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Filing Bankruptcy

Filing BankruptcyMany clients come to me who have tried to file bankruptcy on their own. The usual result of a client filing bankruptcy is that the bankruptcy gets dismissed. To start with, there is a prerequisite to filing a bankruptcy. The prerequisite is that an individual seeking to file bankruptcy must take a credit counseling course. If the individual does not take the credit counseling course his case can be dismissed. That is the first half of the requirement. The second half of the requirement is after the meeting with the bankruptcy trustee the individual who filed bankruptcy must take the second half of the credit counseling course.

Filing Documents with the Court

The filing of a bankruptcy requires the filing of a bankruptcy petition, a statement of financial affairs, a statement of current monthly income, supporting schedules, a means test calculation and a statement regarding the individual’s social security number. In theory a debtor must list his or her income, assets and debts and show that he or she has negative cash flow.

Chapter 13 or Chapter 7?

The person filing bankruptcy must decide whether a Chapter 13 or a Chapter 7 bankruptcy is appropriate. Individuals who seek to save their homes usually try to file a Chapter 13 bankruptcy. However, to qualify for filing a Chapter 13 the individual filing bankruptcy must meet certain financial requirements.

Re-affirmation of Debts

When an individual files bankruptcy he or she must provide the court with their intention as to whether they are going to re-affirm certain debts such as, mortgages on their home or car loans.

Hire an Attorney

While it may look like it is just involved with a series of filing a number of forms, extremely few individuals can correctly file a bankruptcy on their own and navigate the system through the court.

schlissel-headshotElliot S. Schlissel, Esq. is the managing partner of Schlissel DeCorpo LLP. Their office regularly files bankruptcies for individuals in the Metropolitan New York area. He can be reached for a free consultation at 800-344-6431 or e-mailed at Elliot@sdnylaw.com.

Student Loan Considered A Special Circumstance Under Chapter 7 Bankruptcy

new york bankruptcy lawyerA bankruptcy Judge in the Western District of New York found a debtor’s non-dischargeable student loan constituted “a special circumstance” under the Bankruptcy Law. A special circumstance could overcome the statutory presumption of abuse upon filing bankruptcy. This special circumstance would allow the student loan to be discharged in bankruptcy.

Student Loans Are Generally Not Dischargeable In Bankruptcy

The Bankruptcy Abuse Prevention Consumer Protection Act of 2005 created barriers for debtors to file bankruptcy relief under Chapter 7. This law required debtors filing a Chapter 7 bankruptcy who had monthly income higher than the median income in the State to be subject to a “means test“. This means test determines if the debtor is capable of paying back at least a portion of his or her debts. In this event the debtor cannot file bankruptcy under Chapter 7. For a debtor to file Chapter 7 bankruptcy when he or she can’t meet the means test, they must show “special circumstances” that prevents the debtor from having sufficient income to allow him or her to file a Chapter 13 bankruptcy and have a repayment plan.

In the case of a debtor named Jeffrey Powell, he decided to file bankruptcy because he could not pay back his student loans and his other unsecured debts. His disposable income was $697 and the student loan obligations were $658. In his case, if the student loans were paid, he would only have $40 left for payment of all other financial obligations. The court held a surplus of such a small amount did not amount to an abuse of the Bankruptcy Act. The court found the debtor did not have an extravagant lifestyle.

Student Loans Not Dischargeable

Student loans generally are not dischargeable in either a Chapter 7 or Chapter 13 bankruptcy. Under the Bankruptcy Code, a student loan is dischargeable “if the obligation imposes an undue hardship on the borrower or the dependents.” However, the bankruptcy statute does not define the term “undue hardship”.

Bankruptcy Judges are increasingly finding if an individual files bankruptcy and the student loans are not discharged, the student loans accrue interest during the term of the filing of the bankruptcy. This conflicts with the intent of the bankruptcy statute to give the debtor a fresh start.bankruptcy assistance

Foreclosure And Your Credit Score

foreclosure defense and bankruptcy attorneysIf your home goes into foreclosure it will have a negative impact on your credit score. However, the nature and extent of the negative impact may be different than what you believe it to be. When a financial institution brings a foreclosure lawsuit related to a mortgage default, the institution will normally report to the credit agency there is a foreclosure or a home has been foreclosed upon. This information on your credit score will not necessarily impact on the outstanding balance it shows you owe on the mortgage. The credit report will most likely continue to show the entire outstanding balance of your mortgage being due and owing on your credit report. This negative credit material can stay on your credit report for seven years.

