The meeting of creditors or 341 meeting, is schedule approximately 30 days after a debtor files for bankruptcy. At that meeting the debtor must bring their social security card and a photo id which shows a New York address.

Chapter 7 bankruptcy is known as "liquidation and fresh start". The chapter 7 bankruptcy is required to sell non-exempt assets in a chapter 7 bankruptcy and distribute those monies to creditors. Non-exempt assets could be a house, coop or condominium with more than $150,000 of equity for single debtor, a car with more than $4,000 of equity or a business that a debtor wants to keep. Accordingly if a debtor has a non-exempt asset which they want to keep after a bankruptcy filing they would need to file chapter 13 bankruptcy not chapter 7.

In a chapter 13 bankruptcy, besides meeting with a client, attending the 341 meeting (that is the meeting with the bankruptcy trustee) there are 2 additional steps. The attorney for the Debtor must prepare and file with the Bankruptcy Court a chapter 13 plan and attend the hearing on plan confirmation. In a chapter 7 bankruptcy a plan is not drafted and filed with the Court and there is no hearing on plan confirmation so the legal fees for chapter 7 bankruptcy are less than for a chapter 13 bankruptcy.

There are 3 costs or expenses in filing chapter 13 bankruptcy. The first cost is the filing fee which is presently  $281. The second cost is for credit counseling and debtor education is $40 at www.DebtorWise.org. The third cost is legal fees which cost approximately $5,000 in New York City. After the initial consultation Shenwick & Associates provides the client with a written estimate of these costs.

In New York City there are 3 costs or expenses in filing chapter 7 bankruptcy: 1. The first cost is the filing fee which is presently $306. 2. The second cost is for credit counseling and debtor education which costs $40 at DebtorWise.org and 3. The third cost are the legal fees. For a simple bankruptcy the legal fees are $2,000 to $2,500 and for a more complex personal bankruptcy the legal fees are $4,000 to $5,000. After the initial consultation, Shenwick & Associates provides all clients with a written quote for the cost of legal fees.

Understanding the Basics of Chapter 7 Bankruptcy   General Overview   Chapter 7 bankruptcy is often referred to as a straight or liquidation bankruptcy. In a Chapter 7 case all property of any significant value that is included in your bankruptcy is sold. Money from the sale of property is then distributed to whomever you [...]

We received a tremendous response to our Cooler e-mail "Covet Thy Neighbor's Apartment," which discussed the attempts of Chapter 7 Bankruptcy Trustees to assume and assign rent-stabilized and rent-controlled leases for the benefit of creditors. We believe that the following factors are important in determining whether a Chapter 7 Bankruptcy Trustee will attempt to assume and assign the lease to a rent-stabilized or rent-controlled apartment: 1. How many years has the Debtor lived in the apartment? 2. How much rent is the Debtor paying under the rent-stabilized or rent-controlled lease, and what would be the market value rent if the apartment was vacant and not rent-stabilized or controlled? 3. Is the apartment in a gentrifying area or an upscale neighborhood? 4. Has the apartment building recently undergone a condo or co-op conversion? 5. If yes, did the Debtor decline to buy the unit, and therefore become a non-purchasing tenant?; and 6. If the Debtor is married, did the Debtor's spouse also file for Chapter 7 bankruptcy protection? If you're considering bankruptcy and have a rent-stabilized or rent-controlled apartment, you should contact Jim Shenwick.

Business bankruptcy cases can lull you into inattention when no payroll tax issues are apparent on the face of the situation. Even the client who  doesn’t owe the IRS now can get bitten. [You didn't think this was simple, did you?] W-2′s Corporate officers are personally liable for monetary penalties if they fail to give employees their w-2 forms on time. It’s easy to miss making provision for w-2′s if a business shuts down mid year.  Yet the corporate officers don’t get a bye from this responsibility. So, on my checklist of things to do in a business shutdown is make provision for issuing w-2′s. Final tax return If the business has once filed an employment tax return, then stops, the IRS doesn’t assume that the business has shut down and there is not payroll.  No sir. It assumes that things have continued just as they were and you’ve simply neglected to file the return.  And neglected to pay over the trust fund withholding from employee salaries. That assumption often leads to the assessment of the civil penalty against the individual officers for the payroll that never was. Morale of this story:  file an employment tax return that checks the box at the top of the form:  final return. The officer loan For every business person who issues net checks to employees and shorts the IRS on payroll taxes, there’s the “savvy” sort who stays out of that trouble. Rather than cutting himself a payroll check, he makes himself a “loan” from the business.  There’s no withholding triggered by a loan, after all, so there’s no tax to the business.  A loan isn’t income to the borrower, so there’s no tax on the individual. Smart? Well, perhaps not so smart.  If the business ends up in bankruptcy, voluntary or involuntary, the bankruptcy trustee sees a plump asset in that money owed to the business by its shareholder! It’s not a comfortable position to be in, representing the shareholder, if you have to argue “that wasn’t really a loan, he was just evading taxes”.  Yuk! (that’s a legal term, isn’t it?). If the business forgives the loan, there’s the issue of forgiveness of debt income. Add to your client interview a question about loans in lieu of payroll.  Whether the debtor is the business or the shareholder, you need to know. Three more tax issues to add to your quiver. Image courtesy of U.S.Marine Corp and Wikimedia. 

Differences Between Bankruptcy And Debt Consolidation There are huge differences between bankruptcy and debt consolidation services.  If you’re filing a chapter 7, you are going to get a fresh start.  If you are using a debt consolidation service, you are going to wind up paying back to creditors.  It’s quite possible that you really don’t+ Read MoreThe post Why should I file for bankruptcy if I’m using a debt consolidation service right now? appeared first on David M. Siegel.

How Soon Can I Buy? You can typically buy a house two years after the filing of a Chapter 7 bankruptcy.  Lenders want to see that you have rehabilitated yourself after a bankruptcy filing.  They want to see that you have not incurred any negative credit since the time of filing.  They want to see+ Read MoreThe post When can I buy a house after filing for bankruptcy? appeared first on David M. Siegel.