Bankruptcy Law Archives

Exceptions to the Bankruptcy Automatic Stay

Most people realize that when a bankruptcy is filed, the automatic stay stops most lawsuits against the debtor. However, there are exceptions under Section 362(b). For example, a lawsuit can proceed against someone that filed bankruptcy in order to establish paternity. Lawsuits to enforce child support obligations or visitation rights can also be brought even though the defendant filed bankruptcy.

Business Debt Exception To Means Test

When the Bankruptcy Code was amended, one of the purposes was to make it more difficult for high income earners to eliminate their debt in a Chapter 7 bankruptcy. As a result, sections were added to the Bankruptcy Code which essentially  add some limitations on expenses if you make more than the average family your size in your state. However, the "means test" as it is called, only applies if the debts are "primarily" consumer debts. If your business related debts, such as debts from personal guarantees for a failed business, constitute more than 50% of your debt, the means test does not apply. This generally makes it easier to fit into a Chapter 7 bankruptcy. New Jersey courts may interpret whether a debt is a consumer or business debt differently from other states, so it is best to consult an experienced bankruptcy attorney to make this determination

Am I eligible to file Bankruptcy?

Whether you are from Pennsauken NJ or Cherry Hill New Jersey or Northeast Philadelphia Pennsylvania, individuals often come into my office and ask the same question. Am I eligible to file bankruptcy? Most times individuals are eligible to file bankruptcy. There are some limits. For example, section 109 of the bankruptcy code provides that to file a chapter 13 bankruptcy you cannot have more than $394,725.00 in unsecured debt or more than $1,184,200.00 in secured debt. If you do, you cannot file chapter 13, but you can file an individual chapter 11. Sometimes the real question is can they receive a discharge. For example, if an individual has filed a chapter 7 bankruptcy within the last 4 years, they are not eligible to receive a discharge in a chapter 13. However, that does not prevent the individual from filing a chapter 13. If they are behind with their mortgage, a chapter 13 can be used to pay mortgage arrears over 3 to 5 years even if they are not eligible for a discharge. Regarding chapter 7, a discharge will not be received if a chapter 7 is filed within 8 years of a prior chapter 7. In addition, the ability to file a chapter 7 and receive a discharge may be effected by other factors such as income compared to expenses. If an individual has too much disposable income, they could be forced to convert to chapter 7 or have their case dismissed. Equity in assets is also a factor in determining whether someone should file a chapter 7 or chapter 13 bankruptcy. Whether bankruptcy is an option and which type of bankruptcy are important issues that should be discussed with an experienced attorney before deciding how to proceed.

BANKRUPTCY MEETING OF CREDITORS

The bankruptcy code requires that a Trustee appointed by the US Trustee's office conduct a meeting of creditors. In a simple Chapter 7 or Chapter 13 meeting of creditors, typically no creditors appear. Business bankruptcies are more likely to have creditors appear. At the meeting, the trustee will ask the debtors questions under oath about their assets, liabilities, income and expenses. Your attorney will be there with you and generally will review your case with you prior to the meeting. A debtor may plead the fifth to avoid testfying about a pending criminal matter but the failure to testify could prevent the debtor from receiving a discharge. Section 344 of the Bankruptcy Code provides that a person required to testify can seek immunity, although whether it would be granted would be decided on a case by case basis.

Limited Stores Plans for Ch 7 Bankruptcy Liquidation

Limited Stores has decided to file for Chapter 7 bankruptcy liquidation.  Limited has owned Victoria's Secret (Victoria's Secret Beauty), Lane Bryant, Henri Bendel, Lerner, Abercrombie & Fitch (1988 - 1996), Express, Limited Too (renamed Justice in 2008), Bath & Body Works (in 1998 stores were converted to The White Barn Candle Company), and Structure.

NEW JERSEY RETAILERS FILING BANKRUPTCY IN 2016

A number of large retailers with stores in New Jersey have filed for bankruptcy in 2016.  Bob's Stores with locations in Freehold, Springfield Twp, and Totowa, New Jersey filed in April 2016.  Golfsmith with locations in Mount Laurel, New Jersey filed in September 2016.  Fairway Markets with locations in Woodland Park, Paramus, and Fort Lee, New Jersey filed in May 2016.  Also, filing were Eastern Mountain Sports with a Moorestown NJ location and Aeropostale with a Cherry Hill NJ location, among others.  Sometimes the filing is to reorganize by filing Chapter 11 and by closing less profitable locations.  Sometimes a Chapter 7 is filed where the stores are liquidated.

Update on Real Houswives of NJ Star's Bankruptcy Case

Teresa Giudice, Real Housewives of New Jersey co-star and New York Times best-selling author of Skinny Italian, Fabulicious!, and Turning the Tables, served a year-long sentence for bankruptcy fraud in 2015. 

Bankruptcy Supreme Court Case: Czyzewski v. Jevic Holding Corporation

Wednesday December 7th, 2016 the U.S. Supreme Court heard arguments in the case Czyzewski v. Jevic Holding Corporation (a Delanco, NJ based company). http://www.nytimes.com /2016/12/06/ business/dealbook/ supreme-court-case- has-bankruptcy- world-on-edge.html?_r=0  This case questions the need for 'absolute priority rules' in Chapter 11 bankruptcy cases, which protect intermediate creditors from losing claims on assets to senior and junior creditors.  Intermediate creditors include Jevic Holding Corporation's 1,785 workers (drivers) and the $8MM in pay owed to these workers.  Nineteen law professors signed a 'friend-of-the-court brief' urging the Supreme Court to side with Jevic's workers and maintain 'absolute priority rules'.  Opponents of 'absolute priority rules' argue paying small creditors fractions of their claims could be in the best interests of a majority of the company's creditors.  This argument persuaded a bankruptcy judge and a divided panel of the U.S. Court of Appeals for the Third Circuit.

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