Sales Of Homes In Foreclosure

At the end of the foreclosure process, if the bank is a successful, your home will be sold. In the event the sale of your home at the foreclosure sale does not pay off the entire outstanding debt due in owing on your mortgage, the remaining balance may be shown on your credit score as a “deficiency “. The financial institution may be able to bring a proceeding to collect on this deficiency amount. If they do not take action to collect this deficiency they can report it to the Internal Revenue Service as a forgiven debt. This will cause you to receive a 1099 showing the deficiency as income to you in that tax year. This will cause you to pay income taxes on this deficiency debt!

Foreclosures On Second Mortgages

When the financial institution forecloses on a first mortgage, the second mortgage may continue to be maintained on your credit report by the credit reporting agency. The second mortgage will not show it was foreclosed on because it is a separate and distinct financial obligation.

Bankruptcy And Foreclosure

It may be necessary to file a Chapter 7 bankruptcy to eliminate deficiency judgments related to first mortgages and the personal obligations on a second mortgage. To better understand the inferences and long-term impact on your credit score it is strongly suggested to contact either a bankruptcy lawyer or foreclosure lawyer.foreclosure and bankruptcy  assistance

FHA Rescues Homeowners

The Federal Housing Authority (FHA) is coming to the rescue of more than 3000 homeowners whose homes were damaged by Superstorm Sandy. Under a new program, the FHA is allowing these homeowners whose homes were damaged by Superstorm Sandy to apply for mortgage loan modifications. The purpose of this program is to help reduce the monthly mortgage payments of homeowners whose homes were damaged by Superstorm Sandy.

Mortgage Moratorium Ends

Initially, after Superstorm Sandy hit the northeast, there was a mortgage moratorium program established. That program is coming to an end. However, homeowners whose homes have never successfully been repaired are still entitled to the moratorium under this former program. At a news conference which took place at New York Senator Charles Schumer’s Manhattan office, United States Housing and Urban Development Secretary Shaun Donovan stated “this will give homeowners the breathing room and they need.” “Many are still struggling and it is heartbreaking to know that people who lost their homes because of this natural disaster can now lose their homes from a man-made disaster: a foreclosure.”

Loan Modifications

A new loan program will now allow more than 1/4 million New Yorkers to obtain “stream lined loan modifications.” This program will apply to areas affected by Superstorm Sandy.

Additional measures to help families of damaged homes are being considered by Fannie Mae and Freddie Mac. New York Senator Charles Schumer is also urging private financial institutions to develop programs of a similar nature to assist homeowners whose homes were damaged by Superstorm Sandy recover from this difficult situation. Senator Schumer specifically stated “it is time for the banks to step up and assist homeowners who have been doing the right thing all along.”

About The Author

foreclosure assistanceElliot S. Schlissel is the former President of the Commercial Lawyers Conference of New York. He has more than three decades of legal experience litigating foreclosure related cases, dealing with predatory lending issues and foreclosure related bankruptcy problems. Elliot and is dedicated staff of attorneys are available seven days a week to talk to prospective clients. Call for a free consultation at 1-800-344-6431, 516-561-6645 and 718-350-2802.

Strategic Defaults

Walking Away From Your House

Strategic default is the new concept in how homeowners are dealing with mortgages on homes that are underwater. A strategic default is simply when you stop paying your mortgages . Many homeowners are considering strategic defaults on their mortgages. It is estimated that over eleven million homes are now underwater in America. More than three and a half million homeowners are behind in their mortgage payments. There are already a million and a half homes currently in the foreclosure process.

The New York Federal Reserve estimates that there are an additional 3.6 million foreclosures that will be taking place in the next few years. Does it make sense to keep paying a mortgage on a home where it will be many years before the home regains its former value? A columnist named James Surowiecki recently wrote in the New Yorker Magazine that paying mortgage payments for a home that is underwater is “setting a pile of money on fire every month”.

Mortgage Payments: A Moral Quandary?

For some families there is a moral quandary in making the decision to stop making mortgage payments on a home that is underwater. Should families be embarrassed or feel they are going to lose respect as they break their mortgage contract obligations and stop paying their mortgage? Companies utilize the bankruptcy process to default on their financial obligations when they feel it is appropriate. So why shouldn’t individuals consider it is a business decision as to whether they should pay their mortgage payments when their home is underwater and it is unlikely it will ever get back to its former value at anytime in the near future?

