Category: Bankruptcy

If you’re a New Yorker and your wages are being garnished, filing for bankruptcy may be a way to stop this from happening and to keep all of your wages. 

A wage garnishment immediately ceases upon the filing of a bankruptcy due to the automatic stay; the automatic stay is an injunction that is typically imposed against certain creditors who hope to begin action against a debtor. This is one of the perks of filing bankruptcy since either a Chapter 7 or Chapter 13 filing will stop a wage garnishment. This will then give you time to repay the debt. Maybe the debt will be discharged in the bankruptcy. Regardless, the garnishment will stop because of the filing. 

What money is eligible for wage garnishment?

In New York, some income can’t be garnished, including the following:

• 90 percent of your income earned in the last 60 days
• Court-ordered child support
• Income from unemployment insurance, disability, and worker’s comp benefits
• Public assistance
• Public/private pensions and retirement savings
• Social security

How does wage garnishment work?

If you’re employed and your income is at a certain level, then a judgment creditor can garnish your wages to collect what you owe them. The creditor files an “income execution form” and has it signed by the proper authority, such as the county clerk. Depending on your specific situation, you may be able to challenge this. 

If it goes through, the court issues an order for your employer to withhold a part of your paycheck to send to your judgment creditor. Of course, this doesn’t decrease your gross wages, but it does lower the amount of money that enters your bank account on pay day. 

While it may be a relief to stop the wage garnishment, it’s critical to understand how the bankruptcy impacts the debt. 

Types of Wage Garnishment

Depending on the type of wage garnishment involved, this will determine how the debt is treated in a bankruptcy.  

• Federal student loans/income tax: Typically, federal income tax and federal student loans can take 15 percent from disposable income, which means all the money that you make that doesn’t go to the deductions that the law requires. However, the calculation doesn’t include rent or mortgage, or utilities; it does include Social Security and Medicare taxes. The debts will probably not be discharged in the bankruptcy; the garnishments may continue after the bankruptcy is over, and the automatic stay is lifted. 

• Child support/alimony:  This can take up to 50 percent or more of your wages. If you need a modification, you typically will file it with the appropriate family court instead of the bankruptcy court. The chances for the debts to be discharged aren’t very likely due to the type of debt involved.  

• Banks/credit card companies: These consumer-based types are typically adjusted or discharged in a bankruptcy, so when you file either a Chapter 7 or Chapter 13, it could be a long term stop to the garnishment. 

Talk to a NY Bankruptcy Attorney About Wage Garnishment

Filing for bankruptcy can get you back on track financially, and it may be a way to help you if you’re dealing with the garnishment of your wages. Each case is different, so it’s important to speak with an experienced bankruptcy attorney who can advise you on your specific circumstances. You can start by talking to a knowledgeable MOWK Law attorney. Contact us today to help ease your mind about your financial uncertainty. 

If you’re interested in starting over both financially and personally, and you want to file for both a divorce and bankruptcy, you want to understand what you’re getting into before you begin either one of these proceedings. Yes, you can file for bankruptcy without your spouse. However, whether you want to do this before, during, or after your dissolution of marriage will depend on the details of your particular financial situation. 

In general, filing a New York Chapter 7 bankruptcy gives you the chance to discharge unsecured debts. But, in order for you to be eligible for filing a petition under Chapter 7, you have to meet the requirements, which is the “means test” where your income must fall below the designated income threshold. If you do indeed qualify, some of your assets (including your home) may be liquidated if you aren’t able to protect them using allowable state or federal exemptions.  

Identify your Property Interest in your Primary Residence

If you own your home with your soon-to-be ex, it’s important to distinguish the type of ownership interest. Is it as joint tenants with rights of survivorship? Or as tenants in common or as tenants by the entirety? The deed should indicate the interest based on the specific language. However, if it doesn’t, the general rule is that if the property was purchased during the marriage and a divorce hasn’t happened, New York law determines that the property interest is tenants by the entirety.   

