Falling behind on federal student loans can lead to other major financial problemsA story on CNBC reports that "more than 80% of borrowers who experienced default stated that they’d faced at least one additional consequence as a result. The most common impact was a drop in their credit score (62%) followed by being subject to collection fees (47%) and losing eligibility for future federal financial aid (37%)."The story can be found at https://www.cnbc.com/2023/02/22/falling-behind-on-student-loans-can-lead-to-other-financial-problems.htmlWe help individuals & businesses with too much debt!Jim Shenwick, Esq   917-363-3391   [email protected]

While we often recite that bankruptcy is for the honest but unfortunate debtor, a new case from the Supreme Court shows that getting into bed or business with the wrong person can lead to a non-dischargeable debt for an innocent spouse. The case is No. 21-908, Bartenwerfer v. Buckley, which you can find here.What HappenedThe case involved David Bartenwerfer and his then-girlfriend, later wife, Kate. They jointly bought a house to remodel in San Francisco. Their first mistake was that they apparently formed a general partnership to buy the property. Kate's second mistake was leaving the construction and sale of the property to David. David failed to disclose defects in the construction which led to both of them getting sued and being hit with a judgment for over $200,000. When they filed bankruptcy, the judgment creditor brought a non-dischargeability case against them. The Bankruptcy Court found that David had committed fraud and that Kate was liable for David's fraud due to their partnership. The Bankruptcy Appellate Panel found that Kate could not be held liable based on imputed intent. On remand, the Bankruptcy Court found that Kate did not have fraudulent intent. Unfortunately the Ninth Circuit reversed and reinstated liability against Kate.The Court's RulingA unanimous court ruled that non-dischargeability under 11 U.S.C. Sec. 523(a)(2)(A) is based on the type of debt, not the actions of the debtor. Here, the exception to being dischargeable turned on whether there was a debt for money "obtained by . . . fraud." Supreme Grammarian Justice Amy Coney Barrett decreed that because the exception was written in the passive voice rather than the active voice that the debt was non-dischargeable. She stated:The provision obviously applies to a debtor who was the fraudster. But sometimes a debtor is liable for fraud that she did not personally commit—for example, deceit practiced by a partner or an agent. We must decide whether the bar extends to this situation too. It does. Written in the passive voice, §523(a)(2)(A) turns on how the money was obtained, not who committed fraud to obtain it.Opinion, p. 1. While the opinion goes on for twelve pages, everything a practitioner needs to know is on page 1. If someone obtained money through fraud and that person is liable for the debt, then the liability will not be dischargeable in bankruptcy. What Does It Mean?I have two thoughts about this case. The first is that it is so typical of the types of bankruptcy cases that the Supreme Court hears. This was a narrow, technical issue. We just don't see the Supreme Court taking up the big issues of bankruptcy practice, such as equitable mootness or third party releases Instead, they take up these smallish cases that can be decided by looking at a small amount of statutory text. The other way this decision is similar to other Supreme Court decisions on bankruptcy is that we don't know whether this will have a big impact or a teeny tiny one. Justices Sotomayor and Jackson wrote a concurrence stating that they joined the opinion because "(t)he court here does not confront a situation involving fraud by a person bearing no agency or partnership relation to the debtor." If the decision is limited to those parameters it will have a small impact because most people are savvy enough not to enter into a general partnership when an LLC can be formed for a few hundred dollars. However, the concurrence may be trying to impose a limitation not present in the majority opinion. Justice "passive voice" Barrett did not place any limits on how a person might be liable on a debt for fraud. Yes, partnership and agency ensure that the person being held liable has a legal relationship to the person committing the bad acts, but is not the only way someone can be held liable for the debts of another. What is the most common way that someone can be held liable for someone else's debt? By signing a guaranty. Assume a company has a CEO actively involved in the business and a financial partner. The firm takes out a bank loan guaranteed by the financial partner. Under Bartenwerfer, if the CEO lied to get the loan and the bank justifiably relied on those misrepresentations, a debt for money obtained by fraud is created. The innocent guarantor could be held liable just as the innocent girlfriend was in this case. If that is how the cases develop, then Bartenwerfer will have dramatically expanded the universe of debts that can be excluded from discharge.   