Penalties For Not Paying Your Mortgage

Obviously the first penalty is that your home will eventually go into foreclosure. However the foreclosure process in the State of New York, as in most other states, is a slow process. This means you won’t be forced to leave your home in the short run.

The second issue involves your credit score. Not making mortgage payments will definitely have a negative impact on your credit score. It is estimated that your credit score will go down a minimum of 85 to 100 points if you default on making mortgage payments.

Strategic default is not something to be taken lightly. It should be considered as a last option. Your first option should be to make a mortgage modification. Mortgage modifications allow you to rework your mortgage to more favorable terms.

If you decide to strategically default you should save the funds that had formally been allocated to make mortgage payments. This will give you the ability to retain an attorney to fight the foreclosure in court. It will also give you money for a down payment on an apartment that you may need to rent down the line.

Tax Implications of Strategic Defaults

If a portion of your debt is forgiven by a financial institution the forgiven amount is considered taxable income by the Internal Revenue Service. You may end up receiving a 1099 from your bank that you will have to declare on your income taxes. You should talk to a tax professional with regard to how to handle this tax issue.

Strategic defaults are not for everybody but more and more people are making this choice!

Foreclosure Lawyers

If your house is in foreclosures we can help you. The Law Offices of Elliot Schlissel have been helping New Yorkers stay in their homes. To start with we can help you with the mortgage modifications. We are familiar with the problems mortgage modification programs have. We can also assist you with a forensic audit with regard to your mortgage. Should you be served with a summons and complaint we will appear in court for you and attend settlement foreclosure conferences. During these conferences we will press the financial institutions to cooperate in giving you a mortgage modification. We will submit answers to the formal compliant submitted by the banks. Our answers will allege defenses such as defective mortgages, defective foreclosure law suits, predatory lending, foreclosure fraud and other real estate related defenses.

We will advise you with regard to all of your foreclosure options. One of your options may be a foreclosure related bankruptcy. There are two types of bankruptcies that can be utilized in foreclosure. A Chapter 7 bankruptcy and a Chapter 13 bankruptcy. There are benefits and drawbacks to each of these bankruptcies. When you file bankruptcy it immediately stops creditor harassment. All debt collection activity has to come to an end when a creditor receives notice of a bankruptcy filing. Foreclosure proceedings also are immediately frozen upon the filing of a bankruptcy. At the end of the bankruptcy process you receive a discharge of your debts. We educate our clients with regard to reestablishing credit and the end of the bankruptcy. There are many bankruptcy myths such as you will never receive credit again that are simply untrue. At your initial free consultation with our office will we describe the bankruptcy process. We will explain to you what bankruptcy exemptions are and why it may be necessary to file bankruptcy. Feel free to call us for a free consultation 1-800-344-6431, 516-561-6645 and 718-350-2802.

How Debt Collections Work

debt-150x108If you have debt, such as credit cards, there is a timeline followed by your creditors in collecting these debts.

Thirty Days

If you miss a payment on one of your debts by more than thirty days, the creditors will immediately start making phone calls and sending you letters about paying the debt.In some situations, the lender will also report to credit reporting agencies that you were more than thirty days behind on the payment of a debt. If you should find that you cannot

make a payment, you should call the creditor and explain your financial circumstances and advise the creditor when a payment will be forthcoming.

Sixty Days

You now are two months behind in paying the debt. This will cause credit cards to go into collection activity. This is an area maintained by the creditor to deal with nonpayment of credit cards. The amount of collection activity will become more forceful. The creditors may warn you about some type of delinquency action to be taken against you. The creditor will contact credit bureaus and provide them with information that you are sixty days behind. It is still not too late to contact your creditor and try to work out some type of payment plan.

Ninety Days

You are now three months behind on paying your debt. The creditor, in most situations, will cancel or suspend your credit privileges. You will definitely be reported to a credit bureau concerning your delinquency. Late fees and interest will be charged to your account. This may be the last time you have an opportunity to reactivate your account by entering into a payment plan. The creditors will become confrontational if a payment plan is not worked out.

