About Me
“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”
Bankruptcy Procedure
Written by Craig D. Robins, Esq.In every consumer bankruptcy case, whether it is a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, there will be an initial hearing at the bankruptcy court about one month after the case is filed. If you filed for bankruptcy, you are required to attend.
What’s Happens at the Meeting of Creditors in Bankruptcy Court?
The purpose of the hearing is for the court-appointed trustee to ask you questions about your financial situation, the reason why you have debt problems, and whether you have any non-exempt assets.
This meeting is rather informal, as it is not in a courtroom, and it is not before a bankruptcy judge. Instead, it is in a hearing room, and it is before a trustee, who is a bankruptcy attorney, and not a judicial officer. See my post: Don’t Call the Bankruptcy Trustee, “Your Honor”.
As a matter of fact, the bankruptcy law even bars bankruptcy judges from attending the Meeting of Creditors. See: Bankruptcy Judges Are Barred by Law From Attending the Meeting of Creditors .
A bankruptcy trustee presides over the meeting by calling cases, one at a time. When your case is called, you sit at a table in the front of the room with your bankruptcy lawyer, and the trustee asks questions after you’ve been sworn in. To learn more about trustees, see What Is a Bankruptcy Trustee?
Most meetings are relatively short and uneventful. Although they will typically last just a matter of a few minutes, you may wait as much as 60 to 90 minutes for your hearing. The meetings are recorded by an electronic device, and there is a microphone on the table.
Since the meetings are somewhat informal, you do not have to get dressed up or wear a suit.
The Meeting of Creditors is also commonly referred to as the “341 Hearing” or “341 Meeting” because it is Bankruptcy Code section 341 that contains the law regarding such meetings.
Role of the Bankruptcy Trustee
The trustee is charged with several obligations which include making sure the bankruptcy petition is properly prepared, making sure any assets you intend to keep are protected by exemption statutes, ensuring that you properly completed the Means Test, and ascertaining whether you have any non-exempt assets that can be sold for the benefit of creditors.
It is usually rare, but not uncommon, that a trustee determines that there are non-exempt assets. The most common types of non-exempt assets include cars, tax refunds and personal injury law suits. In each case, if the asset is worth more than the exemption amount, the trustee can administer the asset. For more information about whether a trustee will pursue an asset, see: The Back-Door Politics Behind Trustees Pursuing Non-Exempt Assets.
If you live in New York, you can check some of the most common bankruptcy exemptions here: Bankruptcy Exemptions in New York.
If the trustee does try to sell an asset, he is entitled to be compensated for doing so. Information about this is in this post: How Does a Chapter 7 Bankruptcy Trustee Sell Assets .
Some clients primarily speak a second language like Spanish, and need the assistance of an interpreter. In the Central Islip Bankruptcy Court, the court now provides interpretation services at the Meeting of Creditors. See: Interpreters in Bankruptcy Court .
It is relatively rare that a creditor will show up. Generally speaking, credit card companies, which constitute the most common type of creditor, will never show up. I discussed this in my post: Will Creditors Show Up For My Hearing In Bankruptcy Court? However, If a Creditor Shows Up at the Meeting of Creditors in Bankruptcy Court, What Questions Can They Ask?
As far as questions at the Meeting of Creditors that the trustee asks you, it is very important to answer each question accurately and honestly, but you should not provide any additional information, other than simply answering the question. For more about how you should answer questions, see this post: How Much Should You Say at the Meeting of Creditors in Bankruptcy Court?
When Is the Meeting of Creditors?
This is the topic of an article I recently wrote: When Is My Meeting of Creditors in Bankruptcy Court?. Generally, the meeting is about one month after the date of filing. There is a lot of information on this post.
What Can Go Wrong at the Meeting of Creditors?
The vast majority of hearings at the Meeting of Creditors go very smoothly and last just a few minutes. If your bankruptcy attorney did a good job in drafting the bankruptcy petition and preparing you for the meeting, everything should go find.
Nevertheless, lots of things can happen at the Meeting of Creditors to complicate things. Several years go I wrote a lengthy series of articles for the Suffolk Lawyer about how to address unusual issues that may arise at the Meeting of Creditors in bankruptcy court.
If you have a Meeting of Creditors coming up, this series of articles should be extremely useful:
Preparation for the Meeting of Creditors is Key
I cannot stress how important it is to have your bankruptcy attorney prepare you for the meeting of creditors.