Consequences of Chapter 7 Bankruptcy 

Be aware that as of the case commencement date, if you’re the solo filing spouse and you have an undivided interest in the property (tenancy by the entirety, joint tenancy, or tenancy in common), the bankruptcy trustee may sell both the estate’s interest and the non-debtor co-owner’s interest in the property.

Exemptions to Take

There are several exemptions under both federal law and New York State law. However, the specific ones to take depend on your individual situation. If you file alone, the allowable NY state exemption is $89,975 (it’s higher in some counties, including Nassau County and Suffolk County), but if you file as a married couple, the exemption is double, as long as you both own the property.   

Factors that Affect Whether the Trustee Sells the Home

There are many factors that help to determine whether or not the trustee will sell your home, including the following:

• The value of the property (not the original purchase price of the home)
• Mortgages and other liens encumbering the property
• Homestead exemptions

Under Section 363 (h) of the Bankruptcy Code, a trustee may sell these interests only under the following circumstances:

• The partition of the property is impracticable and
• The sale of the bankruptcy estate’s undivided interest in the property would end up substantially less for the estate than the sale of the property free on the non-filing spouse/co-owner’s interest and
• The benefit to the bankruptcy estate of a sale of the property free of the co-owner’s interest outweighs any damage to the co-owners. 

Get Legal Help with your Bankruptcy Issues

If you don’t meet the Chapter 7 income requirement, you may want to file a petition with your spouse that will let you benefit from homestead exemptions if you own your home together. Because bankruptcy is a complex and specialized area of law, you need to talk to an experienced legal professional who can provide detailed assistance specific to your case. Contact an experienced MOWK Law attorney for assistance right away.  

Whenever someone files for bankruptcy, it can be a way for them to wipe the slate clean and start a new without worrying about the bills and debts that they have racked up. However, if you have to pay child support, filing for bankruptcy won’t eliminate what you owe, and it won’t alter what you must pay in the future either. Just because it doesn’t wipe out your child support payments doesn’t mean that there isn’t any connection between bankruptcy and child support. Read on for information on what you should know about filing for bankruptcy and child support obligations.

Automatic Stay

Typically, when you file for bankruptcy, most of your bills are subject to an “automatic stay.” The automatic stay acts as a stop sign, which means that any creditors must automatically stop all collection actions for the entire term of the bankruptcy, including wage garnishments, foreclosures, bank levies, and collection calls. But this doesn’t apply to child support or spousal support because there is an interest in protecting the rights of children to receive parental support. 

The Role of the Bankruptcy Regarding Child Support Obligations

For all bankruptcy filings, the court appoints a bankruptcy trustee to handle the case. The trustee must report child support obligations and will have the debtor to complete a form for the meeting with the creditors. Since child support is considered a “priority debt,” when money is available for paying creditors, the trustee must pay child support arrearages first before paying other debt. 

Chapter 7 Bankruptcy 

Here is some information that is specific to filing Chapter 7 bankruptcy and how it impacts child support obligations:

• In a Chapter 7 bankruptcy, your assets are sold off to pay your debts. 
• While most of the remaining debts will be discharged, this isn’t true for child support in arrears or child support that is past due.
• You are still responsible for child support and property division balances after the case closes.
• If the trustee sells property that you can’t protect with an exemption, the funds will be applied to the support obligation.
• You will remain responsible for any child support obligation and any amount that are due after the filing even when you get a discharge.

Chapter 13 Bankruptcy

Here is some information that is specific to filing Chapter 13 bankruptcy and how it impacts child support obligations:

• If you’re filing a Chapter 13, your child support in arrears is subject to a repayment plan where you will pay it off over 3-5 years.
• You must meet all court-ordered child support obligations. 
• It’s possible that you may be able to wipe out a property division balance.
• Since a repayment plan can’t exceed 5 years, if you have a lot of child support in arrears, you will have to deal with a high monthly plan payment. 

Speak with an Experienced Bankruptcy Attorney

Bankruptcy laws can be complex and difficult to understand. That’s why if you owe child support payments and are thinking about filing for bankruptcy, you should speak with an experienced MOWK Law New York bankruptcy attorney. They can provide insight into your case and can help you make a decision about what’s best for your situation. Contact us today. 

