in March, also raised the cap on total debt for a small business Chapter 11 from $2.7 million to $7.5 million, allowing many more businesses to qualify. “This creates a huge opportunity for small business to restructure their debt,’’ Hughes said.Often, bankruptcy can be avoided altogether. Goott doesn’t make any money that way. But she builds trust with potential clients. “The best thing I do for (businesses) is to give them the ability to narrow in and focus on the problem,” she said.

Child Support and Filing Bankruptcy As a parent in Arizona, it’s the responsibility of yours to provide for your children.  Therefore, this includes paying the child support of yours on time. Arizona doesn’t take this responsibility lightly and also have numerous punishments at the disposal of theirs, which includes incarcerating parents that fail paying their support orders. Additionally, if parents have child support arrearages, declaring chapter seven or even chapter thirteen bankruptcy won’t discharge the debt of child support.  Nevertheless, filing for chapter 13 bankruptcy in Glendale might put you in a position to enable you to get caught up on the payment of yours that you owe for child support.  Let’s take a further look at child support and the various chapters of bankruptcy and your options. Child Support when filing Chapter 7 Bankruptcy When you file for Chapter 7 bankruptcy, there’s an automatic stay which stops anyone from pursuing claims against you. The Automatic Stay doesn’t stop collection actions for unpaid child support. Nonetheless, along with a party looking for back child support from you is permitted to proceed regardless of the simple fact you filed a Chapter seven bankruptcy. Any revenue you get once you file for bankruptcy isn’t considered a part of your bankruptcy estate in a Chapter seven bankruptcy, and may be looked at in determining child support responsibilities and utilized to pay support arrearages. In a Chapter thirteen bankruptcy, nonetheless, any income earned is a part of the bankruptcy estate along with a party seeking to enforce a support obligation should request help from the stay to do it. If an individual that filed for Chapter thirteen bankruptcy is currently governed by a support order and additionally fails to produce support payments, the Bankruptcy Trustee will often raise the stay so the assistance could be recovered.                                                                                         QUESTION: My ex spouse has declared bankruptcy, and now she claims she does not need to pay child support. Is that accurate?                                                                                           ANSWER: Child support payments generally can’t be discharged in bankruptcy. Thus,your wife is completely incorrect. Which means that a parent that owes child support can’t escape this particular responsibility by filing for bankruptcy. Whereas, bankruptcies don’t serve as a stay, or maintain, on measures in order to establish paternity or to change child support obligations. If your co parent has stopped paying kid support, the court and state department that administers support could use various techniques to try to enforce those aforementioned support obligations. The relationship between bankruptcy and child support is complicated.  Therefore, you might require the assistance of an Arizona lawyer acquainted with bankruptcy law. Will Filing a Chapter 13 Get Rid of my Child Support? In a chapter thirteen bankruptcy in Arizona, child support obligations are as essential in the Federal Bankruptcy Court as they’re in the Arizona Family Court. In a chapter 13, child support is considered a priority debt.  Child support arrearages must be paid through your chapter thirteen payment plan.  A chapter 13  repayment plan lasts 3-5 years and is based on what the filer is able to repay.  However, if there is child support, that must be figured into the plan. The substantial difference between a chapter seven and a thirteen is usually that a chapter thirteen stops collection activity for support obligations. A chapter 7 bankruptcy does not stop collection efforts on back child support.  Support collections might be kept because the Bankruptcy Code considers the debtors earnings as home of the estate. Arrearage Child Support Put Into the Chapter 13 Repayment Plan Thankfully, after these payments are stopped, a Chapter thirteen repayment program permits a debtor to manage the debts of theirs, and also by paying child support debt a debtor will lessen the amount he or maybe she would usually spend to satisfy their general creditors. Sometimes debtors are able to minimize just how much they pay to various other creditors by the total amount of support debt they owe through a Chapter 13 filing. Paying back child support should be considered a positive.  Whereas, many debtors usually prefer pay for the needs of their children by paying the owed child support versus paying their arbitrary creditors. Nevertheless, one important part would be that the debtor should stay current by continuing paying their support obligations.  