The New York Post is reporting that “A growing number of office landlords are defaulting on loan payments as the rise of remote work causes more corporate tenants to rethink long-term leases". The story can be found at https://nypost.com/2023/02/21/office-landlord-debt-defaults-rise-as-remote-work-takes-hold-report/?utm_source=gmail&utm_campaign=android_nyp  If New York City office landlords are defaulting on their mortgages, should commercial tenants in New York City with surplus space due to remote work or the recession also be asking for concessions such as a reduction in base rent or additional rent or seek to exit or terminate their leases? At Shenwick & Associates, we believe they should be, and we have helped many commercial tenants surrender, exit, or terminate their leases. We also work with their good guy guarantors to reduce or eliminate their exposure.We recently helped a garment center company surrender their lease on very favorable terms and the post can be found at https://shenwick.blogspot.com/2023/01/office-lease-closing-termination-or.htmlJim Shenwick Esq. has office leasing, bankruptcy & workout experience and an LLM in Taxation from NYU Law School.  "Jim Shenwick, Esq helps individuals & businesses with too much Debt!"

Foreclosure is a legal process where a lender tries to recover the amount of money they are owed by taking ownership of a mortgaged home and selling it. Losing a home can be an extremely distressing experience for anyone. Thankfully, there are ways to avoid having your home taken from you. You may be able to stop foreclosure on your home in New Jersey by filing for bankruptcy. There are two general types of bankruptcy that can be filed by debtors. Guidance from our attorneys can be highly valuable when determining which form of bankruptcy is right for you. If you need to file for bankruptcy in order to prevent foreclosure on your home, seek assistance from our experienced New Jersey bankruptcy lawyers at Young, Marr, Mallis & Associates by dialing (609) 755-3115 today. Bankruptcy Can Prevent a Foreclosure on Your Home in New Jersey By filing for bankruptcy, you may prevent a foreclosure on your home in New Jersey. During your free case review, our legal team can thoroughly explain what will happen when you file for either of the following types of bankruptcy: Chapter 7 Bankruptcy This type of bankruptcy is a potential option for those who do not maintain steady employment or do not produce enough income to pay off their debts. When you file for Chapter 7 bankruptcy, be prepared for someone else will take ownership of valuable items that you own in order to sell them. The proceeds will be used to clear debts with your creditors. By filing for Chapter 7 bankruptcy, your creditors will be temporarily stopped from collecting on most of your debts. This can afford you time to catch up on mortgage payments or submit a mortgage modification to a loan company. If you suspect that you need to file for Chapter 7 bankruptcy, contact our bankruptcy lawyers for help initiating the process. Chapter 13 Bankruptcy This is another type of bankruptcy that you may file to prevent your home from being foreclosed on in New Jersey. Chapter 13 bankruptcy is intended for those who maintain steady income but are still unable to keep up with the debts they owe. Rather than having all of your debt absolved, filing for this form of bankruptcy will simply afford you time to create a repayment plan. This plan has to be approved by your creditors and the court. As long as you make payments on-time according to your repayment plan, the mortgage company cannot foreclose on your home. Our experienced Cherry Hill bankruptcy attorneys can help you file for Chapter 13 bankruptcy and form a reasonable plan for repayment. Can Anyone File for Bankruptcy to Stop Home Foreclosure in New Jersey? There are certain conditions that must be met in order to successfully file for bankruptcy in New Jersey. First, if you have previously filed for bankruptcy, you must ensure that sufficient time has passed for you to file again. The amount of time you have to wait can vary depending on the type of bankruptcy you filed in the past and the type you wish to file. Additionally, to qualify for Chapter 7 bankruptcy, your family’s gross income has to be less than the median income for other families of the same size in New Jersey. During a free evaluation of your case, our bankruptcy attorneys can help you determine if you meet this requirement. Further, to qualify for Chapter 13 bankruptcy, there are several conditions that must be adhered to. For instance, there are maximum amounts of secured and unsecured debts that you can have. Also, you will have to show that you filed your federal and state income taxes for each of the previous 4 years. Thankfully, our legal team can also help determine if you are able to file for Chapter 13 bankruptcy. When Will Your Home Be Foreclosed on in New Jersey? If you fail to keep up with your mortgage payments, your home can be foreclosed on. Foreclosure is a process where the party you owe money to will take ownership of your home and sell it in order to satisfy your debt. According to federal laws protecting homeowners, your lender is prevented from initiating the foreclosure process until you have been delinquent for a minimum of 120 days. Does Your Lender Have to Let You Know that Your Home is Being Foreclosed on in New Jersey? Before homes are foreclosed on, lenders have to provide borrowers with notice of their intent to initiate such processes. This notice must be provided through registered or certified mail with return receipts requested. You should be notified of a foreclosure on your home at least 30 days before the formal foreclosure complaint is filed, but less than 180 days in advance. This notice should provide a great deal of information pertaining to your case. For example, all of the following has to be included in a foreclosure notice: A description of your lender’s interest in your property A reasoning behind the foreclosure such as missed mortgage payments An outline of what you must pay to cure your debts Information pertaining to your right to default Still, there are copious amounts of additional information that must be included in your foreclosure notice. Our experienced East Brunswick, NJ bankruptcy lawyers can help determine if you were served proper notice regarding a foreclosure on your home. Will Filing for Bankruptcy Eliminate Debts Other Than Mortgage Payments in New Jersey? In addition to preventing foreclosure on your home, filing for bankruptcy can also alleviate your financial burden as it pertains to many other debts. For example, filing for bankruptcy can eliminate your obligation to pay overdue credit card balances, doctor’s bills, utility payments, and personal loans. Still, there are certain debts that cannot be wiped away. For instance, your domestic support obligations and tax debt cannot be absolved through bankruptcy. Additionally, it is difficult to eliminate debt for student loans. Our experienced Egg Harbor, NJ bankruptcy lawyers can help explain whether certain debts you owe are dischargeable or not. If You Need to File Bankruptcy to Stop a Foreclosure on Your Home in New Jersey, Contact Our Law Firm for Help If you wish to file for bankruptcy to prevent foreclosure on your house, get help from our experienced Mount Holly bankruptcy lawyers at Young, Marr, Mallis & Associates today by calling (609) 755-3115.