In my Long Island bankruptcy practice, we review with each client the various questions the trustee will most likely ask, as well as our client’s responses, to ensure that the meeting will go smoothly. We usually do this a few days prior to the meeting.
Are You Curious About Your Bankruptcy Trustee?
If your hearing is in the Central Islip Bankruptcy Court, which is in the Eastern District of New York, you can read profiles about each trustee and see their picture, most of which I took. Here is the link: Bankruptcy Trustee Profiles .
Can the Trustee Decline to Grant You Bankruptcy Relief at the Meeting of Creditors?
The answer is “absolutely not.” The purpose of the meeting is for the trustee to obtain information about your case. The trustee does not have the ability to take any action against you or decide whether or not you are entitled to a discharge.
Only a bankruptcy court judge can do such things. Also, every debtor is entitled to a discharge unless a proceeding is brought challenging discharge — and these are very rare.
Directions to the Central Islip Bankruptcy Court on Long Island
If your meeting of creditors is in Central Islip, here’s how to get to the court: Directions to Central Islip Bankruptcy Court - Long Island .
Written by Craig D. Robins, Esq.Some debtors like bankruptcy so much, they come back for more, and more, and even more. . . sometimes using multiple bankruptcy filings to delay foreclosure proceedings for years. But when is enough, enough?
What Can Mortgagees and the Bankruptcy Court Do in Situations Involving Extreme Serial Filings?
In the past three months, Judge Alan S. Trust, sitting in the Central Islip Bankruptcy Court on Long Island, addressed this issue in several cases. The most recent one caught my eye based on the incredible number of related bankruptcy filings, as well as the unbelievable amount of time the debtors were able to thwart the system and delay foreclosure.
Serial Filings in Bankruptcy Cases
Some debtors file successive Chapter 13 petitions because each time they file, they get the benefit of the stay, which stops a foreclosure proceeding dead in its tracks.
Technically, Bankruptcy Code section 109(e) prohibits a debtor from refiling another case for 180 days, if the prior case was dismissed because the debtor neglected to make necessary payments or maintain other debtor responsibilities.
However the bankruptcy court has become rather liberal in permitting debtors to engage in repeated filings and will typically give the debtor the benefit of the doubt as long as the debtor can demonstrate a change of circumstances.
Nevertheless, some debtors clearly take advantage of the system, and by their sheer audacity (and desperation), give bankruptcy a bad name for those who file in good faith. The vast majority of bad faith serial filings are done by pro se debtors.
Any experienced bankruptcy attorney knows that judges will not hesitate to sanction counsel for filing a case in bad faith. The law is very clear that a case cannot be filed for the sole purpose of delay, without any good faith intent to follow through with a Chapter 13 plan.
Bankruptcy Amendment Act Made Serial Filings More Difficult
When Congress overhauled the bankruptcy laws in 2005 (BAPCPA), it imposed several new provisions designed to stop the problem of bad faith serial filers. I wrote about some of these changes in my Suffolk Lawyer column in November 2005: Consumer Bankruptcy Debtors Face New Limitations for Repeat Filings .
In particular, there are new exceptions to the automatic stay. For example, if a debtor had one pending bankruptcy case in the preceding year, then the automatic stay only lasts 30 days, effectively shifting the burden to the debtor to make an application to extend the stay. If there was more than one filing in the prior year, then the debtor is not entitled to any automatic stay at the time of filing.
Even with these provisions, debtors soon learned to game the system. After one spouse’s bankruptcy was dismissed, the other spouse would then file, and then this “tag team” filing approach would go on for years. Although this conduct was nothing new, Congress addressed this problem too, with an “in rem” provision in BAPCPA.
Debtors Filed 10 Cases to Delay Foreclosure
Debtors Filed 10 Cases to Delay Foreclosure
On December 21, 2009, Judge Trust issued companion decisions in two separate, but related cases, outlining the excessive measures taken by two Long Island debtors who filed a total of ten bankruptcy petitions over a 12-year period to stop foreclosure on their jointly-owned home. In re Janet Blair (Case No. 09-76150-ast) and In re Allen Gary Smith (Case No. 09-77562-ast).
The decision was precipitated by a motion brought by the mortgagee, seeking “in rem” relief against the premises. Most of these filings were Chapter 13 cases filed over a four-year period between 2005 and 2009. Almost all of them were filed on the eve of a scheduled foreclosure sale.
