What Property Can You Keep Under Chapter 7 in Pennsylvania? When a person considers filing bankruptcy in Pennsylvania, they often fear that the bank will take everything they have. Thankfully that’s an unfounded fear. While Chapter 7 bankruptcy does mean liquidating assets to satisfy debts, it does not mean your creditors can take the shirt off your back.  It is only referring to assets that are non-exempt. In a typical Chapter 7 Bankruptcy filing, a Bankruptcy Lawyer is usually able to exempt all of a person’s assets There are Federal and State protections for people filing bankruptcy. Some personal property and assets are completely exempt from liquidation, while others are exempt up to a certain value. Federal vs State Exemptions The Federal Government has standard bankruptcy exemptions available to every citizen in every state. Each state also offers their own exemption scheme that can be used when filing for bankruptcy under Chapter 7. There are advantages to both sets of exemptions, but you can only claim one set when filing for Chapter 7 bankruptcy. Your bankruptcy lawyer can help you choose which set of exemptions is best for your situation. Do you have questions about filing bankruptcy in the Philadelphia area? Call David M. Offen at (215) 625-9600 or schedule a consultation through his website. Pennsylvania’s Chapter 7 Exemptions Homesteads The State of Pennsylvania does not offer any specific exemptions for homeowners filing a Chapter 7 bankruptcy. That means your home could be liquidated to pay off your debts if you use the State exemptions. Protections for Spouses Spouses enjoy some limited protections with regards to their marital home. Pennsylvania allows couples to own their home in tenancy by the entirety. This is a special kind of property title where both spouses are treated as owning 100% of the home. If a house is owned in tenancy by the entirety, debts owed by a single spouse cannot be settled by liquidating the home. Only joint debts can be used as grounds to liquidate the marital home.  That means if a house is owned as tenants by the entirety and only one spouse owes $50,000 in credit debt, the house can be completely protected. Personal Property The Pennsylvania bankruptcy exemption set allows for a $300 wildcard exemption for personal property.   Pennsylvania does not have a specific exemption for personal vehicles. They can be liquidated to pay creditors. Work uniforms and their accouterments are exempt from liquidation   Bibles and schoolbooks are exempt as well. Most tools can be liquidated, but sewing machines are specifically exempt. Public Benefits Workman’s compensation, veteran’s benefits, and unemployment benefits are all exempt from liquidation in Pennsylvania. Retirement Funds and Pensions Any retirement fund is exempt up to a deposit of $15,000 a year, but the exemption cuts off 12 months prior to the filing of bankruptcy. Pensions earned by public servants are exempt from liquidation. This includes city and state government workers of all types, public teachers, police, and firemen. Insurance Benefits Up to $100 per month of insurance or annuity payments are exempted. Some insurance policies state in their terms that they cannot be used to satisfy creditors. Conditional on the policy terms, life insurance with such terms might be totally exempt from being used to pay creditors through Chapter 7. Federal Chapter 7 Exemptions Federal bankruptcy exemptions are much more generous with personal property protection. Homesteads There is a much better chance of keeping your home with the Federal exemption set. It allows for $23,675 of the equity that you have built in your home to be exempt from liquidation. Vehicles You can claim an exemption of up to $3,775 equity in your vehicle. Personal Property You can claim exemptions of up to $600 per item on household goods. Household goods up to a total of $12,625 are exempt. You can keep up to $2,375 in items necessary to perform your job. This can include tools, books, computers, or other accouterments. Federal Chapter 7 exemptions allow you to keep $1,600 in jewelry and $1,250 in other property. Up to $11,850 of any unused exemption in your home can be applied to other personal property. Married Couples Can Double Their Exemptions. When a married couple jointly files for Chapter 7 bankruptcy together, their exemptions stack. For instance, claiming federal exemptions, a married couple could keep $47,350 of equity in their home during the bankruptcy.  That means if your home is worth $140,000 and you owe a mortgage of $100,000, you can exempt the home in its entirety with a joint bankruptcy filing. Which exemption set is right for you? When filing Chapter 7 bankruptcy, you will have the ability to claim a set of exemptions, either the Federal or the State exemptions. Which exemption you claim depends on what kind of property you want to save. It is a highly personal decision, best made with qualified legal counsel. If you are in the Philadelphia area, call the Law Offices of David M. Offen at (215) 625-9600 to schedule a free consultation. With over 20 years of practice in bankruptcy law, Mr. Offen has helped over 10,000 clients navigate bankruptcy. He can answer your questions and help you find the best path to get free of debt.  Call him to get the answers to your questions. The post What Property Can You Keep Under Chapter 7 in Pennsylvania? appeared first on Bankruptcy Lawyer in Philadelphia PA | David M. Offen Attorney at Law.