If you’re thinking about what to do about your mounting debt, you might consider filing for bankruptcy. Specifically, you might contemplate filing for a New York Chapter 13 bankruptcy because it allows you to retain your property and still make payments on any loans or other debt that you’ve incurred. It also gives you an opportunity to save your New York home from foreclosure because it lets you stop proceedings and catch up any past due payments over time in your repayment plan. Read on to learn more about Chapter 13 reorganization plans. 

Types of Debt

The type of debt that you have affects your bankruptcy filing. There are a few categories for debt balances, including priority, secured, or unsecured. 

• Priority balances: includes back taxes owed, ongoing child support payments, and costs related to filing for Chapter 13 protection
• Secured debts: includes auto loans, mortgages, or other obligations that are supported by collateral
• Unsecured debts: includes credit card balance, health care bills, or other loans that were obtained with no collateral and obtained with a promise to pay the lender back in a timely fashion; these creditors are last in the pecking order for payment, and any unpaid part of this type of debt is forgiven at the end of the repayment period

Chapter 13 Bankruptcy vs. Chapter 7 Bankruptcy

A Chapter 13 bankruptcy is referred to as a “wage earner” bankruptcy because it requires you to have a steady source of income in order to file– you must have enough money to repay some of your debt. Unlike a Chapter 7 bankruptcy which wipes out all your debts, in a Chapter 13, you repay your debts over time based on a repayment plan.  

How the Terms of a Repayment Plan are Established

The terms of your repayment plan will depend on a few different factors. First, a means test is used to estimate the duration of your repayment plan. If your monthly income is lower than the state median, you will probably be required to make plan payments for three years. If your income is higher than the state median, you will likely make payments for five years. A means test might have disqualified you from filing a Chapter 7 bankruptcy in the first place because you earn too much income. 

The amount of the payment depends on the type of debts that you have incurred and how much disposable income you have to pay them with. IRS guidelines, state law, and the bankruptcy court itself are all factors used to establish how much you can afford to give to your creditors every month. 

What Happens During the Repayment Period?

When you’re in the repayment time, an automatic stay applies. This acts like a legal “red light” that is activated when you file bankruptcy, and your creditors can’t collect on debts that are part of the repayment plan; you don’t have any direct contact with creditors during the Chapter 13.

Considering Filing for a Chapter 13? Get Legal Help

If you’re exploring protection from your creditors, you will probably want to talk to a lawyer. An experienced attorney can discuss how to file for bankruptcy and how it can be an advantage to you. They may also assist you with making sure that creditors comply with the legal stay. Contact a MOWK Law bankruptcy attorney to get started with your bankruptcy plan. 

Now that a new year has started, many take that as their cue for a new start. For some, this can mean a move to a new location. However, you don’t want to derail your economic situation by complicating an existing or upcoming bankruptcy filing. If you’re moving, or have recently moved and you need bankruptcy protection, then there are key factors to consider that will affect your case. 

1. Your relocation destination:

The complexity of your situation will depend on where your new home is located. If you’re moving into another location that is in the same federal court jurisdiction, then it’s as simple as informing the bankruptcy court and the trustee of the change. You may not even have to transfer your case if the new location is nearby. For instance, a move from New Jersey to New York. 

However, if your move is to a place of greater distance, then the process requires a lot more considerations, which is the reason that it’s not highly recommended. Transferring your case requires moving the bankruptcy court for a change of venue; you might have to appear in your current bankruptcy judge’s court to explain why moving your case won’t prejudice your case.  

2. Waiting period:

If you decide to move your bankruptcy case, there is a waiting period before you can file in your new state. You need to have lived in the new state for a majority of the past 180 days (this means at least 91 days) to file a bankruptcy in that state. No specific documents are required to prove your residency, but you can use documentation, such as your lease or utility bills to verify your time in the state. If your time in the new state isn’t enough to meet the requirements, then you can either wait until the time has passed and file then, or alternatively, you can file in your previous state. 

3. Creditors’ meetings: 

Attending your creditors meeting may not be an issue. Due to the pandemic, the meetings are generally conducted by phone. Many trustees accept remote connection attendance, but you can execute a power of attorney instrument to allow someone to sub in you for you, if you prefer.  