“In Rem” Relief in Bankruptcy Proceedings Stops Foreclosure Delaying Tactics
“In Rem” Relief in Bankruptcy Proceedings Stops Foreclosure Delaying Tactics
“In rem” relief is when the bankruptcy court grants an order indicating that a particular piece of property will not be affected by any future bankruptcy stays, effectively eliminating any benefit of the “tag-team” filing approach. “In rem” originates from the Latin phrase for a lawsuit directed against property, rather than a person.
In the Blair / Smith cases, the judge immediately lifted the stay and subsequently granted in rem relief, stating that the serial filings were evidence of the debtors’ bad faith, and also evidence of the fact that the debtors were abusing the bankruptcy process for several years.
Statutory Authority for In Rem Relief. In his decision, Judge Trust, delivered a well-written and detailed analysis behind the statutory authority providing for in rem relief. In doing so, the judge essentially reiterated his holding in a two-month-old similar decision, which has since been published. In re Montalvo (416 B.R. 381).
Statutory Authority for In Rem Relief. In his decision, Judge Trust, delivered a well-written and detailed analysis behind the statutory authority providing for in rem relief. In doing so, the judge essentially reiterated his holding in a two-month-old similar decision, which has since been published. In re Montalvo (416 B.R. 381).
One of BAPCPA’s amendments was the addition of Section 362(d)(4) which provides the statutory authority to grant in rem relief. Pursuant to Section 362(d)(4), the Court can grant in rem relief from the stay as to a mortagee’s interest in the property, such that any and all future filings by any person or entity with an interest in the property will not operate as an automatic stay against the owner and its successors and/or assigns for a period of two years after the date of the entry of such an order.
To obtain this relief, the mortgagee bears the burden of showing that the various petitions filed by debtors are part of a scheme to hinder, delay and defraud the mortgagee.
A key issue in such cases is whether the court can infer an intent to hinder, delay and defraud creditors when it appears that there have been multiple, strategically timed bankruptcy filings. Judge Trust took the established view that holds that the mere timing and filing of several bankruptcy cases is an adequate basis from which a court can draw a permissible inference.
However, Judge Trust also observed that the debtors demonstrated no intent to make the bankruptcy work. They did not make plan payments, show up in court, or provide the trustee with required documents.
Standard of Proof in In Rem Litigation
Judge Robert E. Grossman also addressed this issue just over a year ago, and wrote about the standard of proof necessary to obtain in rem relief. In re Lemma (394 B.B. 315 (Bank.E.D.N.Y. 2008).
In that case, which involved a third Chapter 13 filing (with debtor representation by my friend, Babylon bankruptcy attorney Michael A. Kinzer), the judge concluded that the mortgagee was not entitled to in rem relief (and not even entitled to dismiss the case).
The reason why Judge Grossman denied the mortgagee’s application was because the mortgagee, as the party seeking in rem relief, had the burden of proving that the current filing was part of a scheme; that the scheme involved the transfer of real property, or multiple bankruptcy filings; and that the object of the scheme was to hinder, delay and defraud the mortgagee.
The mortgagee in that case was unable to provide the court with any evidence other than the fact that the debtors filed three petitions.
Thus, multiple filings, alone, are not adequate to find intent to hinder, delay and defraud.
About the Author. Long Island Bankruptcy Attorney Craig D. Robins, Esq., is a regular columnist for the Suffolk Lawyer, the official publication of the Suffolk County Bar Association in New York. This article appeared in the January 2010 issue of the Suffolk Lawyer. Mr. Robins is a bankruptcy lawyer who has represented thousands of consumer and business clients during the past twenty years. He has offices in Patchogue, Commack, Woodbury and Valley Stream. (516) 496-0800. For information about filing bankruptcy on Long Island, please visit his Bankruptcy web site: http://www.BankruptcyCanHelp.com.
Written by Craig D. Robins, Esq.Same-sex couples have many more issues to contend with than heterosexual married ones — especially when it comes to filing bankruptcy in New York. Everything about the federal bankruptcy law is geared towards the conventional family.
Alas, nowhere in the bankruptcy statutes is there sufficient guidance for dealing with non-conventional family units, let alone same-sex couples who were married in other states.
That does not mean that gay or lesbian consumers in committed relationships can’t file for bankruptcy; it just means that they have to approach the bankruptcy petition and means test more carefully.
Having represented a number of gay and lesbian individuals and couples, the following issues routinely come up in providing bankruptcy advice. Unfortunately, some of the answers are not necessarily so clear.
Can a same-sex unmarried couple file a joint bankruptcy?