What Happens After Filing for Bankruptcy? Meeting with your Trustee and Creditors After filing bankruptcy, a trustee will be assigned to your case to manage your bankruptcy estate, including payments to creditors in a Chapter 13 case and liquidation of non-exempt assets if there are any in a Chapter 7 case. Soon after filing, you will be required to attend a meeting with this trustee and any creditors who choose to attend.  This is commonly known as a 341 hearing or a meeting of creditors. While this meeting is not held in a courtroom or before a judge, all questions will be asked under oath. The trustee will ask questions to ascertain the accuracy of your bankruptcy documents and make a decision about whether your debts are all dischargeable as well as whether there are any non-exempt assets which can liquidated to raise money for creditors. While creditors are not required to attend, and in fact rarely do attend,  they too can ask questions if they choose to attend. If recent cash advances or excessive charges appear to have been made without the intent to repay, creditors may come with questions related to apparent fraud. In Chapter 7 cases, you may file a reaffirmation agreement to keep certain secured debts within 60 days of this first meeting of creditors. Before reaffirming a debt, make sure that you are financially capable of handling the payments. Your attorney may advise you not to sign any reaffirmation agreements as it may not be in your best interests Your attorney should be present with you at your meeting of creditors. What to Expect in Bankruptcy Court If your bankruptcy is uncontested, you may never see the inside of a courtroom. Most negotiations will happen between your attorney, the trustee, and your creditors. If creditors file adversarial motions, you may need to appear at the confirmation hearing for your Chapter 13 repayment plan, or if a motion needs to be filed to modify your bankruptcy filing, court appearances might be necessary. How does filing bankruptcy affect you? The effects of bankruptcy will vary largely depending on what kind of bankruptcy you file, your financial situation after bankruptcy, and how responsibly you manage the process of rebuilding your credit. It may be difficult to secure credit or larger loans for several years. Financial responsibility after bankruptcy can minimize the effects somewhat, and some credit card companies actually seek out individuals who have just filed for bankruptcy to get them as a customer. What happens after a bankruptcy discharge? If you filed Chapter 7, and the trustee issued a report that there are no non-exempt assets once you receive your discharge the case is over.  There will no longer be any contact with the trustee or the bankruptcy court. If however, the trustee found that there are non-exempt assets, then the trustee will continue to work with creditors and manage the liquidation of non-exempt assets. You will be required to cooperate with the trustee even after a discharge is granted, and the trustee can request that the court revoke a discharge up to a year after it has been granted if he becomes aware of fraud or non-disclosure of assets. If you file a Chapter 13 Bankruptcy, your case will be closed shortly after making your final payments. The discharge will be granted, the final disbursements will be made by the trustee to your debtors, and after the trustee’s final report the case will be closed. When can I buy a house after declaring bankruptcy? Immediately after bankruptcy, it will be very difficult to get a home loan. As you build your credit back, lenders will start considering you for a home loan. Many people can build their credit enough to qualify for an FHA loan in as little as two years. FHA loans at low interest rates can be had with a credit score as low as 580. This is far below any conventional mortgage company would allow, and a great resource for recently bankrupt individuals looking to own their own home. Those interested in buying a home can even secure FHA loans with scores below 580, but it will be quite difficult. When can I buy a car after bankruptcy? After you file bankruptcy, it will be difficult, but certainly not impossible, to find a willing auto lender at a low interest rate.  There are auto lenders who lend to people who have just filed bankruptcy but the interest rates charged are usually higher than the typical market rate. If you file Chapter 7, you can apply for a loan as soon as you receive your discharge. Many lenders may not feel comfortable granting an unsecured line of credit immediately after bankruptcy, and those that do will be charging exorbitant rates in exchange for taking on what they consider a risky loan. If you file for Chapter 13 instead, you will have to wait until your debts are discharged or the case is dismissed to get an unsecured loan. While this could take up to five years, your credit will be in a much better place if you successfully complete your payment plan. Individuals under a confirmed Chapter 13 case can get auto loans with a letter from the Chapter 13 Trustee and have even been able to purchase homes and take out a mortgage while under the Chapter 13 case with Court approval. How Bankruptcy Affects Credit Scores Bankruptcy lowers the credit score, and stays on your credit report for 10 years. How much the bankruptcy will affect your score depends more on your personal finances before filing than on the bankruptcy itself. If you are delinquent on your bills, your credit score is most likely poor already. In this case, the bankruptcy filing would not make the situation that much worse and may even improve the situation. Do credit agencies treat Chapter 7 and Chapter 13 differently? The initial impact on your credit score will be the same whether you filed Chapter 7 or Chapter 13 bankruptcy. However, Chapter 7 bankruptcies remain on your credit report for ten years, while Chapter 13 may only remain on your record for seven years. Can you remove a bankruptcy from your credit report? Legitimate bankruptcies will remain on your credit report for a fixed period of time, and there is little that can be done to remove the record before that time. For Chapter 7 bankruptcies, the reporting period is ten years. Chapter 13 bankruptcies are reported for seven years. Experian, Equifax, and TransUnion will automatically remove the record of bankruptcy after the reporting period, and no action is required on the part of the consumer. Still have any bankruptcy questions? Call The Law Offices of David M. Offen in Philadelphia at (215) 625-9600 for a free consultation. The post What Happens After Filing for Bankruptcy? appeared first on Bankruptcy Lawyer in Philadelphia PA | David M. Offen Attorney at Law.