Charge Off and Litigation

After more than ninety days, a creditor can charge off your debt as un-collectable. This may trigger the matter being sent out to a third party collection agency or collection lawyer. The collection agency or collection lawyer will send aggressive letters and make very aggressive phone calls trying to motivate you to pay your debt. They will also threaten

you with legal action if the debt isn’t paid. Should the collection activity by the collection agency be unsuccessful, your debt may be turned over to a collection lawyer who will institute a lawsuit against you. Should you receive a summons and complaint with regard to the debt, it is important you either go to court and submit a written answer to the summons and complaint or retain counsel to represent you.

debt1-150x150Bankruptcy

If you have multiple creditors chasing you regarding the payment of credit cards or other debts, bankruptcy may be an option for you. There are two types of bankruptcies available to individuals, which are Chapter 7 and Chapter 13 bankruptcies. The filing of a bankruptcy will stop debt collection activity, stop foreclosures from moving forward and assist you in re-establishing your credit in the long run. Chapter 13 bankruptcies, in certain situations, can also eliminate second mortgages.

There are many myths that people believe regarding bankruptcy that are simply untrue. Should you have questions regarding debt collection activity or bankruptcy issues, feel free to call the Law Offices of Schlissel DeCorpo. Our office has filed hundreds of bankruptcies and assisted our clients in numerous lawsuits against them regarding alleged debts. Feel free to call us for a free consultation

Bankruptcy, Foreclosure and Divorce

bankrupt1-150x150

If one of the parties to a divorce action files for divorce, can he or she later file bankruptcy during the course of the divorce? The answer to this question is yes. Now let’s change the circumstances a bit. A husband and wife are involved in a divorce and during the course of the divorce, the husband is ordered by the court to make mortgage payments. Unfortunately, he falls behind in the mortgage payments. Is filing for bankruptcy the best route to stop the house from being foreclosed upon? The answer to this question in many instances is yes.

Chapter 13 Bankruptcy

In a Chapter 13 bankruptcy, the debtor sets up a plan to reorganize his or her debts. The plan is designed to bring the debtor up to date on his or her debts during a period of three to five years. The amount of the payment pursuant to the bankruptcy plan is based on the debtor’s income.

Debts are classified into various types within the plan. Unsecured creditors, such as debts related to credit cards, may be paid on a percentage of what is owed. Interest and penalty payments to these creditors are eliminated in the plan.

Mortgage Payments

Secured creditors, such as mortgage holders on real estate, are paid 100% of what they are owed under the plan. Banks holding mortgages who have refused to accept payments from the debtors are now forced to accept mortgage payments from the debtors under the bankruptcy plan.

Bankruptcy Protection for the Spouse

Under the bankruptcy law, child support and spousal maintenance payments are non dischargeable debt. This means a father obligated in the divorce to pay spousal maintenance and child support to his wife cannot eliminate these debts. Financial obligations of the payer’s spouse, under court orders of the divorce to make mortgage or home equity line payments, are considered to be part of the spousal maintenance and child support payments and these obligations are also non dischargeable in bankruptcy.

Chapter 13 bankruptcies can successfully be utilized to give a spouse who has obligations to make mortgage payments and pay spousal maintenance and/or child support an opportunity to come current in these obligations, save the home from being sold in foreclosure and comply with the state court order.

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Foreclosure Defense

The foreclosure defense lawyers at the Law Offices of Schlissel DeCorpo have been representing individuals with financial difficulties for more than three decades. Our office helps our clients prepare mortgage modification applications. We also deal with mortgage modification programs that fail to meet our clients’ needs. We defend foreclosure lawsuits for our clients. We attend foreclosure court conferences, litigate defective foreclosure lawsuits, predatory lending issues, defective mortgages and bad faith on behalf of financial institutions. We also assist our clients with other types of real estate litigation. Should bankruptcy be the route to dealing with our clients’ problems, we file both Chapter 7 and Chapter 13 bankruptcies on behalf of our clients. Feel free to call us for a free consultation at 1-800-344-6431, 516-561-6645 or 718-350-2802.

The New Health Care Law – Affordable Care Act

healthThe Republicans in Congress are challenging the health care law passed in 2010 by President Obama and the Democratic controlled Congress. Question: How does the health care law affect you?

Americans between the ages of fifty and sixty-four will be significantly affected by the Affordable Care Act (ACA). Unfortunately, due to the economic slowdown in the United States, more and more Americans between the ages of 50 and 64 have not been able to afford health insurance.

One Million Americans Lose Health Insurance

It is estimated that more than one million Americans between the ages of fifty and sixty-four lost their health insurance during the 2009 calendar year. Altogether, approximately ten million Americans between the ages of fifty and sixty-four no longer have health insurance. As long as unemployment remains high, the number of Americans in this age group without health insurance will continue to rise. Americans between the ages of fifty and sixty-four often have health problems that cannot be addressed without health insurance. Recent bankruptcy filings indicate that more and more Americans are being forced into bankruptcy because of spiraling health care bills that they cannot afford to pay.

