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“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”
Issues Involving New Bankruptcy Laws
Written by Craig D. Robins, Esq.High Court Issues Decision on Attorneys’ Ability to Give Legal Advice to Bankruptcy Clients
The U.S. Supreme Court ruled today that a provision of the 2005 Bankruptcy Act, which bars attorneys from advising clients to take on more debt before filing for bankruptcy protection, is permissible in certain situations.
I first wrote about this case, Milavetz, Gallop & Milavetz v. United States, a year and a half ago when the Eighth Circuit Court of Appeals ruled that the provision was unconstitutional: Portion of New Bankruptcy Laws Declared Unconstitutional. Court of Appeals Strikes Down Provision which Prevented Attorneys from Advising Clients .
The Court of Appeals had ruled that the provision barring such advice was unconstitutionally broad and violated free-speech rights
Now, the Supreme Court unanimously reversed that ruling, but with a caveat.
Today’s decision, which was written by Justice Sonia Sotomayor, said the provision prohibiting such advice was valid, but should be read narrowly. She said that the law only prohibits attorneys from advising clients to abuse the bankruptcy system.
However, Justice Sotomayer indicated that it would be permissible for lawyers to advise clients contemplating bankruptcy to take on additional debt in certain situations. She wrote that bankruptcy lawyers could advise clients to refinance a mortgage or purchase a reliable car prior to bankruptcy on the grounds that doing so would reduce the debtor’s interest rates or improve the debtor’s ability to repay.
“It would make scant sense to prevent attorneys and other debt relief agencies form advising individuals thinking of filing for bankruptcy about options that would be beneficial to both those individuals and their creditors,” Sotomayor wrote.
Professionals specializing in bankruptcy “remain free to talk fully and candidly about the incurrence of debt in contemplation of filing a bankruptcy case,” Sotomayor wrote.
How This Decision Affects Bankruptcy Attorneys and their Clients
I often encounter a situation where my client’s car lease is about to end. Before the 2005 Bankruptcy Amendment Act (BAPCPA), I would have simply advised the client to immediately surrender the existing car and obtain a new car lease or car loan, as getting a new car is easier to do before filing for bankruptcy than after.
However, BAPCPA contained a provision which prevents attorneys from advising clients to incur debt in contemplation of bankruptcy. So, for the last five years, I’ve been technically unable to give clients such advice.
Today’s Supreme Court decision now clarifies that as long as my advice is not meant to abuse the system, it is considered appropriate. Of course, a bankruptcy attorney cannot advise a client to go out and charge up debt when the client has no reasonable expectation to repay it — providing such advice would be considered abuse, and therefore a violation of the statute.
I view the decision as a victory of sorts because it enables us bankruptcy practitioners to do what we’ve wanted to do all along: give honest and appropriate advice to clients in order to reach a beneficial result, as opposed to taking advantage of the system and defrauding creditors.
Bankruptcy Attorneys Are Debt Relief Agencies
Justice Sotomayer also upheld the BAPCPA’s requirement that attorneys make certain disclosures in their advertisements and ruled that attorneys who provide bankruptcy assistance are debt relief agencies within the meaning of the law.
Having to label bankruptcy attorneys as “debt relief agencies” seems silly, and serves no useful purpose. However, the requirement is rather benign, and more of a nuisance than anything else.
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About the Photo: That’s my son, Max. To see more Max, click: Super Ninja Bankruptcy Attorneys
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.Most clients who we represent do indeed pass the means test in Chapter 7 bankruptcy cases. I would say that at least seven out of eight people who desire to file for Chapter 7 bankruptcy on Long Island are eligible to do so because they pass the means test.
The means test is a formula and bunch of calculations designed to ascertain whether someone has too much income to be eligible to file for Chapter 7 bankruptcy. The Means Test is Often the Key to a Successful Chapter 7 Bankruptcy Case.
So What Are Your Options If You Do Not Pass the Means Test, and You Hope to File for Chapter 7 Bankruptcy?
Fortunately, there are several possibilities, and disposing of debt through a bankruptcy proceeding usually remains an option in one form or another.
Waiting to Become Eligible for the Bankruptcy Means Test Later
Sometimes, someone does not pass the means test because they received a large amount of money in the prior six-month means test period. The means test requires that you include all income that you received in the six full-calendar month period prior to filing. (You don’t include income that you received in the month that you file).
The most common example of a large amount of non-recurring income is a tax refund. Suppose you received the tax refund in May. Then you must count the tax refund in the means test calculation as long if you file your petition between June and November of that year. If you have to include the tax refund, it will have the effect of artificially boosting your income for that period.
However, if you just wait until December or later, then you will not have to include the tax refund as part of the six-month income for the means test calculation.
