Archive for the ‘Bankruptcy’ Category

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A common New York Bankruptcy Question: Does my Spouses Income count towards the Means Test…YES!

Thursday, March 18th, 2010

A very very short post which will answer the question that many of my Bankruptcy clients in Manhattan and Brooklyn have.  Namely:  ”If I am filing for Bankruptcy but my spouse is not, do I still have to include their income in a bankruptcy in New York City?”  The answer is yes.  A resounding yes.

For purposes of Bankruptcy, the Means Test looks at the household income of every person in that household, regardless of whether or not that person is filing.  The caveat here, however, is that while you cannot deduct certain expenses from the Means Test, your spouse can.  And some attorneys don’t even know about this.  In other words, lets say you made 40,000 a year and your spouse made 40,000 a year.  You cannot deduct your gym membership, credit card payments, support to family members for purposes of the means test.  HOWEVER, the spouse that is not filing CAN deduct these expenses and its totally acceptable.

The long and short of it is you shouldn’t automatically think that if your spouses income is included you wont qualify or vice versa.  The Means Test is a complicated (and exciting, yes Im a nerd) formula, which only a lawyer should deal with.

I promise a longer post for the next one, but this is one of the more mundane questions I get and I didn’t want to put you guys to sleep…anymore than I usually do.

Posted in Bankruptcy, Gersh Blog | View Comments

What if you have assets during a Chapter 7 Bankruptcy in Manhattan: Dont be Greedy!

Wednesday, March 3rd, 2010

by:  Daniel Gershburg, Esq.

Lets be real.  No one necessarily wants to file for Chapter 7 Bankruptcy in Manhattan as a first step.  Its obviously a last resort.  You’ve gotten yourself into a ton of debt and there doesnt seem to be a way out.  But you have to take practical steps if you want to move forward during the process if you don’t want any issues.

What am I babbling about?  Well, under the Bankruptcy Code, you have certain exemptions, meaning you can keep a certain percentage of your stuff when you file for Bankruptcy and the creditor and Trustee cannot get their hands on it.  Some examples include $50,000 in home equity in your home, $2400 from a Bank Account, all of your IRA’s, 401k’s etc.  However, lets say you have some cash in the bank above that $2400 and you really need to get this Bankruptcy filed.  Dont hide it or move the money.  Don’t try and be crafty and put it into someone elses account.  Just let it go.  You heard me.  Let it go.

Lets say you had $100,000 in debt.  Not a crazy figure and I see it everyday in my Brooklyn office.  If I told you I could get rid of $100,000 in debt for $5,000, chances are, you’d kiss me (ethically inappropriate under most circumstances.)  However, the problem is many clients will try and save their very last dime from the Trustee, and thats just not a great way to go about doing things.  If you have $7000 in your bank account because you saved a couple of bucks, protect the $2400 and give the rest to the Trustee during the Bankruptcy filing.  The Trustee will be happy, which means less problems, if any, for the Bankruptcy, and for that amount of money you’ve known gotten rid of about $100,000 in debt.

It seems counterintuitive to us.  Why give up money when we can “protect” it.  I get that.  The problem is the amount your protecting as a percentage of the debt you’re being forgiven is minimal.  The trade off is absolutely amazing.  So my advice is not to mess up this amazing tradeoff but trying to keep every last dollar.  It will only cause problems for you and your attorney in the actual case.  Of course, like anything Bankruptcy related, there are many caveats to discuss, but in general I think you get the idea.

Posted in Bankruptcy, Cars in Bankruptcy, Gersh Blog, Homes in Bankruptcy, Jobs and Bankruptcy | View Comments

Filing Chapter 7 Bankruptcy in Brooklyn when you have a small business

Thursday, February 11th, 2010

Many of my New York City clients have a common question:  Can I file for Chapter 7 Bankruptcy in Brooklyn, Manhattan, etc., if I own a small business.  The answers, with some caveats as always, is yes.

If you own a small business, the Trustee will likely ask you for tax returns for the last few years the business filed, as well as 6 months to one years worth of bank statements.

The first thing you need to ask yourself is:  Does the business have any assets that can be liquidated to pay creditors.  Most individuals do not.  You have an office and a few computers, but you likely dont have 20k servers or John Deere machines.  In that case the Trustee wont care at all about the business and likely wont liquidate a thing.  However, keep the type of business you run in mind.  If you have a dry cleaning business, youre likely to have a bunch of materials that can be sold for some money.  Same goes for a grocery store or a hardware store.  Real estate business is more unlikely (unless you have a considerable amount of comissions going in.)

The Chapter 7 Trustee in Brooklyn or wherever will also want to know how much the business has in the operating account.  Remember, unlike personal bankruptcy itself, listing your business in a Chapter 7 personal Bankruptcy doesnt come with any exmeptions.  If you have 10k in your business account, you cant protect a cent of it (unless its spoken for by other creditors or its their money.)  Keep that in mind.

Also look out for incoming monies.  Just because your business is flat broke now doesnt mean the Trustee wont ask about monies coming in.  If for instance you’re a commission based business, and you have $100 in the bank, but a 20k commission coming in, the Trustee is going to ask about it and want it, so be sure to be cognizant of that before you go see a Bankruptcy Attorney in Brooklyn.

Finally the Trustee will ask if you have partners in the business, as the Trustee cant technically touch the partners share.  If the assets in the business are worth 20k but you have three other partners, the Trustee might not touch the assets given the headaches that would come with it.

The bottom line is dont get scared about filing personal Chapter 7 Bankruptcy in New York City if you own a business.  Just make sure to speak to us about it before you file so that we can guide you about the proper way to file.

Posted in Bankruptcy, Business Bankruptcy, Gersh Blog | View Comments

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