By Winnie HuIt is not enough that a subway fare increase could soon make traveling underground in New York City more expensive. The cost of getting around above ground is going up, too.An extra $2.50 fee will be tacked onto any yellow taxi rides in Manhattan that begin, end or pass through south of 96th street, and an extra $2.75 fee will be added for other for-hire vehicles, including Ubers and Lyfts — all before the car even starts.The new ride fees were supposed to start Jan. 1, and are intended to raise more than $1 million a day to help fix the city’s broken subway system. New York is following a growing number of states and cities, including Chicago and Seattle, that have adopted similar per-ride fees in recent years to pay for public transportation and other services.In New York, the new ride fees had been temporarily blocked at the last minute by a lawsuit filed by a coalition of taxi owners and drivers who called it a “suicide surcharge” that would drive away customers and devastate an industry already crumbling under financial pressures.Judge Lynn R. Kotler of State Supreme Court disagreed, ruling Thursday that the new ride fees could proceed, noting that the taxi coalition had not “demonstrated irreparable injury.” But she did deny a motion from the state to dismiss the lawsuit, saying that the coalition’s arguments merited moving the case forward.The $2.50 fee will raise the minimum taxi fare to $5.80 in Manhattan.Governor Andrew M. Cuomo’s office would not say when the fees would start.The new ride fees are seen as the first step in passing a comprehensive congestion pricing plan for Manhattan that would charge all vehicles a fee to drive in the busiest neighborhoods and help reduce gridlock. The fees were approved last year by the State Legislature and also included a 75-cents fee for shared car-pool services.The taxi coalition argued in its lawsuit that the fees would “drive the final nail in the proverbial coffin by making medallion taxicab rides so financially unattractive to consumers that the industry is sure to collapse in its entirety.”But lawyers for the state attorney general’s office countered that the lawsuit hurt city transit riders, and that every day the new fees went uncollected meant less money for the Metropolitan Transportation Authority, which operates the subways.Patrick Muncie, a spokesman for Mr. Cuomo, said the decision was “a positive step in our efforts to find a dedicated revenue stream for our subways and buses, as well as easing congestion in Manhattan’s central business district.”But taxi owners and drivers criticized the judge’s decision, saying it would only add to their problems. Many are already struggling with enormous debt as the value of their taxi medallions — the aluminum plate that once sold for more than $1 million — has plummeted. Three taxi owners and five other professional drivers have committed suicide over the last year.“It’s a big problem — that means people will not ride in taxis anymore,” said Mahmud Hossain, 54, a yellow taxi owner and driver from Astoria, Queens. “It’s very hard.”Mr. Hossain said that he typically takes home $70 or less after a 12-hour shift, or about half of what he used to make five years ago before ride-hailing apps started taking away customers. He worries that he will take home even less now.Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, said taxi drivers would feel the effect right away from the new fee. “Their income will drop immediately and force them to delay decisions over food and medicine,” she said.Ms. Desai called on the governor to hold off collecting the new fee while the lawsuit continues and said her group would lobby state legislators to pass an exemption for taxis from the new fee.“Implementing the surcharge while the lawsuit continues could put the industry in the predicament of figuring out how to refund passengers, even those who paid with cash, should the drivers ultimately win the case,” she said.With the new $2.75 fee, the cost for Uber, which has an $8 base fare in Manhattan, will also rise to a minimum of $10.75. But Uber and two other ride-app services, Lyft and Via, have supported the fees as a step toward addressing congestion and transit challenges in the city.The taxi lawsuit had argued that taxis should not be charged a “congestion tax” because their number has been capped by city law at 13,587 “to prevent an overabundance of cars and congestion,” even as Uber and other ride-app services were allowed to expand exponentially. In August, the city declared a one-year moratorium on new vehicle licenses for Uber, Lyft and other ride-app services.Mayor Bill de Blasio has supported the new taxi fee, but Meera Joshi, the commissioner of the New York City Taxi and Limousine Commission, has said it would be “potentially devastating” for the taxi industry.David Graves, 60, a taxi driver for almost two decades, said he was frustrated that the city had created the congestion problem and was now trying to address it by turning taxis into “unpaid tax collectors for the M.T.A.”“This is my future, this is the future of the New York City taxi,” he added.Copyright 2019 The New York Times Company.  All rights reserved.

