man opening empty wallet

What You Need to Know About New York COVID-19 Bankruptcy

With all of the business closures in New York due to the impact of the coronavirus, it’s not surprising that many people would consider filing for bankruptcy to deal with financial hardships. Taking this step can be a way to have a clean slate and erase debts, but making this decision requires knowing all of your options. Here are some important things that you should know about filing a bankruptcy in New York in the Covid-19 era. 

New Procedures in Bankruptcy Courts

The court rooms in New York that hear bankruptcy cases are still functioning, but the processes and procedures have been modified to comply with public health concerns. Obviously, these modifications are on-going and vary, depending on the specific area, but here are some examples of the general changes that the New York Bankruptcy Court has made:

  • Restricts access to all of the New York bankruptcy courtrooms by allowing only employees and other specified individuals to enter.
  • Suspends all in-person bankruptcy appearances.
  • Mandates that all scheduled hearings will be held over the phone.
  • Encourages parties to file bankruptcy petitions electronically. But accepts paper filings that are mailed or dropped off in a sealed envelope.
  • Authorizes a waiver of fees for public access to court electronic records for certain pro se parties.

Chapter 7 Bankruptcy

If you’ve been laid off due to Covid-19 and struggling with debt, you may opt to file a Chapter 7 bankruptcy. This form of bankruptcy eliminates most unsecured debts, including credit card debt and medical bills, and gives you a clean slate. The process is generally quick (3-6 months to finalize), but the pandemic has caused court delays. 

An important thing to keep in mind is that you must wait eight years after the filing date of your first Chapter 7 case before you can file for another. This could be a risk because of the uncertainty of your financial circumstances during the pandemic. For instance, if you became infected with the coronavirus or another illness and you rack up a lot of medical bills, then you wouldn’t be able to file another Chapter 7 case right away. 

Chapter 13 Bankruptcy

Another option for individuals and businesses is filing a Chapter 13 bankruptcy. Here, you don’t have the advantage of liquidation and you must eventually pay back your creditors; the repayment plans typically allow for about three to five years to get in line with the payments. This type of bankruptcy allows for the reorganization of a business, but this type of bankruptcy is based on businesses that are expected to be profitable. If that’s not the case, then there could be further problems down the line, especially when it’s difficult to gauge profitability during the coronavirus crisis.  

Get Help with Your Bankruptcy Filing in New York

If you’re unemployed, laid off, have been furloughed, or are experiencing any other loss of income due to Covid-19, you’re probably concerned with the state of your finances and your ability to pay your bills. Although government entities and creditors have enacted measures to assist with financial woes, it might not be enough. If you’re considering filing for bankruptcy, you want to be aware of all of your options and the skilled New York bankruptcy attorneys at MOWK Law can help you assess your situation navigate New York bankruptcy in these stressful times. Contact us for more information. 

Making the Best of a Bad Situation with Chapter 11 Bankruptcy in New York

With all the economic uncertainties, business disruptions, and massive layoffs happening right now, it’s common for businesses, corporations, and individuals to seek a solution for existing debt and a sudden lack of income. The full scope of COVID-19’s impact is not yet clear, but extensive quarantines, social distancing practices, and business closures have already hugely impacted bank accounts, financial markets, and economies worldwide. There are many advantages to a Chapter 11 bankruptcy and filing should be something struggling companies should  consider exercising in order to keep employees, preserve the value of their business, and potentially avoid shuttering for good. 

What Does Chapter 11 Do for Existing Debt Payments?

Chapter 11 bankruptcy is a way for a debtor to reorganize their assets, debts, and business operations. A reorganization bankruptcy allows businesses and others in debt an automatic stay under Bankruptcy Code section 362. Creditors may no longer initiate or continue litigation efforts for judgments, begin or continue debt collection including repossession efforts, enforce liens and pursue foreclosure among other activities. This allows filers the chance to stretch out certain creditor payments for a time so they can become more financially stable once again.

Maintaining Equity Interests

Business owners filing Chapter 11 may also be able to keep a large part or all of their equity interests in their business and keep operating the business while a reorganization plan comes together and through its confirmation. 

Protection from Unsecured Creditors

Under Section 365 of the Bankruptcy Code, the entity filing Chapter 11 may reject agreements, assume contracts, and assign contracts subject to outstanding defaults being cured. This means that any counterpart to these agreements may be left as an unsecured creditor. 

Financing Options

Debtor in Possession financing – potentially available to companies in crisis – may be an appealing option to help bail out flailing businesses. Lenders offering DIP financing are both incentivized and protected under Chapter 11 to enter into these agreements. It is common to see both desirable interest rates offered as well as giving the lender super-priority to seek payments from the bankruptcy before almost all other creditors in an effort to motivate this type of financial help being given.