Failure to do so means they won’t get their chapter thirteen discharge.  At the end of the Chapter 13 repayment plan, not only will the filer receive a discharge from their chapter 13 bankruptcy but the filer will also be current on their Arizona child support payments.  One can not happen without the other. Child Support is a Priority Debt As the benefits of providing for minor kids is recognized throughout federal court systems and state, in both Chapter seven and Chapter thirteen bankruptcies, Child support debt is deemed a priority debt which isn’t dischargeable in bankruptcy. As a result, any ordered child support debt won’t be forgiven in case you file for bankruptcy and you’ll be forced to make up the overdue payments. Additionally, child support debt is paid first over other priority debts including tax obligations and also before unsecured obligations. In case you filed a Chapter 13, any support debt must to be paid off entirely through part of your respective repayment program for you to get a discharge from the debts of yours.  Making all of your Chapter 13 repayment plans in conjunction will satisfy your child support and arrearages.  An experienced Arizona BK Lawyer will make sure this happens through a Chapter 13 bankruptcy. If you are considering filing for bankruptcy and are currently paying child support or have child support arrearages, you should seek the assistance of experienced Arizona attorneys.  The professionals at My AZ Lawyers represent clients in Arizona in both bankruptcy law and Arizona family law.  You may get in touch with us by calling (480) 833-8000 or Contact us on-line. Arizona Offices: Mesa Location: 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: (480) 448-9800 Email: [email protected] Website: https://myazlawyers.com/ 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 Child Support and Filing Bankruptcy appeared first on My AZ Lawyers.

Gallery Sues Landlord, Claiming Covid-19 Shutdown Voids LeaseThe lawsuit contends that since the Venus Over Manhattan gallery is closed by government orders during the pandemic, the lease should be terminated.In early March, the Venus Over Manhattan gallery on the Upper East Side mounted an exhibition of paintings, drawings and wall reliefs by the artist Roy De Forest, the biggest presentation of his work in New York City since 1975.But the show’s prospects may have been limited when Gov. Andrew M. Cuomo of New York banned most gatherings and ordered nonessential businesses to close by March 22 as part of an effort to limit the spread of the coronavirus.Now the gallery is suing its landlord, arguing that the governor’s actions provide a basis to end its lease, which it says started in 2011 at $54,000 per month, and recover its deposit of $365,000.“As a result of the Covid-19 pandemic, Governor Cuomo issued a number of executive orders, which by March 29, 2020, completely frustrated the very purpose of the lease,” a lawyer for the gallery wrote in a complaint filed last week in Federal District Court in Manhattan, adding that the gallery therefore “considers the lease terminated.”The dispute is between companies run by two prominent art collectors, both with significant business experience and neither averse to attention.The gallery’s owner, Adam Lindemann, who once ran an investment firm, briefly set an auction record for Jean-Michel Basquiat in 2016 when he sold a painting by the artist at Christie’s for $57.3 million.The gallery’s Madison Avenue building is listed as a property of the real estate company run, with a partner, by Aby Rosen. He has displayed several Picassos in his Manhattan home and, in 2014, riled some neighbors by erecting on his Long Island estate a 33-foot, painted bronze sculpture of a naked pregnant woman with an exposed fetus.Mr. Margolin said by email that the lawsuit involved “a dispute between a commercial tenant and a landlord” about whether a lease default had taken place. A representative for Mr. Rosen’s company, RFR Holding LLC, declined to speak about the suit.The complaint filed by the gallery says that it considers the lease to have been terminated as of April 1. On March 25, it added, the gallery informed the landlord that it was vacating the premises on or about July 1 and demanded the return of the $365,000 deposit.On April 8, the complaint states, the landlord declared a default under the lease and on April 23 seized the deposit.The gallery claims it is entitled to end the lease based on two arcane legal doctrines: “frustration of purpose,” described in the complaint as when an unforeseen event destroys the reason for a contract; and “impossibility of performance,” which the complaint says allows performance of a contract to be excused if governmental activities render that performance impossible.Joshua Stein, a commercial real estate lawyer not involved in the lawsuit, said that frustration of purpose is one of several doctrines businesses have considered asserting during the pandemic as a basis to withhold rent or walk away from a lease.