How Much Do You Pay Creditors in Chapter 13? A Chapter 13 bankruptcy is a chance to reorganize your debts without having to liquidate your assets. The monthly payment set up in a Chapter 13 bankruptcy depends on what kinds of debt you owe and how much of that debt you can afford to repay. David Offen has spent over 20 years practicing bankruptcy law in Philadelphia. He has helped more than 10,000 clients through the bankruptcy process. Call (215) 625-9600 to schedule a consultation. There Are Three Types of Debt Under Chapter 13 When a bankruptcy court and its appointed trustee review your filing, they will identify priority, secured, and unsecured debts. Let’s take a look at what these terms mean:   Priority Debts: These debts cannot be discharged. They must be paid in full through the bankruptcy process. Unpaid taxes, child support, and certain fines are all priority debts that can not typically be discharged through bankruptcy.   Secured Debts: These are debts with collateral behind them, such as a house or a car. Chapter 13 requires you to establish a payment plan that will bring these debts current if you want to keep the collateral.   Unsecured Debts: Unsecured debts are not backed by collateral. Credit cards are the most common source of unsecured debt. You must make a good-faith effort to repay these loans, but only to the limits of your disposable income.     You Don’t Pay Creditors Directly When you file for Chapter 13 bankruptcy, the court will appoint a trustee to manage the business of disbursing payment to your creditors. You won’t have to worry about dealing directly with your creditors. Do you pay more in Chapter 13 or Chapter 7? Many people are put off of filing for Chapter 13 bankruptcy by the thought of repaying their debts in monthly installments. What some of these people fail to realize is that certain debts must be repaid no matter which method you choose. If you have a steady income, repaying secured debts and allowing some unsecured debt to be discharged can leave you with more assets after bankruptcy than if you had filed Chapter 7. What determines how much you have to pay? The primary factors for determining your payment is your income, necessary expenses, what kinds of debt you have, and the value of your unprotected assets. Your projected income and expense are the prime factor in deciding how much you will need to pay your bankruptcy trustee each month. Expenses are a combination of your actual monthly expenditures for your basic cost of living, medical and childcare expenses. After comparing your expenses to your monthly income, your bankruptcy lawyer will arrive at a “disposable income” that can be put towards paying down your debts. This disposable income will need to be paid in full each month for a period of 36 to 60 months. Depending on how much priority debt you have, there will be an absolute minimum monthly payment you would need to make to meet the terms of your bankruptcy. This would be the outstanding priority debts broken into 36 to 60 installments. Once you have determined the minimum you must pay and compared it to your disposable income, you can decide which secured debt you can afford to repay, and of that figure, which debts you want to repay. This is often the time to make tough but sensible decisions that will put you in a better financial place. After you have settled the payment necessary to your priority and secured debts, the remainder of your monthly payment will be split between your unsecured debts. Whatever unsecured debts remain unpaid after 36 to 60 months will be discharged. How Much Does Each Creditor Get from a Chapter 13? Feds Paid in Full Priority debts like taxes and child support must be paid first and in full. Back taxes and child support must be completely repaid within 36-60 months, and are not dischargeable. Collateral is Complicated Secured debt such as car loans and mortgages require that you pay most to all of what you owe.  Whether the lender demands full payment depends largely on the value of the collateral. A house is a useful example. If you owe $250,000 but with deflation, the house is now worth a little over $200,000, the bank would lose money if you defaulted on the loan. So it would be in their interest to accept your Chapter 13 repayment plan. Alternately, inflation could have raised the home’s value significantly since you took on the mortgage. In such cases, the bank is unlikely to accept anything but full repayment of the loan along with all of their expenses. Unsecured Debts Come Last There is only an obligation to repay unsecured debts to the limits of your disposable income. If you make all your payments, the remaining debt on unsecured credit through Chapter 13 is wiped out. Considering Chapter 13? David M. Offen has spent over 20 years practicing bankruptcy law in Philadelphia. He has helped more than 10,000 clients through the bankruptcy process. Call (215) 625-9600 to schedule a consultation. The post Chapter 13 Bankruptcy: How Much Do You Pay? appeared first on Bankruptcy Lawyer in Philadelphia PA | David M. Offen Attorney at Law.