More Americans Given Healthcare Coverage

When the Affordable Care Act comes into effect in the year 2014, approximately seven million Americans who currently don’t have health insurance will obtain subsidized health insurance. Starting in the year of 2014, the Affordable Care Act will expand eligibility requirements under Medicaid to cover adults who have incomes below 133% of the Federal poverty level. The Federal Government will have to provide significant cash payments to the states to meet demands for this increased medical insurance.

Starting in the year 2014, insurance companies will no longer have the ability to reject individuals with preexisting medical conditions or to charge individuals who currently are suffering from illnesses higher premiums for medical insurance.

There are a number of court challenges to the Affordable Health Care Law. Several Federal Judges have set aside the law for various reasons. It will be interesting to see how the Appellate Federal Courts deal with this issue.

New York Wills Lawyers

At the Law Offices of Schlissel DeCorpo, we have five attorneys who assist our clients in Wills, Trusts and Estate matters. Our office has been providing our clients with valuable assistance regarding issues concerning probating of Wills, drafting of Wills, Estate Taxes, Estate Planning, Will Contests and Revocable and Irrevocable Trusts for more than three decades.

Elliot S. Schlissel, Esq. is a member of the National Academy of Elder Law Attorneys. He provides his clients with detailed Elder Care legal services involving Medicaid planning, nursing home issues, special needs trusts and issues involving special children. If you have a probate, Wills, Trusts and Estates or Elder Care matter, we are the law firm that can help you. Call us at 1-800-344-6431; 516-561-6645 and 718-350-2802.

JP Morgan Chase Suspends Foreclosure Activities

foreclose-150x150JP Morgan Chase previously announced that it was seizing all further legal action on 56,000 pending foreclosure proceedings. The bank is taking this action due to the fact that its employees have improperly prepared legal documents related to foreclosure proceedings.

These suspensions took place in the 23 states where foreclosure lawsuits must be approved by a court.

New York is one of these states! Chase Manhattan has started an investigation examining their employees actions in foreclosure proceedings. Chase is the third financial institution to take this action. GMAC and Bank of America have already taken similar actions.

Chase has acknowledged that their employees who signed numerous documents related to foreclosure proceedings have signed so many documents that they are now referred to as “robo-signers”.

Lawyers in foreclosure proceedings representing homeowners have uncovered that individuals have signed as many as 10,000 affidavits a month. Query: Is it possible they actually read these affidavits? These affidavits indicate that the person who prepared them reviewed the mortgage file. There was not sufficient time to review the mortgage files.

The courts expect numerous foreclosure proceedings brought by Chase Manhattan to be contested by attorneys who represent the homeowners. Due do uncovering this new information, it is expected that courts will look more carefully at the documents in proceedings brought before them involving the foreclosures of these homes. The solution to this foreclosure crisis is for the banks to become more realistic, more accessible and more willing to provide the homeowners with mortgage modifications.

Our law office can help you with foreclosure defense, foreclosure conferences, mortgage modifications, Chapter 7 bankruptcy and Chapter 13 bankruptcy.

Bank of America and Foreclosures

BankOfAmericaBank of America is the largest bank in the United States. They have recently taken action to stop moving forward with foreclosures throughout the United States. Allegations have arisen with regard to how the bank is handling the foreclosure process. Bank of America is among many large financial institutions which also include Chase Manhattan and GMAC that are reexamining how they handle foreclosures.

Document Problems

Bank of America, GMAC and JP Morgan Chase have uncovered problems with the documents they have utilized in processing foreclosure proceedings. Attorneys representing homeowners who homes have been foreclosed upon are developing new and innovative defense techniquess to deal with the document crisis created by the financial institutions.

Attorney Generals in California, Connecticut and Florida are investigating the materials submitted by various financial institutions in foreclosure proceedings. The Associated Press recently reported that a Bank of America official acknowledged that she signed up to 8,000 foreclosure documents per month without reading them. Consumer advocates claim that there are numerous problems with the foreclosure process.

Should you find your home in foreclosure, please call our offices 1-800-344-6431 or contact us by email. Our law firm has represented individuals in debtor/creditor matters for more than 30 years. We are experts in handling foreclosure defense, foreclosure conferences, mortgage modifications, Chapter 7 bankruptcy and Chapter 13 bankruptcy.

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