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New York Bankruptcy Laws – Where To Find Them

May 25, 2010 By

New York bankruptcy laws are often thought to be just like the ones in other states – in fact, you probably think they’re found in the U.S. Bankruptcy Code.  If only it were so easy.

In fact, the New York bankruptcy laws are scattered around the federal and state statutes.  It’s one of the reasons why lawyers who practice bankruptcy law in other states often call a local bankruptcy lawyer when they have a question that relates back here.

It makes sense to think you should look first to the federal laws, and you’re right.  The framework of the bankruptcy system is based in the federal scheme.  But that’s pretty much where it ends.

For example, here are 2 places where the New York bankruptcy laws come from state, rather, than federal statutes:

Fraudulent Conveyances: The determination of whether a transfer of property is fraudulent comes from the Article 10 of the Debtor and Creditor Law, not the federal bankruptcy laws.

New York Bankruptcy Exemptions: What you get to keep in Chapter 7 or Chapter 13 comes not from federal law, but from a host of New York laws.  In particular, NY Civil Practice Law and Rules Sections 5205 and 5206 govern our bankruptcy exemptions for personal property and real estate.  Article 10 of the Debtor and Creditor Law also governs the exemption of personal property.

These two aspects of the bankruptcy law are very important when you’re dealing with a New York issue because the outcomes in bankruptcy can be radically different here than elsewhere.

For example, let’s say you own a home in Illinois yet you live here.  You move to Illinois and try to file a case.  Assuming that Illinois exemptions apply (they don’t unless you live there for a certain period of time) you may end up getting to keep certain property that you would have to give up if you lived here (such as your home) – or vice versa.

Some people have moved to another state merely to take advantage of more liberal exemption and fraudulent conveyance rules, and there’s nothing wrong with that it done properly.  But don’t make the mistake of doing something like that without consulting with lawyers on both sides of the border or you may be in for a rude awakening when it comes time to file your case.

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Divorce, Bankruptcy And Houses In New York

May 18, 2010 By

I was sitting in front of a man who had gone through everything bad in his life, and all in a very short span of time.

First, he’d lost his job of 15 years.  A mid-level New York executive in a field that favored the young, his prospects were bleak.  But he kept plugging away, working towards a new career in an industry that would pay less but let him keep living in New York while giving him the stability he sought for himself and his family.

[Read more...]

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10 New York Bankruptcy Exemptions You Need To Know

May 11, 2010 By

Bankruptcy exemptions for New York cases are governed by state law rather than by the U.S. Bankruptcy Code. Under Section 522 of the U.S. Bankruptcy Code, a consumer domiciled in New York can exempt only personal and real property exempt under Section 5205 and Section 5206 of the New York CPLR, Section 3212 of the New York Insurance Law, and under New York Debtor Creditor and Law Section 282.

Here are 10 important New York bankruptcy exemptions you need to know before filing for Chapter 7 bankruptcy:

  • One motor vehicle not exceeding $2,400 in value above liens such as car loans;
  • Your right to receive:
    • social security benefits, unemployment compensation
    • a local public assistance benefit;
    • veterans’ benefits;
    • benefits for disability, illness, or unemployment;
    • alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
    • all payments under a stock bonus, pension, profit sharing, or similar plan or contract on account of illness, disability, death, age, or length of service except under certain circumstances;
    • award under a crime victim’s reparation law;
    • payments for wrongful death of a parent or guardian;
    • up for $7,500 for compensation in connection with a pending personal injury lawsuit; and
    • payments in compensation of loss of future earnings.

The New York bankruptcy exemptions are important when determining the impact that filing for bankruptcy will have on you.  The last thing you want to have happen is for your lawyer to file a Chapter 7 case on your behalf before you’ve gone through the full list of New York bankruptcy exemptions; unfortunately, many people who file for Chapter 7 don’t take the time to work with their lawyer on these issues and end up losing assets that they would otherwise been able to keep.

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Reliable Bankruptcy Information In New York – Where To Find It

May 11, 2010 By

Bankruptcy information in New York should be easy to come by.  After all, with so many bankruptcy lawyers in such a small area, you’d think there would be enough good stuff to keep you well-informed without much of a problem.

That’s what a recent client thought when she decided to file for bankruptcy without the benefit of an experienced New York bankruptcy lawyer.  She figured she had a simple Chapter 7 case and didn’t need to go through the time or expense of finding an attorney to help her.

Relying on what she thought was solid bankruptcy information from a variety of websites claiming to know everything about New York exemptions and rules, she was off and running.

Unfortunately, she went running in the wrong direction.  Her bankruptcy case went bad, and she came to me to help dig her out of the mess she’d made by looking to the wrong sites for her bankruptcy information.

The Truth Is Out There – But Difficult To Find

I had no idea how my client, this intelligent and otherwise well-reasoned New York consumer, could have been led astray in her quest for reliable bankruptcy information.