Appealing Asset Liquidation Conditions

The United States Bankruptcy Code also grants debtors the ability in a Chapter 11 to sell assets without the transfers being burdened with liabilities such as liens, encumbrances, and claims. This provides a chance to sell assets that otherwise might not be transferrable or appealing due to the burdens that come with them. Not only may this help a distressed company, it offers reassurance of safety from successor liability claims for buyers and may incentivize them to make a purchase they otherwise would not. 

New York Chapter 11 Bankruptcy LawyerWhen faced with financial hardship and uncertainty about the future, it’s important for business owners to be aware of and consider the options available to them under Chapter 11. Not only can the move allow businesses and corporations to continue operating to the benefit of their clients and their employees, it can potentially allow businesses that depend of their payments of debts owed to avoid financial crisis and a bankruptcy filing of their own. If you have questions about your options or want to plan for your financial future, speak with the New York bankruptcy lawyers at MOWK Law sooner rather than later. Contact us today with your questions to get started.

What Would a Change to New York’s 50-a Law Mean?

Now that New York’s Senate is under the control of Democrats, the state’s controversial 50-a law is being looked at with an eye towards revision or repeal. This could mean sweeping changes surrounding misconduct involving the police and other corrections personnel.

What is 50-a?

In the New York Civil Rights Law, section 50-a declares that police officer, firefighter, and corrections officer “personnel records” are confidential and not subject to inspection or review unless the officer gives their permission. Though it was passed to protect personal information of officers who testified in court and prevent harassment by defense attorneys. State courts have created precedent permitting police to conceal almost all records from the public and allowing officers to escape transparency standards other public officials must obey.

Initially, the law only protected off-duty misconduct records such as illegal activities performed off the clock. However, appellate court decisions have expanded the protections of 50-a to include records of police misconduct on duty, such as assaulting civilians while conducting a routine traffic stop or search.

Why Is the Law Being Reviewed?

Though the law has been on the books since the 1970s, the law began receiving more public scrutiny since 2014, when notorious and highly publicized incidents of police violence brought national attention to criminal justice reform. The New York Police Department has cited 50-a numerous times when it has refused to disclose the history of Officer Daniel Pantaleo’s disciplinary actions– the officer responsible for choking Eric Garner to death in Staten Island. His internal NYPD trial is ongoing, but a leaked record of his history of complaints revealed he was the subject of several substantiated complaints for abusive stops and searches of individuals.

What Proposals Are Being Considered?

Though the options of 50-a’s reform or repeal are on the table, the New York City Council is debating a set of bills meant to curtail the city’s broad interpretation of the 50-a law. These bills would require:

  • The NYPD provide prosecutors access to disciplinary records within 24 hours of a request
  • District Attorneys offices provide a breakdown of the number of cases they prosecute and decline to prosecute
  • The NYPD make public their departmental guidelines for discipline, the number of officers disciplined annually, and information on individual cases of misconduct. Currently the Council may obtain information on those cases but cannot public individual proceeding details
  • Reports from the NYPD on how each precinct handles walk-in misconduct complaints
  • Data from the NYPD on second-degree assault, resisting arrest, and obstructing governmental administration arrests

Currently, however, only state legislators can dismantle or reform the 50-a exemptions. The police union, however, has been donating heavily to state politicians in an effort to prevent changes to or a repeal of the law. The legislature has until June 19 to figure out details on the bill before the legislative session ends.

New York Criminal Defense Lawyer

Everyone wants to believe the police will do their duty to protect and serve, but when they fall short of that standard it’s important you have an experienced New York criminal defense attorney by your side to fight for your rights. Contact the experienced team at MOWK Law to have your questions answered and learn about your options today.

divorce couple

The Relationship Between Chapter 7
Bankruptcy and Divorce

Financial difficulties in the United States are all too common a problem and can play a role in marital problems and even divorce. Both New York bankruptcy and divorce laws are can be quite complex; combining the two can create a procedural and legal quagmire with far reaching ramifications and implications for all parties involved. Bankruptcy is primarily a federal law while divorce law is largely set in the state arena. However, because bankruptcy and divorce can occur in rapid succession – even at times simultaneously – the impact of the two and their timing should be explored in more depth.

Chapter 7 Bankruptcy

Chapter 7 is one of the most common forms of bankruptcy alongside Chapter 13. While Chapter 13 requires partial or full repayment of a petitioner’s debt for a period of years before discharging any eligible remaining debt, Chapter 7 is a more complete form of bankruptcy as it will erase all eligible debt without requiring repayment. However, though wider in its scope a Chapter bankruptcy 7 filing does not erase a debtor’s obligation for:

  • Tax debts;
  • Federal student loans;
  • Fines from criminal cases;
  • Domestic support obligations (such as child support and spousal support); and
  • Debts created through fraud.