There is no difference between gay or straight non-married couples. Only married couples can file a joint bankruptcy petitions.
Can a same-sex couple that is legally married in another state file a joint bankruptcy petition in a New York Bankruptcy Court?
Recently, a handful of states adopted legislation recognizing same-sex marriage. They include Massachusetts, Connecticut, Iowa, Vermont, Maine, and for a short time, California.
Consequently, many New York residents in same-sex committed relationships eagerly went to these state to tie the knot. What if one of these gay or lesbian married couples now wants to file a joint bankruptcy petition in a New York bankruptcy court: can they?
Here we have a conundrum. According to the Defense against Marriage Act, a federal law dating back to 1996, a state is not required to recognize a same-sex marriage in their state even if the couple was legitimately married in another state. However, Governor Paterson did not feel that this produced a fair result and issued a directive in May 2009 requiring all state agencies to recognize same-sex marriages performed out-of-state.
Bankruptcy is a federal procedure based on federal laws. When these laws fail to address certain issues, such as legitimacy of marriage, then state law can be used to amplify the federal law. Since New York does not currently have any law that explicitly recognizes such marriages (Governor Paterson’s directive only applies to state agencies), then it appears that the a New York bankruptcy court would not be able to recognize an out-of-state same-sex marriage.
I have not yet had the opportunity to file a joint case involving a same-sex married couple, but given that opportunity, I certainly would give it a try. The Office of the United States Trustee would then have the difficult decision on whether they should seek to dismiss the case.
Even if they raised such objections, a sympathetic judge could nevertheless rule in favor of the debtors and come up with some legal justification for permitting the joint bankruptcy filing. It is just a question of time before we see such a filing in a New York bankruptcy court. Earlier this year I even placed a post on my bankruptcy blog offering to do such a filing on a pro bono basis, just to set a precedent.
How do you calculate the size of the household for means test purposes when you have a same-sex couple with a domestic partnerships?
The real issue here is essentially no different for any two partners or roommates living together, whether they may be straight or gay. Simply calculate all of the people who occupy the household, whether they are related or unrelated.
The real issue here is essentially no different for any two partners or roommates living together, whether they may be straight or gay. Simply calculate all of the people who occupy the household, whether they are related or unrelated.
Do you include a same-sex partner’s income on the means test?
The means test only requires a debtor to include the income of the spouse. If you are representing an individual debtor who is in a same-sex unmarried relationship in which the parties share their finances, the best approach is to come up with a specific monthly contribution amount from the non-filing partner.
If the individual debtor is in a same-sex marriage, the debtor can conceivably argue that the spouse’s income and finances should be included in the means test, or, alternatively, argue that the spouse is merely a roommate, considering that New York has yet to make the arrangement legal, and that the income does not need to be included.
Does the United States Trustee look any differently at bankruptcy petitions filed by debtors who have same-sex partners?
My experience has been that the United States Trustee’s office does not treat debtors in same-sex relationships any differently than debtors in straight relationships. However, I do get the feeling that they may want to avoid any politically-charged controversy involving gay rights issues.
My experience has been that the United States Trustee’s office does not treat debtors in same-sex relationships any differently than debtors in straight relationships. However, I do get the feeling that they may want to avoid any politically-charged controversy involving gay rights issues.
What’s down the road?
Eventually, Congress may recognize the existence of same-sex marriages and domestic civil unions in bankruptcy proceedings and provide statutory authority for dealing with such issues. Until that happens, we can only look towards the time when New York legalizes same-sex marriage.
Eventually, Congress may recognize the existence of same-sex marriages and domestic civil unions in bankruptcy proceedings and provide statutory authority for dealing with such issues. Until that happens, we can only look towards the time when New York legalizes same-sex marriage.
In October, Governor Patterson called same-sex marriage a civil right and announced that he wanted the legislature to take quick action and adopt such legislation.
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About the Author. Long Island Bankruptcy Attorney Craig D. Robins, Esq., is a regular columnist for the Suffolk Lawyer, the official publication of the Suffolk County Bar Association in New York. This article appeared in the November 2009 issue of the Suffolk Lawyer. Mr. Robins is a bankruptcy lawyer who has represented thousands of consumer and business clients during the past twenty years. He has offices in Patchogue, Commack, Woodbury and Valley Stream. (516) 496-0800. For information about filing bankruptcy on Long Island, please visit his Bankruptcy web site: http://www.BankruptcyCanHelp.com.