Salene Mazur Kraemer, CTA Mazur Kraemer Business Law, Pittsburgh and Weirton, W.Va. Anthony Malky Mazur Kraemer Business Law, Pittsburgh and Weirton, W.Va. Date Created: Wed, 2019-01-23 14:18 3d cir. efh decision affirms disallowance of $275m break-up fee | abi. (PDF of ARTICLE) 1 Published by the ABI Business Reorganization Committee Link to Newsletter is here. As transactional business attorneys, we strive to craft documents that are bullet-proof, covering every what-if scenario should a deal fall apart. We hope that the agreements we draft will result in a fair and just consequence for all parties to the bargain. On Sept. 13, 2018, the U.S. Court of Appeals for the Third Circuit issued its opinion in Energy Future Holdings Corp., et al. (Appellee) v. NextEra Energy Inc. (NextEra) (Appellant),[1] affirming the U.S. Bankruptcy Court for the District of Delaware’s decision[2] in the In re Energy Future Holdings Corp., et al., (EFH) (debtors) chapter 11 bankruptcy cases, striking a $275 million break-up fee (termination fee). What practical tips can we learn from this case? The debtors owned an 88 percent economic interest in the rate-regulated business of Oncor Electric Delivery Co. LLC (Oncor), the largest electricity transmission and distribution system in Texas.[3] On July 29, 2016, the debtors entered into an Agreement and Plan of Merger (Agreement) with NextEra, pursuant to which NextEra would acquire the debtors’ interest in Oncor.[4] The Agreement provided that, but for certain exceptions, the debtors must pay a $275 million termination fee to NextEra if the debtors terminated the Agreement.[5] The debtors would not have to pay the termination fee if they could not get regulatory approval by the Public Utility Commission of Texas (PUCT) and NextEra (not the debtors), then terminated the agreement.[6] If the PUCT did not approve and the debtors then terminated the Agreement, then the break-up fee was to be due and payable to NextEra.[7] While PUCT regulatory approval was a condition to the merger, the Agreement did not set a date by when such approval was required and did not contemplate the scenario in which the merger would dissolve automatically because the third-party PUCT approval was not obtained.[8] In the face of regulatory rejection, NextEra could simply “be patient,” wait for the debtors to terminate first, then collect the $275 million break-up fee.[9] And that is exactly how it played out. Ultimately, the PUCT refused to approve the merger because NextEra, a.k.a. the “deal-killers,” refused to comply with the (1) the requirement that Oncor maintain an independent board of directors, and (2) the ability of certain minority shareholders to veto dividends.[10] Without PUCT approval and with another purchaser waiting in the wings, the debtors formally terminated the Agreement based on the failure to obtain regulatory approval and NextEra’s alleged breach of the Agreement.[11] NextEra filed an application seeking recovery of its $275 million administrative claim in the chapter 11 cases.[12] Creditors of the debtors simultaneously sought reconsideration of prior approval of the termination fee.[13] In an extraordinary move, Judge Sontchi amended his previously approved order so as to have the practical effect of striking the award of the $275 million termination fee.[14] Judge Sontchi explained that he had “fundamentally misapprehended the facts as to whether the Termination Fee would be payable if the PUCT failed to approve the NextEra Transaction.”[15] No party made him aware “that if the PUCT did not approve the NextEra Transaction, the Debtors could eventually be required to terminate the Merger Agreement and trigger the Termination Fee unless NextEra terminated first of its own volition.”[16] On appeal, the Third Circuit, after taking the matter upon direct certification, rejected NextEra’s argument that the motion to reconsider was untimely, since the Approval Order was interlocutory and not a final order.[17] The Third Circuit also found that the lower court fundamentally misjudged the likelihood that the termination fee would be harmful to the estates. Had the bankruptcy court possessed complete knowledge of the facts at the time the Approval Motion was filed, it could not have approved the termination fee as an allowable administrative expense under 11 U.S.C. § 503(b).[18] Given the totality of the circumstances, the fee was not an “actual, necessary cost and expense of preserving the estate” under 11 U.S.C. § 503(b)(1)(A).[19] “Payment of a termination or break-up fee when a court (or regulatory body) declines to approve the related transaction cannot rovide an actual benefit to a debtor’s estate sufficient to satisfy the statutory requirement.”[20] The termination fee was detrimental, with the debtors “back to square one and, with the passage of time, in a worse off position — desperate to accept an alternative transaction.” [21] The Third Circuit further noted that NextEra’s bid was not designed to provide a competitive benefit.[22] Although the termination fee was intended to induce NextEra to adhere to its bid, this benefit was potentially negated by the perverse incentive that resulted, inducing NextEra to hold firm against any burdensome ‘deal killer’ conditions.”[23] The termination fee would have created substantial financial risk if the PUCT did not approve the transaction, and it had the “potential to be disastrous.”[24] It should be noted that this Third Circuit Opinion was not a majority opinion. In the dissent, Judge Rendell took issue with (1) the grant of a delayed reconsideration motion when there had been no clear error of fact or law, and (2) what he viewed as a flawed analysis of the benefit to the estates as though there had been no pre-approval of the termination fee as part of the Merger Agreement.[25] Judge Rendell writes that even if the bankruptcy court judge “failed to appreciate a particular set of potential consequences”, that “hindsight cannot justify nullifying a material term of the deal that was struck….”[26] Practical Takeaways from this Case and Appeal Have you made the material terms and conditions of a sale transaction as clear as you can at the approval hearing? Have you provided testimony of parties involved? Does the Agreement set forth the necessary time frame for completing the condition? Is the condition one that can only be satisfied by a third party, i.e., a regulatory body? Is it clear who bears the risk if the third party does not satisfy the condition? What impact will a failed condition have on an agreement? Will one party have undue influence on that third party’s ability to satisfy the condition? Which party will be deemed to be in breach if the condition is not satisfied? Is the dollar amount of the break-up fee commensurate with the value the prospective purchaser is or is not bestowing upon the estate? Does the fee provide a competitive benefit? Could a break-up fee have a perverse incentive to induce a buyer to hold firm against certain burdensome   [1] In re Energy Future Holdings Corp., 904 F.3d 298, 314 (3d Cir. 2018). [2] In re Energy Future Holdings Corp., 575 B.R. 616 (Bankr. D. Del. 2017). [3] In re Energy Future Holdings Corp., 904 F.3d at 302. [4] Id. [5] Id. [6] Id. [7] Id. [8] Id. at 304. [9] Id. [10] Id. at 306. [11] Id. [12] Id. [13] Id. at 306. [14] Id. at 307. [15] Id. at 306. [16] Id. at 304. [17] Id. at 307-310. [18] Id. at 306, 315. [19] Id. at 313-315. [20] Id. at 307 (citing In re Energy Future Holdings Corp., 575 at 635). [21] Id. at 314. [22] Id. [23] Id. at 315. [24] Id. [25] Id. at 317. [26] Id.  