There are other reasons why waiting to file bankruptcy can help. Some people previously earned a larger amount of income several months ago, but no longer have the ability to earn at the same level for various reasons.
It might be that they were laid off (or their spouse was laid off); or they can no longer earn overtime; or their income will be reduced for other reasons like a new job that doesn’t pay as much.
In such instances, waiting a few months can mean the difference between passing the bankruptcy means test or not.
Engaging in Financial Transactions That May Make You Eligible Under the Bankruptcy Means Test
An experienced bankruptcy attorney is also familiar with all of the intricacies of the means test, and can often recommend other possible ways that may enable a consumer to become eligible.
For example, there is currently an issue as to whether an attorney can recommend to a client that he or she incur debt in contemplation of filing for bankruptcy (This issue is actually before the United States Supreme Court right now).
In any event, if a debtor obtains a new car loan or lease just before filing, the amount of the new monthly car payment can be included as a means test deduction, and this can possibly make the difference between passing the means test or not.
This is just one of several financial transactions that one can do that may make have the effect of qualifying you for Chapter 7 bankruptcy filing under the means test. A good bankruptcy attorney may also suggest other possibilities.
Filing Chapter 13 Bankruptcy Instead of Chapter 7 Bankruptcy
Most people who do not qualify for a Chapter 7 bankruptcy filing because they did not pass the means test can still file for Chapter 13.
If they do, they still get immediate debt relief through the same automatic bankruptcy stay that stops all creditor action in Chapter 7 cases. However, they will have to pay something to their creditors, usually over a five-year period of time. This is done by making monthly payments to a Chapter 13 trustee.
The good news, though, is that frequently, the amount paid back is a small fraction of the amount owed — sometimes as little as ten percent.
When No Bankruptcy Offers a Feasible Solution, Debt Settlement Can Be the Answer
Very few of our clients who desire to file bankruptcy do not qualify for one chapter or another. However, there is always an option for those who can’t file bankruptcy or do not want to file. That is debt settlement.
Debt settlement, which is not to be confused with debt consolidation, is when we negotiate settlements with the credit card companies (or their collection attorneys), often for less than 50%, and frequently for as little as 25%.
Doing so, however, requires the ability to fund lump-sum settlements, as the best credit card settlements are only available when the settlement amount is paid in full.
No One Ever Said that the Means Test in Bankruptcy Was Fair
To the contrary, the means test was the most controversial aspect of bankruptcy reform when the laws were changed about four years ago.
The means test tends to actually reward those with significant secured debt by making it easier to qualify for Chapter 7 filing. Thus, if you have a high mortgage and several car loans or car leases, it is easier to pass the means test and be eligible to file for Chapter 7 bankruptcy.
An Experienced Long Island Bankruptcy Attorney Can Evaluate Your Means Test Eligibility
The means test is rather complex and complicated. Retaining an experience bankruptcy attorney is your best way to ascertain whether you qualify for Chapter 7 bankruptcy filing, and if not, to learn what your other options are.
To see a bunch of other posts that I’ve written about the means test, please click : Information about the bankruptcy means test.
Written by Craig D. Robins, Esq.The two major reasons why people who know they need to file for bankruptcy, but put off doing so, is anxiety about filing, and concern about paying the legal fees.
Some consumers consider filing themselves. However, this can be a major mistake and create additional problems. Here’s why:
In every bankruptcy case, the debtor must appear before a court-appointed trustee. The trustee is not your friend. To the contrary, the essential purpose of the trustee is to investigate the debtor and determine if there are any assets that can be taken for the benefit of creditors. Meeting with an experienced bankruptcy attorney will enable the debtor to have his or her assets reviewed.
What many debtors do not realize is that certain conduct that may have occurred years before filing can have a major impact. For example, giving away assets or transferring an interest in real estate can result in significant litigation in the bankruptcy case. Such matters are regularly reviewed by bankruptcy counsel before a bankruptcy petition is filed. There are many reasons Why Consumer Debtors Can’t Transfer Assets Like a House or Car Before Filing Bankruptcy on Long Island .
The bankruptcy petition is written in plain English, so one would think that it is quite readable. However, a fully-completed petition in a Chapter 7 bankruptcy in New York, when including all of the various forms and schedules, can easily exceed 40 pages. The petition requires preparing numerous schedules and budgets. Proper information about debts and assets must be listed. Not necessarily an easy task.
Then, there are several dozen questions in a Statement of Financial Affairs that must also be answered. The creditors and their addresses must be listed not only ih a schedule of debts (that is broken into three separate categories) but also in a special format called a Matrix.
When Congress drastically overhauled the Bankruptcy Code in 2005, many new requirements were imposed. Now there is a complex and complicated means test, as well as the requirement for mandatory credit counseling. The Chapter 7 trustee as well as the Office of the U.S. Trustee reviews each and every petition to make sure all of the requirements under the new law are properly met. I reviewed issues under the new bankruptcy laws in several posts. Here’s one: Bankruptcy Judges Convene to Discuss New Bankruptcy Laws on their One Year Anniversary .