Written by Craig D. Robins, Esq.The United States Trustee Manual has some unusual and interesting provisions buried in its many pages. One concerns bringing your own security guards to the meeting of creditors in Chapter 11 bankruptcy cases. This is somewhat unusual considering that bankruptcy proceedings tend to be non-controversial and non-violent.
Section 3-5.14 of the Manual concerns security at section 341 meetings. It provides that if the debtor believes that there may be security problems at a particular meeting, it should notify the United States Marshal’s Service in advance.
In addition, the provision further states that the debtor may hire security guards to be present at the meeting to deter potential security problems.
I can’t imagine a situation where this would be necessary, but if a Chapter 11 debtor has plenty of enemies, this provision can provide some additional protection.
If a Creditor Shows Up at the Meeting of Creditors in Bankruptcy Court, What Questions Can They Ask?
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Written by Craig D. Robins, Esq.I previously wrote that it is highly unlikely that creditors will show up at the meeting of creditors, which is also known as the section 341 hearing. See Will Creditors Show Up For My Hearing In Bankruptcy Court? .
However, in the unusual instance that a creditor does attend, what questions can they ask the debtor?
Creditors are entitled to ask the debtor questions about the debtor’s assets and liabilities. However, they are not permitted to cross-examine the debtor as if the trustee was a judge.
Sometimes creditors will ask improper questions or become argumentative. In such instances, any experienced bankruptcy attorney will direct his or her client not to respond to the question, and will also admonish the creditor as to the proper scope of questioning. The trustee will probably do so as well.
Also, a creditor cannot use the meeting as a fishing expedition to ask the debtor very general questions. Although a creditor has the right to ask numerous relevant questions, there is not enough time to ask many questions at a meeting of creditors, and trustees will not permit it.
If a creditor wants to ask a lot of questions, they must request an additional examination hearing just for them, which is called a “section 2004 exam” because it is done pursuant to a Bankruptcy Rule 2004. Section 2004 exams are extremely rare and occur in less than one percent of all consumer cases.
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In the unlikely event there is a section 2004 exam, it would either be held at the Long Island Bankruptcy Court in Central Islip, or more likely, at the attorney’s office of the creditor or trustee requesting it.
Written by Craig D. Robins, Esq.A bankruptcy filing immediately stops bill collectors. The entire process typically lasts three and a half months.
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The first part in any bankruptcy case is preparing the petition and filing it with the bankruptcy court.
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Once a client retains us, it usually takes anywhere from a few days to a few weeks to gather the necessary information, prepare the petition, and have it signed, although in emergencies, this can be done in a day. Prior to filing, the debtor must also take a mandatory 30-minute credit counseling session, which can be done by telephone or on-line.
Once we file the petition, which we do electronically (right from our office into the court’s computer), the protections of the bankruptcy stay go into effect, making it illegal for any creditor to contact the debtor.
About one month after filing, there will be a brief meeting in the Bankruptcy Court called the meeting of creditors. This is when the trustee will ask the debtor questions.
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With most of our Long Island bankruptcy clients, attending the meeting of creditors is basically the end of their obligations in the bankruptcy process, although they also have to do a second, thirty-minute credit counseling session, called debtor education, which is also done over the phone or by computer.
In some cases, however, the trustee will request some additional documents to review, such as bank statements, tax returns or deeds.
Creditors technically have 60 days from the date of the meeting of creditors to file objections to discharge. This is very rare and occurs in far less than one percent of all cases filed. The date which is 60 days after the meeting of creditors is called the “bar date” because creditors are barred from filing any objections after that time.
Once the bar date passes, and assuming the debtor has taken the debtor education course (we have to file a certificate with the court indicating that), then the bankruptcy court clerk’s office will process the final paperwork and issue the order of discharge and close the case.
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In most instances, this usually occurs about three and a half months after the date the bankruptcy petition was filed. At that point, all dischargeable debt (such as credit card debt) has been forever eliminated and the debtor is on his or her way to enjoying their fresh, new financial start.
Written by Craig D. Robins, Esq..
Every consumer debtor who files for bankruptcy, be it Chapter 7 or Chapter 13, will be examined by the trustee at a hearing called the meeting of creditors. Also known as the section 341 hearing, it is held at the bankruptcy court about a month after the bankruptcy petition is filed.
If you live on Long Island, your hearing will be at the Central Islip Bankruptcy Court. If you live in Brooklyn or Queens, your hearing will be at the Brooklyn Bankruptcy Court.