Bankruptcy, Judgments, and Liens: What You Need to Know Bankruptcy Questions? Contact The Law Office of David M. Offen at (215) 625-9600 for a free consultation. Why do creditors sue for unpaid debts? Borrowing money in the form of a loan or a mortgage carries a legal expectation for the borrower to repay what they owe. Larger debts are usually secured by property or real estate. Common secured debts include home equity loans, automobile loans, and mortgages. If you fail to pay these secured debts, the borrower has legal standing to foreclose upon or repossess the property or real estate. Many common debts, including credit cards and personal loans, are not secured by real estate or property. If payments are not made, a lender can file a lawsuit against you. If you fail to respond to the lawsuit or are unsuccessful in defending against it, the court will issue a judgment against you for the value of the debt. This is essentially a legal order for you to pay your creditor. With a judgment in hand, lenders are empowered to pursue a variety of collection actions. These could include wage garnishments, account freezes, and liens against your property. What Are Liens? Liens are notices filed with state agencies to record debts against a property. By placing a lien against a vehicle or property, a lender can collect money from the sale of that property to settle the debt which is owed them.   Does Bankruptcy Clear Judgments? Bankruptcy does not always automatically reverse judgments or remove liens, but it does provide protection from them. When a bankruptcy proceeding is filed, an automatic stay goes into effect. This automatic stay will protect you from a variety of legal actions. A stay will prevent the commencement or continuation of legal proceedings to recover debts. The enforcement of a judgment entered before bankruptcy was declared against the debtor and the debtor’s property or estate will be halted. Foreclosures, sheriff’s sales, or other acts to take possession of the property of the debtor are halted. Liens to secure a debt or claim that arose before the bankruptcy was filed cannot be enforced. Acts to reclaim or recover claims against the debtor that arose before the bankruptcy will be halted. The commencement or continuation of Tax Court proceedings for tax liabilities in the period before the bankruptcy was filed will be halted. The automatic stay does not mean that the debts, liens, or judgments have been erased. How judgments are handled in bankruptcy will depend on what kind of debt they relate to: priority, secured, or unsecured. Priority Debts Priority debts must be repaid. They cannot be discharged through bankruptcy, so if asset liquidation does not cover the full priority debt they will still need to be paid. Priority debts include most state and federal tax obligations, alimony and child support, and judgments awarded as a result of death or injury caused by driving while intoxicated. Unsecured Debts Unsecured debts can be discharged. Even if a judgment has been entered, these debts are wiped out by successfully completing a bankruptcy case. If you file a Chapter 7 bankruptcy, non-exempt assets can be liquidated to pay these unsecured debts. In a Chapter 13 bankruptcy, disposable income will be used to pay down these debts for the duration of your repayment plan, with the remainder completely discharged upon the successful completion of the plan. Liens If an unsecured debt has already been entered against your property as a lien, the record may remain on file after successfully discharging the related debt. If this happens, your bankruptcy lawyer can file a motion to have the lien dismissed. He or she may also contact the lien holder directly to request that they remove the lien or mark the lien satisfied, as they no longer have a legal right to collect the discharged debt. Some liens may not be dischargeable. As with any other debt, you should disclose any and all liens to your bankruptcy lawyer. Adversarial Proceedings Within your bankruptcy proceedings, creditors and the bankruptcy trustee can file challenges to the dischargeability of debt or make accusations of fraud. Creditors with certain kinds of judgments may be able to force you to repay otherwise dischargeable debts using an adversarial motion. Such motions might be used if you face civil judgments related to criminal acts such as assaulting someone or damages from malicious and willful behaviors. Misrepresenting yourself in fraudulent ways, such as on credit applications claiming you have a very high income, could also expose you to an adversarial motion to make the allegedly fraudulent unsecured debts non-dischargeable. If these actions are successful, debt from these type of judgments will be treated like other priority debts and not discharged.  While these types of actions do exist, they are typically not seen except where the debtor has behaved in a highly improper way. Can I File Bankruptcy After Being Sued? If you file bankruptcy while being sued for a civil matter concerning finances or property, the automatic stay will freeze the court action and creditors will have to work through the bankruptcy framework to recover what they’re owed. If you are being sued over child custody, alimony or are in the process of divorce, the stay will not always stop those proceedings. Filing bankruptcy after losing a lawsuit is also possible. An adverse judgment after being sued by a creditor may be the financial warning sign that pushes you to consider bankruptcy.    If you cannot afford to pay the judgment against you stemming from a civil case not related to debt, you should consult an experienced bankruptcy attorney to make sure it can be discharged by filing bankruptcy. Can’t Afford to Pay Judgments? Contact The Law Offices of David M. Offen for a free consultation. Mr. Offen has helped more than 10,000 clients and has the experience you need to get free of debt. He can help you decide if bankruptcy is the right solution for your problems. For a free consultation, call (215) 625-9600 today. The post Does Bankruptcy Clear Judgments? appeared first on Bankruptcy Lawyer in Philadelphia PA | David M. Offen Attorney at Law.