In addition, the means test is very tricky. Failure to properly prepare the bankruptcy means test can spell disaster as the United States Trustee can seek to have the bankruptcy case dismissed. The Means Test is Often the Key to a Successful Chapter 7 Bankruptcy Case .
Another important aspect is Determining Household Size for the Means Test . If the bankruptcy court determines that the debtor did not include the proper number of family or household members for the means test calculation, the means test eligibility can change, resulting in an abusive filing situation.
Consumers must also choose which Chapter 0f bankruptcy to file. If a consumer is seeking to stop foreclosure and cure mortgage arrears, A Chapter 7 filing won’t do the trick.
Of course, there are many books that explain how to do the process. They are all several hundred pages long. Yes, any American consumer can file their own bankruptcy petition. However, there are so many traps for the unwary that even attorneys who do not regularly practice bankruptcy often get their clients into hot water.
A good bankruptcy attorney will also prepare the client for the meeting of creditors. For example, How Much Should You Say at the Meeting of Creditors in Bankruptcy Court?
Every trustee I know on Long Island has expressed concern about those consumers who file bankruptcy without an attorney because these consumers often make serious mistakes with the procedure. Many consumers who file on their own get bad advice from a friend or relative. When it Comes to Bankruptcy, Don’t Listen to Uncle Joey .
Self-representation by pro-se debtors in bankruptcy matters can end up being penny-wise, but pound-foolish. This is one of Three Reasons Why a Chapter 7 Bankruptcy Case Can Go Bad .
Written by Craig D. Robins, Esq.Christmas bonuses are now less than 90 days away. This notion is important because receiving a Christmas bonus or year-end bonus for some people can adversely skew the bankruptcy means test and make them ineligible for Chapter 7 bankruptcy.
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The Bankruptcy Means Test
The bankruptcy means test is a very comprehensive, very complex series of calculations that the federal government designed to ascertain whether someone qualifies for Chapter 7 filing. It was designedas part of the new bankruptcy laws to prevent those consumers who have high incomes from being able to eliminate their debts in Chapter 7 cases. See my post, The Means Test is Often the Key to a Successful Chapter 7 Bankruptcy Case . The means test looks at all income you received during the prior six calendar months.
Year-End Bonuses Must Be Included in the Means Test if Received Six Months Before Filing Bankruptcy
Some people just barely qualify for Chapter 7 filing because they just barely pass the means test. If you are on the edge of being eligible, adding a significant year-end bonus into the calculation of income can preclude you from being able to file for Chapter 7 bankruptcy relief.
What this means: if you receive a substantial Christmas bonus in December, you might have to wait as many as six months before being eligible for Chapter 7 filing, because the means test requires that you add up all income received in the previous six calendar months.
Consider Filing Bankruptcy Sooner than Later If Expecting a Christmas Bonus
What you should do now: if you are considering filing for bankruptcy, and your income appears to be substantial, you should file bankruptcy before getting any year-end bonus.
How do you know if your income is considered substantial enough? The only way to find out is to consult with an experienced consumer bankruptcy attorney.
One additional caveat: if you know for sure that you are receiving a year-end bonus, then this should be reported on the bankruptcy petition budget schedules as anticipated future income. Doing so has no effect on the means test, but may nevertheless show that there is extra income in your budget. An experienced bankruptcy attorney can discuss how to deal with this concept.
Right now, so many companies are cutting back that there may be no way to know if you are going to receive a Christmas bonus this year. Thus, you may be better off filing sooner, rather than later, because at some point between now and Christmas, your employer may inform you that you will receive a year-end bonus.
Written by Craig D. Robins, Esq.
Several times in the past month this issue has arisen with my Long Island bankruptcy clients: Can they deduct their children’s college tuition expenses on the means test? The means test does not provide any specific category for doing so.
I previously addressed this issue a few months ago: Can You File For Bankruptcy and Still Pay Your Child’s College Tuition? I will now expand upon that prior post.
Unfortunately, those bankruptcy courts which have addressed this issue have found no statutory support for such deductions.
Certain educational expenses can be deducted on the means test. These include deductions for elementary and secondary education expenses, although the amount is limited.
The means test also permits debtors to deduct expenses for contributions to family members, but this category is also limited to elderly, chronically ill or disabled family members.
Accordingly, at this time, there does not appear to be any way to include a debtor’s contributions to their children’s college expenses on the means test.
The following are some recent cases involving college expense deductions.