4. Exemptions: 

• Exemptions are the laws that dictate what assets you can keep after filing for bankruptcy. When the property is “exempt,” it means it is protected up to a certain amount. 
• You shouldn’t sell assets that belong to the bankruptcy estate; this includes any of your prior possessions that are non-exempt, not reaffirmed, or not assumed to belong to the bankruptcy estate for liquidation and distribution. This probably includes your house and any other real estate that you own. If you do indeed sell the bankruptcy estate’s property, the trustee will probably come after you for the proceeds. However, if the trustee files a report of no distribution or abandonment of an asset, then it reverts back to you and you can sell it.
• You probably can’t reap the benefits from your new home state’s exemptions, if they are more generous than your other state; amendments to exemptions usually require you to be in the new state for 730 days.

Get Legal Assistance with New York Bankruptcy Issues

If your case is a New York bankruptcy or will turn into one, it’s obvious that the laws about residency requirements, exemptions, and the way that it intersects with contemplating bankruptcy after relocation can be difficult terrain to navigate. It makes sense to get expert help from a skilled MOWK Law attorney for your bankruptcy needs. Contact us today. 

With all of the business closures in New York due to the impact of the coronavirus, it’s not surprising that many people would consider filing for bankruptcy to deal with financial hardships. Taking this step can be a way to have a clean slate and erase debts, but making this decision requires knowing all of your options. Here are some important things that you should know about filing a bankruptcy in New York in the Covid-19 era. 

New Procedures in Bankruptcy Courts

The court rooms in New York that hear bankruptcy cases are still functioning, but the processes and procedures have been modified to comply with public health concerns. Obviously, these modifications are on-going and vary, depending on the specific area, but here are some examples of the general changes that the New York Bankruptcy Court has made:

• Restricts access to all of the New York bankruptcy courtrooms by allowing only employees and other specified individuals to enter.
• Suspends all in-person bankruptcy appearances.
• Mandates that all scheduled hearings will be held over the phone.
• Encourages parties to file bankruptcy petitions electronically. But accepts paper filings that are mailed or dropped off in a sealed envelope.
• Authorizes a waiver of fees for public access to court electronic records for certain pro se parties.

Chapter 7 Bankruptcy

If you’ve been laid off due to Covid-19 and struggling with debt, you may opt to file a Chapter 7 bankruptcy. This form of bankruptcy eliminates most unsecured debts, including credit card debt and medical bills, and gives you a clean slate. The process is generally quick (3-6 months to finalize), but the pandemic has caused court delays. 

An important thing to keep in mind is that you must wait eight years after the filing date of your first Chapter 7 case before you can file for another. This could be a risk because of the uncertainty of your financial circumstances during the pandemic. For instance, if you became infected with the coronavirus or another illness and you rack up a lot of medical bills, then you wouldn’t be able to file another Chapter 7 case right away. 

Chapter 13 Bankruptcy

Another option for individuals and businesses is filing a Chapter 13 bankruptcy. Here, you don’t have the advantage of liquidation and you must eventually pay back your creditors; the repayment plans typically allow for about three to five years to get in line with the payments. This type of bankruptcy allows for the reorganization of a business, but this type of bankruptcy is based on businesses that are expected to be profitable. If that’s not the case, then there could be further problems down the line, especially when it’s difficult to gauge profitability during the coronavirus crisis.  

Get Help with Your Bankruptcy Filing in New York

If you’re unemployed, laid off, have been furloughed, or are experiencing any other loss of income due to Covid-19, you’re probably concerned with the state of your finances and your ability to pay your bills. Although government entities and creditors have enacted measures to assist with financial woes, it might not be enough. If you’re considering filing for bankruptcy, you want to be aware of all of your options and the skilled New York bankruptcy attorneys at MOWK Law can help you assess your situation navigate New York bankruptcy in these stressful times. Contact us for more information. 