In Pennsylvania, driving on the highways in the Commonwealth is considered a privilege, not a right.  By virtue of having a driver’s license, you are therefore impliedly consenting to submit to a blood or breath test upon request from a police officer who suspects that you have been driving under the influence.  Well, what happens […] The post Can You Refuse a Blood Alcohol Test for DUI in Pennsylvania? appeared first on .

By John Aidan ByrneNew York City is officially the most financially distressed metropolis in America, according to local debt counselors and financial analysts.The city’s credit card delinquency rates and level of bad personal debt are the highest in the nation, which saw household debt and credit soar by $219 billion, or 1.6 percent, to $13.51 trillion, in the third quarter of 2018 — a record $837 billion more than its previous peak in 2008.Facing an environment of mounting personal bankruptcies and financial meltdowns, unprecedented numbers of local residents are just one paycheck away from total monetary disaster.The latest surge in toxic debt is blowing a huge hole in New Yorkers’ personal finances, these experts say. Forty percent of Americans recently said they could not cover a $400 emergency — and that proportion may be even higher in New York City, analysts say.“It’s really bad right now,” Kelly Figueroa, a consumer debt counselor in New York at GreenPath, a national nonprofit, told The Post.“Like the rest of the nation, most New Yorkers are living paycheck to paycheck,” she added. “But in New York, the situation is even worse because of the city’s higher — and rising — cost of living.”From low-income to highly paid consumers, Kelly says, local clients’ unsecured distressed household debt ranges from an average of $20,000 per individual to as high as $100,000.Credit card debt troubles in particular have jumped in New York City, from 30 percent of client caseloads at GreenPath to 40 percent in the past few years, even as housing and mortgage stress cases stemming from the financial crisis have ebbed.New York City is now its No. 1 metro market, followed by Atlanta and Los Angeles, as measured by the sheer volume of distressed consumers seeking assistance and relief, according to Money Management International, a nationwide credit-counseling network.“New York has the second-most expensive housing market in the US; rents are rising along with interest rates and credit card and other debt, including auto loans,” said Thomas Nitzsche, a consumer debt expert at Money Management International, citing some of the nonprofit’s latest findings.A large population with average wages well above the national average — and a low unemployment rate — can give residents the courage to take on large credit card balances and debt, analysts say.However, since 2010, rents in New York City overall have jumped 31 percent — and even as much as 45 percent in some neighborhoods, according to the StreetEasy Rent Index in late 2018.This may explain why many city consumers are sinking in card and other debt, say analysts.A New York Fed study shows average credit card balances alone in Manhattan hit $7,400 by 2016, compared with the nation’s $5,400.Credit card delinquency rates for holders 90 days late on payments reached a stunning 15.1 percent for the Bronx and nearly 10 percent citywide, compared with 8.3 percent nationwide.Analysts figure those balances and delinquency rates have since ticked up further in New York.© 2019 NYP Holdings, Inc. All Rights Reserved.

