​Author: Andrew M. Thaler
 
Individuals often seek chapter 7 bankruptcy relief to obtain a “fresh start” to discharge debts they have difficulty satisfying.  In most chapter 7 cases “eligible” debtors discharge most if not all of their debts and keep most if not all of their property. If they do not properly plan however, they could be shut out of chapter 7, where debts can be discharged in as little as 3 months.  Instead, the only alternative may be a choice between a chapter 13 bankruptcy (where creditors are paid all or a portion of their debts from the debtor’s future income over three to five years), or not filing at all.  As soon as financial trouble appears on the horizon it is critical to consult with a qualified bankruptcy professional so proper planning can occur.
 
Timing comes into play in numerous aspects of bankruptcy planning.  One example is in application of the “Means Test” for debtors with consumer debt.  

​Author: Andrew M. Thaler

​When a debtor files for bankruptcy the debtor is permitted to exempt certain assets from the reach of creditors and a bankruptcy trustee.  Personal injury awards can be exempted in whole or part. In New York a debtor has the choice of selecting either a federal or state exemption scheme.  The debtor must select one or the other.  There is no picking and choosing between the specifics of the two (e.g. a debtor cannot elect the homestead exemption of New York law while also applying the wildcard exemption of Federal law). Therefore, an analysis by a qualified bankruptcy attorney needs to be performed to ascertain which scheme best suits the debtor circumstances.
 
As of the writing of this article (Jan 2018) the federal personal injury exemption is $23,675. That exemption can potentially be enhanced by a supplemental wild card exemption of up to as much as an additional $13,100 for a total exemption of $36,775.   The New York personal injury exemption is $8,275. 
 

​The United States Supreme Court has granted Certiorari in three bankruptcy cases this term.
 
In Lamar, Archer & Cofrin v. Appling the court will resolve a split of circuits and decide whether  a false oral statement about one asset is a statement of “financial condition” that must be in writing to result in denial of discharge of debt under Bankruptcy Code Section 523(a)(2).
 
In Merit Management Group LP v.  FTI Consulting Inc. the court will deal with the safe harbor provisions of Section 546(e).
 
In U.S. Bank NA v. The Village at Lakeridge LLC the court will prescribe the standard of appellate review for non-statutory insider status.  

Author: Andrew M. Thaler 

​In a recent Blog Article I discussed how a purchaser of real property might use the Bankruptcy Code to prevent a default under a time of the essence provision of a contract to purchase real property. In that instance the Bankruptcy Code helped the purchaser.  Conversely, the provisions of the Bankruptcy Code could result in abrogation of a purchaser’s contract rights where the seller files for bankruptcy protection.
 
Consider the following scenario. Purchaser contracts to purchase real property, and Seller refuses to close the transaction.  Because of the unique nature of real property one remedy available to a purchaser under state law is to obtain title by compelling specific performance of the contract. What happens, however, if the seller files for bankruptcy protection? That situation occurred in a recent case in which I was involved. The purchaser negotiated a favorable purchase price ($875,000) for a commercial property. For whatever reason, (perhaps realizing it had made a bad deal) the seller refused to close.  The purchaser hired an attorney who commenced proceedings in state court to compel specific performance.  Multiple motions for specific performance were made and denied due to infirmities in the purchaser’s papers.  Nearly 5 years after the contract was signed, the purchaser’s motion for specific performance remained unresolved.  Then the seller filed for bankruptcy. 

​Author: Andrew M. Thaler