With all the economic uncertainties, business disruptions, and massive layoffs happening right now, it’s common for businesses, corporations, and individuals to seek a solution for existing debt and a sudden lack of income. The full scope of COVID-19’s impact is not yet clear, but extensive quarantines, social distancing practices, and business closures have already hugely impacted bank accounts, financial markets, and economies worldwide. There are many advantages to a Chapter 11 bankruptcy and filing should be something struggling companies should  consider exercising in order to keep employees, preserve the value of their business, and potentially avoid shuttering for good. 

What Does Chapter 11 Do for Existing Debt Payments?

Chapter 11 bankruptcy is a way for a debtor to reorganize their assets, debts, and business operations. A reorganization bankruptcy allows businesses and others in debt an automatic stay under Bankruptcy Code section 362. Creditors may no longer initiate or continue litigation efforts for judgments, begin or continue debt collection including repossession efforts, enforce liens and pursue foreclosure among other activities. This allows filers the chance to stretch out certain creditor payments for a time so they can become more financially stable once again.

Maintaining Equity Interests

Business owners filing Chapter 11 may also be able to keep a large part or all of their equity interests in their business and keep operating the business while a reorganization plan comes together and through its confirmation. 

Protection from Unsecured Creditors

Under Section 365 of the Bankruptcy Code, the entity filing Chapter 11 may reject agreements, assume contracts, and assign contracts subject to outstanding defaults being cured. This means that any counterpart to these agreements may be left as an unsecured creditor. 

Financing Options

Debtor in Possession financing – potentially available to companies in crisis – may be an appealing option to help bail out flailing businesses. Lenders offering DIP financing are both incentivized and protected under Chapter 11 to enter into these agreements. It is common to see both desirable interest rates offered as well as giving the lender super-priority to seek payments from the bankruptcy before almost all other creditors in an effort to motivate this type of financial help being given.

Appealing Asset Liquidation Conditions

The United States Bankruptcy Code also grants debtors the ability in a Chapter 11 to sell assets without the transfers being burdened with liabilities such as liens, encumbrances, and claims. This provides a chance to sell assets that otherwise might not be transferrable or appealing due to the burdens that come with them. Not only may this help a distressed company, it offers reassurance of safety from successor liability claims for buyers and may incentivize them to make a purchase they otherwise would not. 

New York Chapter 11 Bankruptcy LawyerWhen faced with financial hardship and uncertainty about the future, it’s important for business owners to be aware of and consider the options available to them under Chapter 11. Not only can the move allow businesses and corporations to continue operating to the benefit of their clients and their employees, it can potentially allow businesses that depend of their payments of debts owed to avoid financial crisis and a bankruptcy filing of their own. If you have questions about your options or want to plan for your financial future, speak with the New York bankruptcy lawyers at MOWK Law sooner rather than later. Contact us today with your questions to get started.

Financial difficulties in the United States are all too common a problem and can play a role in marital problems and even divorce. Both New York bankruptcy and divorce laws are can be quite complex; combining the two can create a procedural and legal quagmire with far reaching ramifications and implications for all parties involved. Bankruptcy is primarily a federal law while divorce law is largely set in the state arena. However, because bankruptcy and divorce can occur in rapid succession – even at times simultaneously – the impact of the two and their timing should be explored in more depth.

Chapter 7 Bankruptcy

Chapter 7 is one of the most common forms of bankruptcy alongside Chapter 13. While Chapter 13 requires partial or full repayment of a petitioner’s debt for a period of years before discharging any eligible remaining debt, Chapter 7 is a more complete form of bankruptcy as it will erase all eligible debt without requiring repayment. However, though wider in its scope a Chapter bankruptcy 7 filing does not erase a debtor’s obligation for:

• Tax debts;
• Federal student loans;
• Fines from criminal cases;
• Domestic support obligations (such as child support and spousal support); and
• Debts created through fraud.

Both bankruptcy and divorce may be appropriate in certain instances, but the decision of whether to file bankruptcy or divorce proceedings first (or even simultaneously) may depend upon several factors, including:

• The reasons for either divorce or bankruptcy;
• The timing of the decision to file either action and benefit to each party involved;
• Whether a person is eligible to file for bankruptcy relief; and
• Whether the person wanting to file bankruptcy has assets or income that is collectible.

