Month: November 2020

Business Bankruptcy Questions

Business is tough right now, especially small business.  Sometimes it’s hard to know whether to keep trying or to throw in the towel. Here are three things we can examine to determine whether a business bankruptcy will work for your business or not. 

How much of the business debt is secured? 

How much of the debts is secured vs unsecured generally guides us in how much we can help the business.  Business liens are tricky and can limit how the debts can be paid or reorganized.  Some liens can be crammed down but others stick around unless certain conditions are met.  

Is the debt tax related?

If you’re an employer and you haven’t been withholding taxes from your W-2 employees, you’ve got a problem.  When you take that money you’re taking on the role of a fiduciary for that cash that belongs to your employee (and technically, Uncle Sam). 

If you’ve propped up your business with your employees tax contributions you’ve exposed the corporate officers to severe penalties and made them personally responsible for the taxes not paid to the government.  

The same can be said for sales tax money.  If you’ve been propping your business up with unpaid sales tax liabilities, you’ve got some real trouble.  

Are you paying debts to insiders? 

If, in the last year, you’ve repaid relatives or decision makers on their liens against the business, these can be recovered by the trustee under a rule that limits what’s known as a preference.  

You’ve got to be extremely careful when filing a business bankruptcy against an LLC.  You might be opening the corporation and it’s directors and family members up to lawsuits to recover money for creditors.  

If your business is struggling and you need to discuss your options, call the attorneys at Harmon and Gorove to see how we can help you solve your financial puzzle.  

Distressed Debts

Bankruptcy is supposed to make all the stress go away.  We’ve talked over and over again about how wonderful bankruptcy is and how it melts stress like butter.  When you file and get your discharge, you’re supposed to be in the clear.  What happens though, when you’re in the clear and then out of nowhere, someone comes knocking wanting to collect on an old debts?

Getting a collection notice on a debt that was supposed to be discharged is a stressful situation.  Sometimes people make mistakes or attorneys get lost in the shuffle but more often than not, that debt collector is just in the wrong. 

Chances are, the debt collector bought your debts without having any idea that you’d filed bankruptcy.  This is what we call, distressed debt.  Distressed debt is when companies who can’t collect on debts often sell them, in packages, to debt buyers.  Debt buyers pay 5-10 cents on the dollar for debts and usually just get a list of debts.  If they collect on 10% of the debts, they usually make a good return on their money.  

Fight it.

If you get a phone call or letter from some crummy debt collector, fight it.

The first thing you should do is find out who they bought the original debt from That will usually be listed on the collection letter.  The next step involves getting your bankruptcy paperwork.  First and foremost, find your discharge paperwork.  Once you have that in hand, send the creditor a copy.  Usually just saying you filed bankruptcy will scare off most people like this

You’ll want to get proof that you sent them this information so send it USPS certified.  Keep a copy of the letter you sent them and your bankruptcy papers.  Again, remember, they usually have no idea you filed bankruptcy so this will usually make everything go away.  

But they won’t stop

You called their bluff and sent them the paperwork you needed to send.  They should have gone away.  After All, it’s the law, but some of these guys are insufferable and just won’t listen.  That’s when you call in the big guns.  

First, call us.  We’re always happy to help and we love to smack these guys down.  They’re disregarding our hard work and the discharge order from the judge. Most judges don’t take kindly to people ignoring their orders.  We’ll call them and remind them that you were discharged.  That’s their last warning.  

Our next step is to file a motion for sanctions against the collector that’s violating your discharge order.  We’ll help you do this.  We will file the order in the court that your original case was filed in and then we’ll go to work.  We’ll submit evidence to the judge and once we do that you’re entitled to damages, including any fees you have to pay us for taking this on.  

Establishing the case for damages

If this happens, it’s best to take meticulous notes about the outfit that keeps calling you.  Keep track of all the money you’ve had to spend to fix this problem.  The better record you keep, the easier it is to prove your damages if it goes that far.  

You need to keep an eye on your credit report and make sure that the discharged debt hasn’t been placed on there again.  If they have, they’ve opened themselves up to additional damages.  

Long story short, we love what we do and we love helping people.  We’re always here for you to help you with your bankruptcy related issues.  If you have an issue, give us a call and let’s see how we can figure this out together.  

