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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 | Comments

New York City Real Estate Attorney Daniel Gershburg discusses Mortgage Pre-Approvals

Thursday, February 25th, 2010

I constantly here this in my law office: “Im good to get the house because I got a Pre-Approval”.  Congratulations.  That means two things.  1.  The bank has verified you are a human being who is currently alive and 2. You have absolutely no clue as to whether or not you’ll get a loan.

Think Im crazy?  I am.  But ask any people you know who purchased a condo/co-op or a home in New York City in the past year what the process was like.  They will tell you it was pure unadulterated hell.  Banks have no clue what they’re doing anymore.  Absolutely none.  And because of that, what you thought would be a smooth loan process has turned into a loan nightmare.  Therefore, here are some friendly tips from your Manhattan Real Estate Attorney:

1.  Everything on time, all the time, with confirmations of receipt.  If youre dealing directly with a bank, you may be speaking to Jim in Omaha on Monday, and Tyle in Akron on Tuesday.  You want to get a point person whenever possible, because you can verify all the documents the bank asked to be sent, were in fact sent in received.  Absent that, I would ask to always deal with supervisors, as they seem more helpful on most occassions.

2.  Do not believe anything they tell you.  Im serious.  The loan process is fairly simple, but they keep saying nonsense that confuses both client and attorney.  They’ll say “We need your lawyer to close by March 9th” but they wont assign a bank attorney who is required to be present at the closing and to actually clear the file to close.  Once you get any response from them, call your lawyer and tell he/she what the bank said.  I don’t care if they get annoyed, they shouldn’t.  It can delay your closing and your rate can expire.  If your lawyer has to call (we do it all the time), so be it.  Its a crazy market out there and you need someone who knows that and doesnt care.

3.  Bankrate.com .  I dont care if your neighbor told you their mortgage broker got them a free house.  Before you do anything, go to that site.  Completely unbiased and independent and offers you a comparison of tons of banks, their rates, closing costs, and even contact information, plus informative articles.

4.  Aspirin.  Take it a lot during the process because you’ll need it.  I know I’m making this sound so dreary but the reality is that the process has become quite painstaking and can take some time and patience to navigate.  Have a good attorney by your side, always always always follow up with the bank (also have a back up bank in case the first isnt moving quick enough) and youll be fine at the end of the day.

Posted in Gersh Blog, Mortgages, New York City Real Estate | 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 | Comments

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