CNBC ~ May 19, 2020https://www.cnbc.com/2020/05/19/how-to-navigate-bankruptcy-if-the-coronavirus-wrecks-your-business.html

A Wave of Small Business Closures Is on the Way. Can Washington Stop It?Bipartisan proposals address weaknesses of a hastily passed aid program.One of the great threats to the post-pandemic economy is becoming clear: Vast numbers of small and midsize businesses will close permanently during the crisis, causing millions of jobs to be lost.The federal government moved with uncharacteristic speed to help those businesses — enacting the Paycheck Protection Program, with $669 billion allocated so far.But there is a problem. The structure of the program is not particularly well suited to the type of crisis that millions of businesses face. The program may have bought businesses some time, but in its current shape it will not enable many of them to remain solvent long enough to emerge from the other side of the pandemic in some viable form.Rather, it is more tailored to what the crisis looked liked when shutdowns first took place in the olden times of March 2020, when it seemed that business closures would be a short-term blip and everyone might be able to get back to normal by summer.It was intended to cover eight weeks’ worth of expenses, of which 75 percent must apply to payroll, for firms with under 500 employees. Now it is looking likely that many businesses will face revenue shortfalls for many months.For loans made under the program to be fully forgiven, an employer must maintain pre-crisis employment levels. Now it’s clear many businesses will permanently shift to smaller staffing levels to remain viable, such as restaurants operating at partial capacity.The program is technically available to companies that make a good-faith assertion that they need help to support operations. But it doesn’t distinguish between firms with mild and temporary disruptions and those facing threat of permanent closure.Moreover, the structure of the program, which provides a recipient with a Small Business Administration-backed loan that is then forgiven if certain conditions are met, could make some business owners reluctant to take advantage. They might fear that if they run afoul of the government’s rules, they will have even more debt heaped on top of a failing enterprise.“The risk is that they’ve spent more money on this program than anyone has ever spent on a small-business program in world history, but haven’t changed the trajectory of permanent small-business closures,” said John Lettieri, president of the Economic Innovation Group, a think tank that advocates business dynamism. “If the patient has a gaping chest wound and you give him a bandage, it’s better than nothing but probably isn’t going to keep the patient alive.”When Congress enacted the Paycheck Protection Program as part of a $2 trillion aid package in March, it still seemed plausible that the disruption to the economy would be temporary. And the P.P.P. was devised to ensure that employers kept as many people on their payrolls as possible. But that has often acted at cross-purposes with the goal of having businesses ultimately emerge as viable enterprises.“The P.P.P. makes sense in that incentivizing employers to keep people on payroll and compensating them for doing that is valuable, especially given the overwhelming of the unemployment insurance system that was happening,” said Adam Ozimek, chief economist of Upwork, a website for freelancers. “Conceptually that makes sense, but the issue is trying to do that and at the same time address the issue of massive small business insolvency that we are increasingly facing.”Mr. Ozimek is dealing with the tension firsthand. In addition to his job as an economist studying labor markets, he is co-owner of Decades, a bowling alley, restaurant and bar in Lancaster, Pa. Before the pandemic, it employed the equivalent of 35 full-time employees, but it now needs fewer workers while takeout food is its only business. It has taken a P.P.P. loan.Leading economists have identified the mass closure of service-oriented businesses as a particular risk for the medium-term future of the economy. One survey of 5,800 small businesses conducted in late March found that only 47 percent expected to still be in business at the end of the year if the crisis lasted four months.