Step by Step

Bankruptcy is one of those things that requires a step or two to complete.  In this post, we’ll outline the 4 main steps that everyone goes through in a normal bankruptcy.  

Step 1

The first step is for you to get your initial consultation.  Here at Harmon and Gorove, we offer a free initial consultation and evaluation.  You shouldn’t have to pay hundreds of dollars just to find a solution that doesn’t work. Afterall, if you had that kind of extra money laying around, you wouldn’t want to spend it having someone tell you how they can’t help you.  During this initial consultation, we’ll need you to submit some paperwork.  Paystubs, bills, your credit report and your taxes are all very helpful things to bring in to your consultation.  It will save you time and heartache down the road if you come in with all your ducks in a row.  It speeds up the bankruptcy process for everyone, you and us.  

Step 2

If bankruptcy is right for you and you want to proceed, we may need to see you another time.  You’ll need to come in and sign off on everything, including our agreement to represent you.  You’ll also need to bring in any paperwork you didn’t submit at our initial consultation. This is the final step before we file the case and get you some relief.  

Step 3

We begin the filing process.  Once you have signed off on everything and paid your filing fees, we file your case.  We do this electronically, it happens pretty fast.  Once we hit submit, we can have you a case number within minutes.  Once you’re armed with that case number, the automatic stay applies (it’s awesome) and it stops everyone’s collection attempts dead in their tracks.  From then in, anytime a creditor calls you, you give them your case number and tell them to call us.  

Step 4

In step 4, we work on all the things that happen after we click, submit.  Your next step is the “meeting of creditors.” This is also known as a “341” hearing.  While it is a meeting of creditors in the true sense, most of the time, no creditors show up.  This occurs sometime between 30 and 45 days after the filing happens. While they have traditionally been held at the courthouse, they are currently being held telephonically.  That means you can call in from wherever you are and take care of everything in your pajamas if you want. We’ll be there with you, either in person or on the phone.  You’ll answer any questions posed to you and then you’ll be free to go.   

Wrapping it up

Your hearing may only last a few minutes.  In fact, most are over in 10 minutes or less.  The trustee will conclude the hearing and then they’ll let us know if they need any other documentation from us.  If they do, you can get it to us and then we can move on.  From this point, if you filed a Chapter 7, you’ll be discharged within the next 120 days or less.  If you filed a Chapter 13, we’ll move to confirmation of your case and get you started down the right path.  Filing bankruptcy is easier than ever if you’ve got the right attorney.  We are there for you every step of the way.  

Car Repo Options

Bankruptcy is the fastest way to stop any type of repossession effort.  If you’re behind on your car you can stop a repo dead in its tracks in most cases.  If you’re going to file a Chapter 7 you’ll likely need to be current for the Chapter 7 to work without a hitch. Once you are current, you can reaffirm that debt and keep making payments on the car. Chapter 7 eliminates other debts that may be keeping you from making your car payments to begin with.  

The process of reaffirmation is an agreement between you and your lender on your car.  It basically makes the bankruptcy as though it didn’t happen, at least in relation to your car.  The lender gets you back on the hook for your car and you keep making payments just like before.  The only difference is, you’ve gotten rid of all the things that were keeping you from being able to make your payments to begin with.  

If you’re filing a Chapter 13, you don’t have to be current on your car.  Chapter 13 is its own solution in and of itself.  If you’re behind, the plan can be written so you can pay back the arrearage and keep making your payments.  You get to keep the car and they get what they’re really after, their money. One thing you don’t want to do though is wait.  If you know they’re looking for your car, you need to file NOW.  It’s much easier (and cheaper) to keep your car and get the case filed than it is to go back and get it back after a repo.  Once you know your car is in danger of being repossessed, you need to get in touch with us ASAP so we can stop it from ever happening.  

One thing you need to remember is, you don’t have to be 3 months behind on your car for the lender to repo it. Under a lot of contracts, if you’re even a day late you have defaulted on the contract and they can begin the proceedings.  You aren’t guaranteed anything outside the contract.  Will they repossess on day 1, not likely.  Ideally, they want you to pay, but that doesn’t mean they won’t come after the vehicle.  Once you get notification of a pending repossession or you know you can’t make payments, you need to contact us.  Remember, your rights begin to diminish with every moment you wait after you know you can’t pay anymore.