If you missed the bar date and filed your claim late, your claim will most likely be disallowed.

If you determine that the debtor does, in fact, owe you money, you will need to prepare and file a proof of claim.

 Relief of Indebtedness Income and Workouts under Section 108 of the Internal Revenue Code.Shenwick & Associates performs many workouts for clients, and one point that is often overlooked during negotiations is relief of indebtedness income. Section 108 of the Internal Revenue Code provides that income from discharge of indebtedness is income to the Debtor, unless otherwise provided for in that section. The following example illustrates the point: If a debtor owes a creditor $100,000.00 and the creditor agrees to accept $50,000.00 as payment for that debt, the debtor has been enriched by the sum of $50,000.00 and the Debtor must report $50,000 of income on its tax return.Answers to many relief of indebtedness income questions are provided below:Question: Do creditors really report relief of indebtedness income to the IRS?Answer: Yes they do and the income is reported on IRS Form 1099-C Question: Which creditors report income to the IRS? Answer: All banks and financial institutions do. Landlords, hospitals and trade vendors generally do not report relief of indebtedness income, although they should.     3. Question: Is the income ordinary income or capital gain? Answer: Sadly, it is ordinary income.     4.  Question: Is relief from indebtedness income recognized by the guarantor of a debt?            Answer: The IRS generally holds that a guarantor (whether or not the primary obligor has defaulted and the guarantor has become liable for the indebtedness) does not realize relief of indebtedness income on release of a liability. IRC 108(e)(2)5. Question: Do I have to recognize relief of indebtedness income if I file for bankruptcy? Answer: No. See section 108(a)(1)(A) of the Internal Revenue Code. This is why many debtors elect to file for bankruptcy rather than do a workout.6. Question: If I am insolvent (my Liabilities exceed my Assets also known as the Balance Sheet test) do I have to pick up relief of indebtedness income? Answer: No. See section 108(a)(1)(B) of the Internal Revenue Code7. Question: What if I am a member, partner, or shareholder of a company that defaults on an unpaid debt? Answer: A member, partner, or shareholder of an LLC, partnership, or S corporation (a pass-through entity) must report income unless an exception applies.Clients or their advisors with questions regarding relief of debt income should contact Jim Shenwick, Esq.   [email protected]   917 363 3391 "We held individuals and businesses with too much debt!"

 Judge Wilde's, a Bankruptcy Judge Revisits the Rent Cap Calculations allowed a Landlord under Section 502(b)(6) of the Bankruptcy Code. The article can be found at jdsupra at https://www.jdsupra.com/legalnews/sdny-revisits-rent-cap-calculations-a-8004543/?origin=CEG&utm_source=CEG&utm_medium=email&utm_campaign=CustomEmailDigest&utm_term=jds-article&utm_content=article-linkJim Shenwick, Esq.  [email protected]   917 363 3391"We held individuals and businesses with too much debt!"