“The loss of thousands of small- and medium-sized businesses across the country would destroy the life’s work and family legacy of many business and community leaders and limit the strength of the recovery when it comes,” Jerome Powell, the Federal Reserve chair, said in a speech last week. “These businesses are a principal source of job creation — something we will sorely need as people seek to return to work.”There’s not much the government can do if a health crisis renders some types of businesses, especially those where large groups of people gather, nonviable indefinitely. But there are several ideas circulating on Capitol Hill to try to address the potential of mass small business closures.Senator Michael Bennet, Democrat of Colorado, and Senator Todd Young, Republican of Indiana, plan to introduce a bill text Thursday on what they call the “Restart Act.” Businesses would receive loans to finance six months’ worth of fixed operating costs and payroll, offered at a low interest rate — no payments due for 12 months — and with a seven-year term.In their bill, the government would forgive the share of the loan devoted to payroll, rent and other fixed expenses based on the company’s revenue decline. So it would act as a loan for companies that are able to weather the downturn, and act as a grant for those more severely affected.Another group of senators, including the Republican Mitt Romney of Utah and the Democrat Joe Manchin of West Virginia, have proposed legislation that would build on the Paycheck Protection Program, in part by expanding the period for loan forgiveness from eight to 16 weeks.In the House, Representatives Dean Phillips, Democrat of Minnesota, and Chip Roy, Republican of Texas, have offered legislation that would, among other steps, extend the duration of P.P.P. loans.The bipartisan nature of the bills shows this issue doesn’t cleave along the usual ideological divides. A key question is whether whatever comes next will enable businesses that are in a deep hole now — but have a viable future once the public health crisis recedes — to get from Point A to Point B.And it would particularly help if any new or revised P.P.P. program would have clearer rules of the game and greater predictability about who is truly eligible and under what terms.“To be kind to both Republicans and Democrats who came up with this plan on the fly, the magnitude of the shock is so much larger than what anybody thought it was at the time,” said Joe Brusuelas, chief economist at RSM, an accounting firm that serves midsize companies. “It makes sense to revisit the program.“Right now what we’re hearing from our clients is that they are frustrated and confused.”

People ask, “what’s involved in chapter 7 personal bankruptcy case?” Here’s a practical answer: Recognize the problem Investigate professionals Interview professionals Chose and retain professional Chose a course of problem-solving – alternatives to bankruptcy may be preferable Decide to file Determine the best time to file Prepare petition, schedules and statements Take mandatory pre-petition counseling File petition If an incomplete “emergency” petition was filed, finish and file schedules and statements (within 14 days of filing) Provide trustee with required documents (e.g. tax returns, pay stubs, bank records) Attend meeting of creditors (usually around 45 days after filing) – the Trustee asks questions under oath about your assets, liabilities, financial affairs, what’s in your filed schedules and statements. Creditors may also ask questions. Take 2nd required course within 45 days of creditors meeting Wait —within the 60-day period following the creditors’ meeting, the trustee and creditors can challenge you: a.) receiving a discharge of all and specific claims; b.) property claimed to be exempt from creditors. Creditors and the trustee can do additional examination under oath to determine whether and how they would make those challenges If a challenge is asserted, you get to defend it If there are no challenges within that 60 days and the period is not extended You get your discharge It may take a while before the trustee files a final report and the clerk’s office issues the discharge. Don’t worry. Discharge issued Estate administration – If the case has no assets, it will usually be closed when the discharge is granted. If the case has assets, the trustee will liquidate them and use the proceeds to pay creditors. The trustee may have claim to recover estate assets and voidable transfers. That will involve litigation and delay the distribution to creditors and closing of the case. Final report and distribution to creditors Case closes This may seem like a lot. It isn’t. We’ve broken it down, so you can see details. When you look at a person you don’t notice the billions of cells, the skeleton, and organs. Same thing here. It’s the bankruptcy edition of the “visible man.” Each case may have its own peculiarities affecting its course. Proper analysis and planning can reduce the consequences of those peculiarities. That’s one more reason to not be self-represented and to hire a lawyer. You probably don’t know what you don’t know. With an experienced lawyer, the process will feel probably feel like: prepare – petition- creditors meeting- wait – discharge. However, these are the details . . . since you all asked for them. Any questions? We’re here to answer them, too. The post What’s Involved In A Bankruptcy? appeared first on Wayne Greenwald, P.C..