During the examination, which frequently lasts just a matter of minutes, the trustee will question the debtor in the presence of their attorney. The trustee will ask questions about the debtor’s assets and liabilities, and the reasons why the debtor sought bankruptcy relief.
One key issue for debtors is: How much should you talk, in response to the trustee’s question?
The simple answer is: As little as possible.
Many of the questions the trustee will ask require a simple “yes” or “no” answer, and that’s all you should respond with: “yes” or “no”. Providing any additional information can only get you into trouble by opening up a can of worms that could lead to the trustee to ask even more questions.
If the trustee asks a question that requires that you explain something, you should do so accurately and honestly, but also as simply as possible.
I have seen many debtors, who, being a little nervous, say far too much, and provide additional information that the trustee did not ask for. Remember, only answer the trustee’s question and do not volunteer any other information. As long as you answer the question truthfully, then you’re O.K.
The only exception is if you have a very compelling reason as to why you fell into debt, such as being unable to work because of a serious illness. In such instances, you should talk about your compelling medical issues as much as possible.
Incidentally, assuming you have an experienced bankruptcy attorney who has prepared you for the meeting of creditors as we do, you should not be surprised by the trustee’s questions, as your attorney will have already reviewed them with you.
Written by Craig D. Robins, Esq..
For lack of a better term, I often have “repeat customers” coming back to see me at my Long Island bankruptcy law offices. It is unfortunate, but consumers who have totally eliminated all of their debts in a bankruptcy filing years ago can sometimes find themselves in debt again — especially in these difficult economic times.
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The other possibility is that they liked bankruptcy so much the first time around, they want to do it again.
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“Can I File Bankruptcy Again?”
This is the question I get from every one of these clients. Fortunately, the answer is YES! However, when the bankruptcy laws were changed in 2005, various waiting periods were imposed. In every case, you can file bankruptcy again; it’s just a question of how long you have to wait.
Four Important Notes About Filing a Second Bankruptcy Case
The first important note you need to know is that the waiting period starts from the date you filed your prior bankruptcy petition and ends on the date you filed your second bankruptcy petition.
The second important note is that you only have to wait if you received a discharge in your prior case. If you did not receive a discharge, you can file immediately. For example, if you filed a Chapter 13 bankruptcy case, and it was dismissed because you were unable to make payments, you do not have to wait at all to re-file a second case (provided, of course, that you meet other necessary criteria — speak to an attorney about this).
The third important note is if your prior case was a Chapter 13 bankruptcy case in which you paid back your unsecured creditors at least 70%, then you do not have to wait at all.
The final important note is that the waiting period does not prevent you from filing again; it just prevents you from getting a discharge. You can still file without waiting — you just do not get the benefit of the discharge. Why would you do this? If the sole purpose of re-filing is to stop foreclosure, you probably do not need to wait several years, as you still get the benefit of the bankruptcy stay in a Chapter 13 case as well as the ability to cure arrears with a payment plan.
The Waiting Periods Are 2, 4, 6 and 8 Years
Two Years
If your prior case was a Chapter 13 bankruptcy case and your new case will be Chapter 13, then the waiting period is only two years.
Four Years
If your prior case was a Chapter 7 bankruptcy case and your new case will be Chapter 13, then the waiting period is four years.
Six Years
If your prior case was a Chapter 13 bankruptcy case and your new case will be Chapter 7, then the waiting period is six years.
Eight Years
If your prior case was a Chapter 7 bankruptcy case and your new case will be Chapter 7, then the waiting period is eight years.
Important Note for homeowners in foreclosure: Even if you do not qualify to file again based on the above criteria, you can still file for Chapter 13 if the primary concern is curing mortgage arrears. In this instance, you will not receive a Chapter 13 discharge, but you will be able to cure all of your mortgage arrears and stop foreclosure.
The Above Waiting Periods Can be Tricky, So Get Good Bankruptcy Advice
Since the new bankruptcy laws made repeat filings somewhat complicated, it makes sense to meet with an experienced bankruptcy attorney who can give you the appropriate advice about filing a second bankruptcy.
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These Waiting Periods to Re-File Bankruptcy Apply In Every State
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A number of my blog readers located outside of New York have asked if these guidelines apply in their home state. They do. The waiting periods are the same no matter what state you file in.
For more info about repeat filings, see my full-length post that was published in the Suffolk Lawyer – Consumer Bankruptcy Debtors Face New Limitations for Repeat Filings . That post also contains info about specific issues concerning multiple filings in Chapter 13 cases.