So I did the logical thing – I went to Google. And what I found shocked me.

Of the top search results, there was only one law firm (in the paid search area at the top) and the website for the New York bankruptcy court. Every other result – and I do mean every single one of the paid results as well as four out of the top five unpaid results – were for paid attorney referral sites.

In fact, here are the results:

New York Bankruptcy Information

Just Because A Bankruptcy Lawyer Pays For A Directory Listing Doesn’t Mean They’re No Good

Let’s be clear on one thing.  There are many excellent New York bankruptcy lawyers who pay for directory placements.  And I personally know many of the owners of these directories; they’re good people with strong business ethics.  But these sites do not exist to provide bankruptcy information – to say they do would be like saying the Yellow Pages is a place to find recommendations.  It’s just not true.

If You’re Looking For Dependable Bankruptcy Information In New York, Dig Deeper

It would be too obvious for me to tell you how wonderful this site is, and all about the wealth of information you’ll find here.  So in spite of my strong desire to toot my own horn, I will not do so.  But if you said how good the bankruptcy information is here for New York issues, I wouldn’t be upset.

There are other places to find solid New York bankruptcy information – places that are not this site.  They are as follows:

  1. Bankruptcy Law Network:  26 bankruptcy lawyers from around the country who get together and provide information – free of charge.  Disclosure: I’m part of BLN)
  2. MoranLaw.net:  Run by California bankruptcy attorney Cathy Moran, this site provides more bankruptcy information than I’ve ever seen in a single place by one person.  It is an excellent resource not only for New York consumers, but also for budding bankruptcy lawyers.
  3. U.S. Trustee Program:  This is the governmental entity that oversees bankruptcy filings in the United States, and their bankruptcy information is well done.
  4. Federal Trade Commission
  5. U.S. Bankruptcy Court, Southern District of New York

Self-Help Is No Help At All

Filing for bankruptcy in New York may seem simple, and for many people it can be.  But if you’re getting your bankruptcy information from a paralegal or someone who’s not an experienced bankruptcy attorney then you’re leaving it all up to chance.  Do yourself a favor – even if you decide to go it alone, take the time to sit down with a real, live lawyer (either in person or on the phone) and get the information you need to make the right decision.

And of course, feel free to wander around this site for more information.

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Chapter 13 Bankruptcy – Don’t Drag Your Feet!

April 28, 2010 By

Chapter 13 Bankruptcy - Don't Drag Your Feet!When you file for Chapter 13 bankruptcy you’ve got a lot of information to provide to the trustee – papers fly back and forth in a mad flurry, and it’s all got to be done in a specific timeframe.  A recent New York bankruptcy court decision confirms that if you delay in cooperating with the court or trustee, you could end up having your case converted or dismissed.

Eric Gordon Jensen filed a Chapter 13 bankruptcy case in Manhattan on August 3, 2009. On February 12, 2010, the Chapter 13 Trustee asked the court to dismiss the case because Jensen had been dragging his feet.  In fact, Jensen had not filed documents on time, had not shown up for court when he was supposed to, and did nothing to advance a lawsuit that he claimed would net him enough money to pay his creditors.

Under Section 1307(c) of the U.S. Bankruptcy Code, a court may dismiss or convert a chapter 13 case to case under chapter 7 in 11 circumstances. Subsection (c)(1) provides thata court may dismiss or convert a chapter 13 case to a case under chapter 7 where there has been “unreasonable delay by the debtor that is prejudicial to creditors.”

Subsection (c)(5) provides that a court may dismiss or convert a chapter 13 case in the event of “denial of confirmation of a plan under [11 U.S.C. § 1325] and denial of a request made for additional time for filing another plan or a modification of a plan.”

The Court may convert the case rather than dismiss it if conversion “is in the best interests of creditors and the estate.” 11 U.S.C. § 1307(c).

In this case, Jensen appeared to be using Chapter 13 as a way to buy time until certain lawsuits freed up enough money to pay his debts.  In doing so, it sounded to the bankruptcy judge as if he was using the Chapter 13 process as a sword rather than a shield – never a good idea.  So the judge ordered that the case be converted to a Chapter 7.

What does this mean?  Well, under Chapter 13 you keep control over your assets rather than having to surrender them under Chapter 7.  In addition, you can always dismiss a Chapter 13 case – not so with Chapter 7.  If you’re in Chapter 7, you’re there until the court tells you it’s done.  Period.

So Jensen started out using Chapter 13 as a way to hold off his creditors and ended up in a Chapter 7, potentially losing control over his assets and being prevented from converting back to Chapter 13 or dismissing his case.  Here’s a link to the decision in the case if you’re so inclined to read it.

Just goes to show – when you file for bankruptcy, you need to keep in mind the power that the trustee and the court have.

Photo by DJOtaku.
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