Both bankruptcy and divorce may be appropriate in certain instances, but the decision of whether to file bankruptcy or divorce proceedings first (or even simultaneously) may depend upon several factors, including:

  • The reasons for either divorce or bankruptcy;
  • The timing of the decision to file either action and benefit to each party involved;
  • Whether a person is eligible to file for bankruptcy relief; and
  • Whether the person wanting to file bankruptcy has assets or income that is collectible.

Divorce Before Bankruptcy

Generally, filing for bankruptcy first is more advantageous as it clarifies the finances of the parties that may later become involved in a divorce. However, there are circumstances where divorce does make sense before filing for bankruptcy:

  • If one spouse wants to use divorce proceedings to get a palimony order that cannot be discharged in a later bankruptcy; or
  • If a spouse is disqualified from filing for bankruptcy during the marriage because the other’s income is too high.

Bankruptcy Before Divorce Proceedings

If circumstances render it appropriate to temporarily refrain from filing for divorce (and both members of the married couple need to file bankruptcy), there can be numerous benefits for married couples to wait to file divorce proceedings until they have filed for bankruptcy and discharged their debt. Benefits to the parties involved may often include:

  • Bankruptcy benefits to the married couple and their assets; and
  • Simplifying and economizing the divorce and bankruptcy process.

Boosting Bankruptcy Benefits

The financial benefits of filing bankruptcy together may benefit married couples who refrain from filing for divorce until afterwards. The Bankruptcy Code allows each debtor filing to claim exemptions – even if the debtors are married to one another. This means married couples filing jointly have double the bankruptcy exemptions that may impact what property and possessions they are permitted to keep safe from creditors – specifically, for the purposes of divorce, the marital residence.

Federal law contains exemptions debtors may use when they file for bankruptcy. Every state also possesses its own set of exemptions, which vary from state to state. Depending upon the most advantageous outcome, married couples filing jointly may elect which exemptions they want to use (but generally may not avail themselves or federal and state benefits).

Simplifying and Economizing

Another benefit of jointly filing bankruptcy first is to simplify the subsequent divorce process. After any marital debt is settled, it no longer needs to be handled during divorce proceedings. This might allow spouses to settle their divorce more rapidly. A simpler divorce can often be less costly, which might put the parties in a better financial position to begin a new chapter of their lives as unmarried individuals.

Legal proceedings may also be time-consuming and costly, and filing a joint bankruptcy before filing a divorce could also vastly reduce expenses for both parties. By not filing separately, they can avoid double court filing fees and legal fees. Bankruptcy also requires the petitioning party produce large volumes of financial documents and personal information to substantiate their assets and the claims of inability to pay their debts.

Concurrent Divorce and Bankruptcy Filings

Simultaneously filing both a bankruptcy and a divorce action is abnormal and not the best course of action in most cases as it leaves assets, spousal and child support, obligations, and property up in the air while both proceedings are being resolved. Additionally, family courts cannot award and distribute assets until any pending bankruptcy is complete. This could drag out a case. The parties can use bankruptcy to delay bank levies or evictions as well as divorce proceedings to establish temporary orders of custody or spousal support in orderly to properly resolve bankruptcy and divorce issues at the same time. Though concurrent filings may be called for on rare occasions, they can be complicated and it is best to speak with an attorney before proceeding to understand your options.

Joint Filing Drawbacks

As much as filing joint bankruptcy might benefit married couples in certain situations, there can be disadvantages to doing so. In some situations, choosing to file jointly under Chapter 7 could render the parties financially ineligible due to their incomes, so they are left with a less complete debt discharge option under Chapter 13.  Filing jointly prior to a filing for divorce may also create a conflict of interest for the attorney representing the married couple, causing a completely different set of problems for all parties involved. These situations require caution and would benefit from the scrutiny of an experienced legal professional.

New York Bankruptcy Lawyer

Both bankruptcy and divorce proceedings can be long, drawn out, complicated, and emotionally draining. However, both can sort out complex situations and settle difficult disputes related to child custody, possession of assets, spousal and child support, debt resolution and allocation.

The decision of if or when to file either may affect strategy and be beneficial to different parties at different times. Given the precarious nature of both divorce and bankruptcy as well as the potentially dire personal and financial consequences poor planning can create, it is advisable to speak to an experienced New York bankruptcy lawyer regarding these matters. At MOWK Law, we know this time is complicated, confusing and emotional and we are here to help with all your legal needs and questions- get in touch with us today.