What happens if a Chapter 7 debtor realizes that he or she forgot to include a creditor after the case has closed?..
Wrritten by Craig D. Robins, Esq.
If you’re a regular bankruptcy practitioner, this will sound all too familiar. You file a routine Chapter 7 bankruptcy petition, the case goes unremarkably, the debtor gets a discharge, and the case is closed.
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Then, sometime thereafter – it could be days, months or years – the debtor calls to say that he or she inadvertently omitted a creditor. The anxious client explains that this failure was an innocent mistake.
Then, sometime thereafter – it could be days, months or years – the debtor calls to say that he or she inadvertently omitted a creditor. The anxious client explains that this failure was an innocent mistake.
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Counsel might then instinctively think, “no problem.” The case can be reopened by motion, and an application can be brought to amend the schedule of creditors to include the omitted one. Right?
Counsel might then instinctively think, “no problem.” The case can be reopened by motion, and an application can be brought to amend the schedule of creditors to include the omitted one. Right?
Confusing Case Law Has Made Resolving this Issue Difficult
But, not so fast. There have been a great number of cases on this issue, with widely differing theories and conclusions. Some have held that you can re-open, and some have held that you can’t.
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Some bankruptcy courts routinely grant debtors’ motions to amend schedules to list previously omitted creditors. One line of cases focuses on whether there is prejudice to creditors or whether there was fraud.
Some bankruptcy courts routinely grant debtors’ motions to amend schedules to list previously omitted creditors. One line of cases focuses on whether there is prejudice to creditors or whether there was fraud.
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Some courts will refuse to permit the case to be reopened, because they believe omitted debts are non-dischargeable. Yet other courts will refuse to permit the case to be reopened because they believe that omitted debts are automatically discharged even if they are not listed, and therefore reopening the case serves no purpose.
Some courts will refuse to permit the case to be reopened, because they believe omitted debts are non-dischargeable. Yet other courts will refuse to permit the case to be reopened because they believe that omitted debts are automatically discharged even if they are not listed, and therefore reopening the case serves no purpose.
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Even in our own jurisdiction, I have seen different judges over the years have different policies with this issue. Understandably, there has been a good deal of confusion as to the appropriate remedy dealing with the problem of the omitted creditor.
Even in our own jurisdiction, I have seen different judges over the years have different policies with this issue. Understandably, there has been a good deal of confusion as to the appropriate remedy dealing with the problem of the omitted creditor.
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So what is the Long Island bankruptcy lawyer to do?
So what is the Long Island bankruptcy lawyer to do?
Recent Case Provides Some Guidance
In April, Brooklyn Bankruptcy Court Judge Dennis E. Milton addressed this issue in the case of In re: Coppola (96-21661). Although the decision contained a nice discussion of the two main approaches, it still left undetermined what the appropriate protocol is in this district.
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In that case, the debtor filed a motion to reopen his Chapter 7 bankruptcy case for the purpose of amending the schedule of creditors. He did this over 11 years after he filed his petition. The debtor hoped to include a debt owed to his former business partner.
In that case, the debtor filed a motion to reopen his Chapter 7 bankruptcy case for the purpose of amending the schedule of creditors. He did this over 11 years after he filed his petition. The debtor hoped to include a debt owed to his former business partner.
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The Court, however, after conducting a trial, determined that the debtor was not a credible witness and that the debtor’s failure to disclose the debt was either the result of recklessness or intentional design. Because of that, and the significant delay, Judge Milton denied the application.
The Court, however, after conducting a trial, determined that the debtor was not a credible witness and that the debtor’s failure to disclose the debt was either the result of recklessness or intentional design. Because of that, and the significant delay, Judge Milton denied the application.
Equitable Approach vs. Mechanical Approach
Judge Milton stated that in deciding motions to reopen bankruptcy cases where the debtor has failed to disclose a creditor on his schedules, courts have developed two approaches.
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Under the “mechanical approach” courts have denied motions to reopen no-asset cases, finding that the debt owed to an omitted creditor is discharged “as a matter of law.” Under this approach, there is no reason to reopen a bankruptcy case, provided that it is a no-asset case and the debt is not otherwise excepted from discharge.
Under the “mechanical approach” courts have denied motions to reopen no-asset cases, finding that the debt owed to an omitted creditor is discharged “as a matter of law.” Under this approach, there is no reason to reopen a bankruptcy case, provided that it is a no-asset case and the debt is not otherwise excepted from discharge.