Divorce Before Bankruptcy

Generally, filing for bankruptcy first is more advantageous as it clarifies the finances of the parties that may later become involved in a divorce. However, there are circumstances where divorce does make sense before filing for bankruptcy:

• If one spouse wants to use divorce proceedings to get a palimony order that cannot be discharged in a later bankruptcy; or
• If a spouse is disqualified from filing for bankruptcy during the marriage because the other’s income is too high.

Bankruptcy Before Divorce Proceedings

If circumstances render it appropriate to temporarily refrain from filing for divorce (and both members of the married couple need to file bankruptcy), there can be numerous benefits for married couples to wait to file divorce proceedings until they have filed for bankruptcy and discharged their debt. Benefits to the parties involved may often include:

• Bankruptcy benefits to the married couple and their assets; and
• Simplifying and economizing the divorce and bankruptcy process.

Boosting Bankruptcy Benefits

The financial benefits of filing bankruptcy together may benefit married couples who refrain from filing for divorce until afterwards. The Bankruptcy Code allows each debtor filing to claim exemptions – even if the debtors are married to one another. This means married couples filing jointly have double the bankruptcy exemptions that may impact what property and possessions they are permitted to keep safe from creditors – specifically, for the purposes of divorce, the marital residence.

Federal law contains exemptions debtors may use when they file for bankruptcy. Every state also possesses its own set of exemptions, which vary from state to state. Depending upon the most advantageous outcome, married couples filing jointly may elect which exemptions they want to use (but generally may not avail themselves or federal and state benefits).

Simplifying and Economizing

Another benefit of jointly filing bankruptcy first is to simplify the subsequent divorce process. After any marital debt is settled, it no longer needs to be handled during divorce proceedings. This might allow spouses to settle their divorce more rapidly. A simpler divorce can often be less costly, which might put the parties in a better financial position to begin a new chapter of their lives as unmarried individuals.

Legal proceedings may also be time-consuming and costly, and filing a joint bankruptcy before filing a divorce could also vastly reduce expenses for both parties. By not filing separately, they can avoid double court filing fees and legal fees. Bankruptcy also requires the petitioning party produce large volumes of financial documents and personal information to substantiate their assets and the claims of inability to pay their debts.

Concurrent Divorce and Bankruptcy Filings

Simultaneously filing both a bankruptcy and a divorce action is abnormal and not the best course of action in most cases as it leaves assets, spousal and child support, obligations, and property up in the air while both proceedings are being resolved. Additionally, family courts cannot award and distribute assets until any pending bankruptcy is complete. This could drag out a case. The parties can use bankruptcy to delay bank levies or evictions as well as divorce proceedings to establish temporary orders of custody or spousal support in orderly to properly resolve bankruptcy and divorce issues at the same time. Though concurrent filings may be called for on rare occasions, they can be complicated and it is best to speak with an attorney before proceeding to understand your options.

Joint Filing Drawbacks

As much as filing joint bankruptcy might benefit married couples in certain situations, there can be disadvantages to doing so. In some situations, choosing to file jointly under Chapter 7 could render the parties financially ineligible due to their incomes, so they are left with a less complete debt discharge option under Chapter 13.  Filing jointly prior to a filing for divorce may also create a conflict of interest for the attorney representing the married couple, causing a completely different set of problems for all parties involved. These situations require caution and would benefit from the scrutiny of an experienced legal professional.

New York Bankruptcy Lawyer

Both bankruptcy and divorce proceedings can be long, drawn out, complicated, and emotionally draining. However, both can sort out complex situations and settle difficult disputes related to child custody, possession of assets, spousal and child support, debt resolution and allocation.

The decision of if or when to file either may affect strategy and be beneficial to different parties at different times. Given the precarious nature of both divorce and bankruptcy as well as the potentially dire personal and financial consequences poor planning can create, it is advisable to speak to an experienced New York bankruptcy lawyer regarding these matters. At MOWK Law, we know this time is complicated, confusing and emotional and we are here to help with all your legal needs and questions- get in touch with us today.