By Noah Manskar, Patch StaffNEW YORK — New York City's turbulent taxi industry saw a massive spike in foreclosure sales last year as drivers struggled to make ends meet and some took their own lives, records show. The Taxi and Limousine Commission recorded 381 foreclosure-related medallion sales in 2018 — more than 10 times the 37 seen in 2017. The numbers are based on Patch's review of the TLC's monthly lists of sales, some of which include more than one medallion. The sales accounted for about two thirds, or 64 percent, of last year's 595 medallion transfer transactions, while only 33 percent of 2017's transactions were foreclosure-related, TLC records show. The spike is both a good and bad sign, TLC Commissioner Meera Joshi said. While many individual drivers still face financial strain, the flurry of sales suggests buyers now see viability in an industry that has seen years of instability. "When there are purchasers that are not the banks it's a signal that there are people that believe there is a value to this asset," said Joshi, who plans to leave her post in March.The foreclosure figures include cases in which a bank took possession of a medallion on which someone could no longer pay the mortgage, and others in which a buyer purchased a medallion from a bank. The "vast majority" of last year's increase comprises hedge funds buying up medallions at large public auction, said Robert Familant, the former treasurer and CEO of Progressive Credit Union, a medallion lender. For instance, a hedge fund reportedly paid $170,000 each last June for 131 medallions once owned by Evgeny Freidman, an operator once known as the "Taxi King" who pleaded guilty to tax fraud last year. Last year's unusually large number also reflects some sales that were made in 2017 but not recorded until 2018, according to Familant, whose company recently merged with Pentagon Federal Credit Union. The spike came at a tumultuous time in the city's taxi industry. At least half a dozen professional drivers died by suicide last year, some of them facing hefty financial burdens amid competition from ride-hailing apps. Hundreds of medallions held by individual drivers have been forced into foreclosure or bankruptcy in recent years as their owners have seen costs mount while their businesses suffer, Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, said in a Jan. 16 court filing. "Not only have they been unable to keep up with their mortgages, (they've) also just been unable to earn enough for day-to-day living," Desai said in an interview. "I honestly never imagined to have so many conversations with drivers about food stamps, really basic benefits." Medallion prices have plummeted in from $1 million or more in 2014 to as little as $130,000 last month, TLC records show. That drop in value helped drive the recent spike in foreclosure sales, along with declining revenues and a lack of confidence among some owners in city regulators' ability to address the prices, Familant said. "When the value of collateral diminishes, financial institutions are put into a very difficult regulatory position," he said. Recent changes to medallion rules have also contributed to recent movement in the market, Joshi said. One eliminated the requirement that certain medallion owners drive a certain number of hours each year. Another eliminated the distinction between independent and corporate medallions, making it easier for banks to take back those that were independently owned, according to Joshi. The City Council also slashed the medallion transfer tax in 2017 from 5 percent to 0.5 percent. That made the tax less of a burden for buyers, according to Joshi. To Familant, the large number of foreclosure sales reflects the start of a "cleansing process" that allows drivers and operators a way into a business in which they now see an opportunity. "Everyone knows the industry has had a difficult time the last few years and it was sort of in free fall. Now that free fall has stopped," he said. "Buyers came back into the industry at a point and said, 'I think it's a good buy now. I'm willing to put my money where my mouth is now.'" But Desai called that a "rosy description" of where the industry stands. It may be easier for institutional buyers like hedge funds to buy medallions but individual drivers still face barriers, she said. She called for a "restructuring" of the loan market to reflect the value of medallions. "If you know you're going to have to eventually take that medallion away from the current owner and then resell it at a lower rate, why not just forgive on some of the loan now and restructure it so the current people who've already paid so much into those medallions, even if they haven't paid off the whole thing, at least they can continue to work and live off of it," Desai said. The TLC lacks the authority to regulate banks but has encouraged them to "right-size" medallion loans, Joshi said. The City Council also passed bills in November to bolster financial education for drivers and create a task force to review changes in medallion prices. To Familant, it's important for lenders and medallion owners to find solutions to tough financial situations that don't involve foreclosure. "You have to go there and you have to work together," he said. "No one's going to survive unless we work together."© 2019 Patch Media. All Rights Reserved.

People in the US hold over $1 trillion in credit card debt. Credit cards are the most essential source of day-to-day financing for millions of Americans. Yet little is known about the true demographics of who owns credit cards, how much they charge on them, and whether they pay their balances on time. The information we have is based on surveys, and people are notoriously bad at accurately reporting their finances.A new study by Federal Reserve economist Joanna Stavins sets out to fix this problem. Every year since 2008, the Federal Reserve Bank of Boston conducts a nationally representative survey asking Americans how they pay for things. It includes a section on credit cards. In order to check the accuracy of their responses, Stavins compared respondents’ answers with administrative data from credit reporting agency Equifax,which holds their actual data.  Stavins found that people tend to overreport the number of credit cards they have, underreport their balances, and greatly undervalue their credit limits. But most importantly, by combining demographic data from the Fed’s survey with Equifax, we finally have accurate public data about how different groups of people use credit cards. The survey was conducted in 2015 and 2016.The data show that whether a person owns a credit card diverges hugely by age, income, and education. Overall, 74% of adults have a credit card, but just 48% of those under 25 have one, compared with 87% who are 65 or over. The difference is even greater across education and income levels.Credit card balances also vary hugely. While the average American maintains an average balance of $4,560, this is highly dependent on age. Balances are relatively low for the young, about $2,340 for those under 25, but grow as people get into middle age, reaching over $6,000 for people 45-54, before falling as they get older. At the peak of a person’s earning power, typically in middle age, they are given larger credit limits from card companies.Finally, the analysis estimated the share of people who have “revolving” credit card debt—meaning they don’t pay off their balance in full at the end of the month. Stavins found that 44% of adults have revolving credit, and these people typically have an outstanding balance of $6,600. Revolvers are generally poorer and less educated than the typical American.It is worrisome that financially strapped Americans are incurring high interest payments on credit cards that reduce their already modest incomes, writes Stavins. Yet she also notes that credit cards offer the poor a source of funds that may help them through tough times that would otherwise be worse.© 2019 Quartz Media, Inc. All rights reserved.