In re Baker, No. 08-13987, 2009 Bankr. LEXIS 193 (Bankr. N.D. Ohio Jan. 30, 2009): Recognized that special circumstances might justify allowance of college expenses for adult children, but found that this case does not rise to that level because it is not apparent that the debtor has made a reasonable effort to mitigate her expenses as her adult child could live with the debtor rather than on her own.
In re Saffrin, 380 B.R. 191 (Bankr. N.D. Ill 2007): Held that a debtor may not deduct his daughter’s college expenses because the Code only allows education expenses related to elementary or secondary education.
In re Boyd, 378 B.R. 81 (Bankr. M.D. Pa. 2007): Found that a debtor may not expense her adult daughter’s college education because the Code does not expressly provide such deduction and it does not qualify as another necessary expense.
In re Hess, No. 07-31689, 2007 Bankr. LEXIS 3553 (Bankr. N.D. Ohio Oct. 15, 2007): Found that “[w]hile a parent’s desire to assist a child…pursuing a college degree is laudable, a debtor is not free to do so at the expense of her unsecured creditors.”
In re Featherston, No. 07-60296, 2007 Bankr. LEXIS 4578 (Bankr. D. Mont. Sept. 28, 2007): Held that a debtor may not deduct college expenses for adult children because children are not elderly, chronically ill or disabled as required by the Code to qualify as an acceptable contribution to family members.
In re Goins, 372 B.R. 824 (Bankr. D. S.C. 2007): Held that the Code limits education expenses to those related to elementary and secondary school.
In re Hicks, 370 B.R. 919 (Bankr. E.D. Mo. 2007): Found that a debtor paying college expenses of an adult child is a luxury, not a necessity, and that the Code does not provide any support for allowance of such deduction.
Written by Craig D. Robins, Esq.
The 2005 Bankruptcy Amendment Act changed how a debtor determines which state’s exemptions statutes to use. If you’ve lived in the same state for the two years prior to filing then you have nothing to worry about. You use the exemptions from that state.
However, if you moved from state to state during the prior two years, then some important rules apply.
The 730-day Rule
If you resided in the same state for at least 730 calendar days continuously (two years) prior to the filing of your bankruptcy petition, then you can use that state’s exemptions.
The 180-day Rule
If you did not live in your current state continuously for at least 730 days, then you must pick the state in which you lived most of the time during the 180 days prior to the 730 days. In other words, the state that must be selected is where you lived most of the time between 2 and 2 ½ years before filing.
The Default Rule
If no state qualifies using the above rules (i.e., you lived in abroad) or if the 180-day state requires current residency or domiciliary to use its exemptions (a tricky issue), then you must use the federal exemptions. The default rule will only apply if you did not live in any state during the 180 day period that began 730 days before filing, or if the state requires current residency or domiciliary.
If You Moved, Seek Advice From an Experienced Bankruptcy Attorney
The above rules can be somewhat confusing. If you moved between different states in the past two or three years, then you should consult with a knowledgeable bankruptcy attorney.
I’m Serious: BAPCPA Man Is Here Again
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Written by Craig D. Robins, Esq.
Bankruptcy Can Be Humorous!
In the past two weeks I posted the two debut strips of BAPCPA MAN, the new comic strip from New York bankruptcy attorney Steven Horowitz and and artist Gideon Kendall. Here is stip number three. BAPCPA MAN is designed to entertain both consumers and bankruptcy attorneys.
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Steve and Gideon originally came up with the well-received Bankruptcy Bill cartoon strips, about a hapless New York City bankruptcy attorney associate at a large bankruptcy firm.
“BAPCPA”, an acronym universally known to all bankruptcy attorneys, stands for The Bankruptcy Abuse Prevention and Consumer Protection Act. This is the new bankruptcy law that went into effect in 2005.
The strips seek to educate consumers, humor attorneys, and will also try to poke fun at some of the more ridiculous requirements of the new bankruptcy law.
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The strip is posted with permission from Bankruptcy Bill.
BAPCPA Man Makes Another Appearance
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Written by Craig D. Robins, Esq.Can Bankruptcy Be a Laughing Matter?
Last week I posted the debut of BAPCPA MAN, the new comic strip from New York bankruptcy attorney Steven Horowitz and and artist Gideon Kendall. BAPCPA MAN is designed to entertain both consumers and bankruptcy attorneys.
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Steve and Gideon originally came up with the well-received Bankruptcy Bill cartoon strips, about a hapless New York City bankruptcy attorney associate at a large bankruptcy firm.
“BAPCPA”, an acronym universally known to all bankruptcy attorneys, stands for The Bankruptcy Abuse Prevention and Consumer Protection Act. This is the new bankruptcy law that went into effect in 2005.
The strips seek to educate consumers, humor attorneys, and will also try to poke fun at some of the more ridiculous requirements of the new bankruptcy law.
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The strip is posted with permission from Bankruptcy Bill.
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.