Keeping up with mortgage and loan payments is crucial to avoid foreclosure. If you find yourself in the middle of foreclosure proceedings, an attorney can help you through the process and protect your legal interests. Foreclosure is a legal process by which lenders may seize property or assets if borrowers default on the loan. Although foreclosure is often thought of as a terrible and frightening experience, it takes time to complete, and certain procedures must be followed. First, you should be properly notified of foreclosure proceedings. Next, you must submit an answer to the lender. In some cases, it is possible to cure the default, reinstate the loan, and avoid foreclosure. If this is not the case, foreclosure proceedings may begin, and your property might be sold off to pay for the loan. If you face foreclosure in Pennsylvania, call our Pennsylvania foreclosure defense lawyers at Young, Marr, Mallis & Associates at (215) 701-6519 for a free case review. Why Foreclosure Occurs in Pennsylvania The first thing you should understand in the foreclosure process is why foreclosure happens. If you are a new homeowner, you might have been warned about foreclosure when you mortgaged your house, but the process is somewhat complicated. Our foreclosure defense attorneys can help you fight to keep your home and avoid foreclosure. Foreclosure and bankruptcy are usually tied up in federal law, although various state laws might apply depending on your case. According to federal law 11 C.F.R. § 1024.41(f), foreclosure can only happen under specific circumstances. First, perhaps the most widely known reason that foreclosure can occur is if the borrower is late with their monthly payments. Missing one payment is a problem, but it is insufficient to trigger foreclosure proceedings. Under the same federal law mentioned above, foreclosure cannot begin until a borrower is more than 120 days late with a payment. Often, a borrower will be notified of the foreclosure before the 120 deadline, but the foreclosure actually begins after that. Second, a foreclosure can happen if the borrower violates a due-on-sale clause, also known as an alienation clause. This clause usually requires a borrower to pay the mortgage or loan in full when they sell the property. If you sell the property that secures the mortgage without paying off the full loan, the lender could foreclose the property. Finally, according to federal law, a lender may initiate foreclosure proceedings if another subordinate or superior lender has filed a foreclosure action to seize the property. This can be a complex process because multiple lenders are involved, and you should contact an attorney immediately. How the Foreclosure Process Begins in Pennsylvania The foreclosure process includes several preliminary steps and phases. During this time, our Philadelphia foreclosure defense attorneys can help you figure out what to do in order to protect yourself and whether you can hold on to your home. One of the very first things to happen during the foreclosure process is the notice. Generally, lenders must notify the borrower of their intent to foreclose. As said before, foreclosure for nonpayment can only occur if a borrower is more than 120 days late with a payment. As such, lenders often send foreclosure notices before the 120-day deadline, and the foreclosure officially commences after. The notice might be an Act 6 or Act 91 notice. Each notice has the same effect and puts the borrower on notice of foreclosure, but they apply to different kinds of mortgages or loans. Generally, an Act 6 notice applies to people with conventional mortgages or loans, and Act 91 notices are sent to people with Federal Housing Administration loans or U.S. Department of Agriculture Loans. What Happens After You Have Been Notified of the Foreclosure Process in Pennsylvania Once you receive the notice, talk to an attorney about submitting your answer. Since many borrowers are notified before foreclosure commences, there might be time to catch up on missed payments or work something out with the lender. Our Bensalem foreclosure defense attorneys can help you answer the notice and hopefully prevent foreclosure. Once we send your answer, we can begin working on ways to cure the default or otherwise avoid foreclosure. You might have numerous options to choose from, and our foreclosure defense lawyers can assist you. One possibility in the foreclosure process is to go through mediation with the lender. Mediation allows you to sit down with the lender and try to work out a deal. Foreclosure is not necessarily automatic or required, and the lender might choose to exercise forbearance and hold off on foreclosure proceedings while you cure the default. Other possibilities include modifying the mortgage or loan agreement to make it easier for you to keep up with payments. If the mortgage cannot be altered, you might want to consider refinancing with a new loan. What Happens During Foreclosure Proceedings in Pennsylvania? If the default cannot be cured and time has run out, the lender may move forward with foreclosure proceedings. You might have to go through judicial or nonjudicial foreclosure proceedings, depending on your state. Pennsylvania is a judicial foreclosure state, meaning the process goes through the courts. In judicial foreclosure proceedings, the foreclosure begins with the lender filing a lawsuit against the borrower. As with any lawsuit, numerous documents, forms, and paperwork must be filed to make sure that the correct parties are involved and that the lender has the standing to sue. If you believe the foreclosure is happening unlawfully or the lender does not have proper standing, an attorney can help you contest the foreclosure in court. If your case is unsuccessful, your property may be seized by the lender and sold to pay the debt. Call Our Foreclosure Defense Attorneys for Help Call our Bucks County foreclosure defense attorneys at Young, Marr, Mallis & Associates at (215) 701-6519 for a free case review about your impending foreclosure.

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