General Bankruptcy

One of the more paradoxical effects of the Pandemic has been the resulting substantial increase in values of residential real estate. Unless the sale of the real estate was anticipated, this may not be the boom to homeowners one might think. If bankruptcy is being contemplated as a result of work layoffs or debt assumption during the Pandemic (or already recently filed), it in fact can be quite problematic.

After fourteen (14) months of enactment, the Subchapter V provisions of Chapter 11 of the Bankruptcy Code has worked remarkably well in terms of simplification and reduction of time and expenses for small business reorganizations. The concern of run-a-way trustee fees has not materialized and plans are being confirmed far quicker and at higher rates than traditional Chapter 11 filings.

Let’s face it; this has been a wickedly rough year for almost all of us. As the country slowly starts to pull out of this Covid 19 downturn and the federal and state disaster programs that are offering various stimulus packages, extended unemployment benefits, moratoriums preventing evictions, and foreclosure sales will all start to recede and disappear. It is time to examine what life will look like going forward. It may be necessary to look at other options to save one’s home or to deal with the ever-mounting credit card debt.

One of the more frequent questions we get as Bankruptcy Attorneys is when is the right time to file. Like most legal answers, “it depends.” Normally (and there are some significant exceptions) I advise individuals that there is rarely a benefit to waiting. One can wait too long and like cancer, the tumor can become inoperable.

Every day we seem to be greeted with news of an impending explosion of evictions and foreclosures to be generated by the lifting of current Pandemic restrictions.  If, when and for how much and for how long the Government will step to assist remains anybody’s guess. Chapter 13 of the U.S. Bankruptcy Code remains essential to protect homeowners and renters from the loss of their homes – but early action is necessary.

There is a tremendous amount of chatter these days about the long-term effect of the Covid-19 Economic Shutdown, with predictions that a great many of today’s small businesses will not be able to survive this cataclysmic event. While we all hope that reopening can safely be accomplished and that government assistance may be enough for businesses to hang on, the reality suggests that small business bankruptcies are headed for record numbers. We created a short list of questions to ask yourself if you are thinking about bankruptcy for your business. 

As a result of the Covid-19 Pandemic, Congress has emergently passed, and the President has signed legislation to provide for an economic stimulus and assist struggling Americans from the economic effects of this crisis. The CARES ACT (Coronavirus Aid, Relief and Economic Security Act)includes several provisions impacting existing and potential bankruptcy cases.

One of the stated purposes of the 2005 Bankruptcy Law revisions (BAPCPA) was to try to push more individuals into Chapter 13 repayment plans by compelling those with the “ability to pay” to do so. Congress adopted a “Means Test” Calculation whereby those with incomes above a certain level based on household size and the median income for the individual’s respective state would not automatically qualify to file basic Chapter 7 bankruptcy and such a filing would be deemed to be an “abuse.”

Effective February 19, 2020, the Bankruptcy Code will provide for a somewhat more compact and hopefully, easier version of Chapter 11 Reorganizations for Small Business Corporate and Individual Debtors. It is commonly referred to as a “Subchapter 5.”

It can be quite disheartening to listen to political leaders, the media and other reports as to how well the economy has rebounded since 2008, with record employment and sky-high stock numbers – yet at the same time realize you are living from paycheck to paycheck and things have never been tighter for you and your family.

In this firm, we pride ourselves on providing prospective debtors a fair and honest evaluation of the benefits and detriments of filing for Bankruptcy Protection. Most often, I encourage individuals to utilize bankruptcy when there is “no viable alternative that will result in the elimination of the debt over a finite and reasonable period of time at an affordable figure
per month."

A ritual of spring in America is about to begin. Tens of thousands of people will soon get their tax refunds, and when they do, they will finally be able to afford the thing they’ve thought about for months, if not years: bankruptcy.

As a consumer Bankruptcy attorney, I cannot recount how many times over my career I have heard these words, even though the need for Bankruptcy relief is compelling – if not overwhelming.

Ipso facto literally means "by that very fact" in Latin. It is an extremely important concept in Bankruptcy which if not recognized and enforced, could undermine the very protection of Bankruptcy itself.

Certainly a visit to a bankruptcy attorney would rank up there with one of the least anticipated appointments on a calendar.  However, like many type of medical visits, needless delay can be extremely costly or worse to the bankruptcy process.  As I say so often, it rarely gets better with time.