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Based on my own familiarity with cases here, I would say that prior to this decision, most judges in the Central Islip Bankruptcy Court utilized this approach.
Based on my own familiarity with cases here, I would say that prior to this decision, most judges in the Central Islip Bankruptcy Court utilized this approach.
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Judge Milton then explained that under the “equitable approach,” courts consider whether the debtor’s omission was the result of fraud, recklessness or intentional design, or if it would prejudice the creditor’s rights. Good faith is an important element. Courts adopting this approach have held that motions to reopen no-asset cases to list omitted creditors should be liberally granted.
Judge Milton then explained that under the “equitable approach,” courts consider whether the debtor’s omission was the result of fraud, recklessness or intentional design, or if it would prejudice the creditor’s rights. Good faith is an important element. Courts adopting this approach have held that motions to reopen no-asset cases to list omitted creditors should be liberally granted.
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Judge Milton did not use the mechanical approach, and instead relied upon the equitable approach. He did so because the facts of the case (the debtor’s bad faith) would have produced an unfair result by permitting the debt to be discharged under the mechanical approach.
Judge Milton did not use the mechanical approach, and instead relied upon the equitable approach. He did so because the facts of the case (the debtor’s bad faith) would have produced an unfair result by permitting the debt to be discharged under the mechanical approach.
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The judge found the debtor lacked good faith as it appeared the debtor had known about the debt for years, but neglected to amend earlier. It also appeared that the debtor lied about this knowledge at trial. The court also found that the length of time that elapsed between the filing of the petition and the request to reopen the case also suggested bad faith and prejudiced the debtor.
The judge found the debtor lacked good faith as it appeared the debtor had known about the debt for years, but neglected to amend earlier. It also appeared that the debtor lied about this knowledge at trial. The court also found that the length of time that elapsed between the filing of the petition and the request to reopen the case also suggested bad faith and prejudiced the debtor.
Practical Tips
For most garden variety situations where the debtor omits a typical credit card debt and advises the attorney within a few years, the courts here will probably be unwilling to permit counsel to reopen the case to add the creditor, asserting that, under the mechanical approach, the debt is dischargeable. In such cases, consider sending a certified letter to the creditor stating that the debt has been discharged, together with copies of the notice of commencement and order of discharge.
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However, in situations where the creditor raises objections to this approach, be prepared to file a motion to reopen, in which case the court will probably consider the various factors in the equitable approach.
However, in situations where the creditor raises objections to this approach, be prepared to file a motion to reopen, in which case the court will probably consider the various factors in the equitable approach.
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About the Author. Long Island Bankruptcy Attorney Craig D. Robins, Esq., is a regular columnist for the Suffolk Lawyer, the official publication of the Suffolk County Bar Association in New York. This article appeared in the June 2009 issue of the Suffolk Lawyer. Mr. Robins is a bankruptcy lawyer who has represented thousands of consumer and business clients during the past twenty years. He has offices in Patchogue, Commack, Woodbury and Valley Stream. (516) 496-0800. For information about filing bankruptcy on Long Island, please visit his Bankruptcy web site: http://www.BankruptcyCanHelp.com.
Although Chapter 7 bankruptcy trustees seek to liquidate assets, they close most cases as no-asset cases
Written by Craig D. Robins, Esq.
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Most Chapter 7 bankruptcy cases are “no asset” cases. That means that the trustee examines the debtor and closes the case without administering any assets.
In these situations, the trustee has concluded that whatever assets the debtor has, whether they may include a house, car, money in the bank, or personal possessions, are either exempt, or have such a small non-exempt value that they are not worth administering.
When a bankruptcy case is a no-asset case, the trustee will file a certification pursuant to Federal Rule of Bankruptcy Procedure 5009 indicating various information as part of the process of closing the case. This is called a “no asset report” and it means good news for the debtor, because the trustee has decided to close the case without taking any further action.
Most Chapter 7 bankruptcy cases on Long Island are closed with no asset reports.
The no asset report includes statements from the trustee that he has neither received any property nor paid any money on account of the estate; that he made a diligent inquiry into the financial affairs of the debtor(s) and the location of the property belonging to the estate; and that there is no property available for distribution from the estate over and above that exempted by law.
In the report, the trustee further certifies that the estate of the debtor(s) has been fully administered, and that the trustee requests to be discharged from any further duties as trustee.
Most Long Island Chapter 7 bankruptcy trustees file their no asset reports within a few days or weeks after examining the debtor at the meeting of creditors.