Is Filing for Bankruptcy 'Dishonest'?

Many people often feel it is somehow ‘dishonest’ or ‘immoral’ to wipe away debts they would otherwise owe. There are three things to bear in mind:

First, and most fundamentally, as a United States Citizen, our Constitution entitles you to the protection of the laws of our country. The bankruptcy laws are enshrined in our legal system. As a U.S. Citizen there is no need to feel ‘bad’ or ‘immoral’’ about availing yourself of the protections of our country’s legal system.

Second, many businesses, credit card companies in particular, are well aware of these laws as well. They lend money and extend consumers a line of credit with full knowledge of the risk that consumers may file for bankruptcy and have these debts extinguished. For them this is simply the cost of doing business.

Finally, many, if not most, creditors, have likely filed for bankruptcy themselves at one point in time. Bankruptcy is simply a normal part of today’s business world. Life frequently presents many previously unforeseen challenges. When individuals and business alike encounter these challenges the bankruptcy process provides a mechanism of relief to enable you to get back on your feet. There is nothing ‘dishonest’ about this.

 At Anderson Shen we can help you determine whether bankruptcy is a viable option for you. To schedule a free consultation call 718-521-6041.

But Do I Really Need to File?

This is a common question we are frequently asked. Many people often seem content to simply let their bills pile up; if they ignore them perhaps they will go away. This is a move fraught with consequences.

So what will happen if I don’t do anything? What happens if I don’t pay my bills and I don’t file for bankruptcy? If you are employed your wages may be garnished. This means that your creditors can actually have your employer deduct money straight from your paycheck, much the same way taxes are deducted, and paid directly to them until the debt is paid off.  This means when you are already struggling under the weight of so many bills you will see even less money in your pocket at the end of each pay period. One of the many advantages to filing for bankruptcy, is that the bankruptcy process will halt garnishments.

Well what if I am not employed? What can the creditors do if I have no money to pay them? In the short term, perhaps not a whole lot. However, if a creditor, credit card companies in particular, take you to court and obtain a judgment against you, they can seize future assets which you may come into. This can come in the form of future wages, inheritance, insurance payouts, even money you may get as a result of a lawsuit if you suffer a personal injury.

The bottom line is that creditors have many means at their disposal of finding and taking your money, either now or in the future. Filing for bankruptcy protects your assets today while at the same time extinguishing most, if not all, of your liabilities.  

Can I Discharge My Tax Liability?

Benjamin Frank once uttered the famous words "In this world nothing can be said to be certain, except death and taxes." Although mostly true, in the land of Bankruptcy, the great forefather is not entirely correct. 

You see, under normal circumstances, a person can only discharge normal unsecured debt like credit cards, repossessed car debt, and any personal debts that do not have collateral attached to them. That means, usually, that Taxes and Student loans survive bankruptcy. 

This can be a potentially disastrous consequence, however, considering some people may have tax liability from a past business or for other reasons. Seeing this potential outcome, Congress carved out a provision where one can actually discharge taxes, but only if they meet a certain number of requirements:

• The Tax Debt can only be for income. That means that the tax cannot be for payroll or some sort of penalty as a result of a fraudulent filing. 
• You did not commit fraud or willful evasion. This is fairly self-explanatory. If you try to cheat the tax man, you can't discharge any debt that results from it. 
• The debt is at least three years old. This means that the tax debt accrued from a year that was over three years ago. That is, if its 2015, you can only discharge debt from 2012 and before (provided you meet the remaining requirements). 
• You filed a tax return at least two years prior to filing. If you haven't filed the return, you cannot discharge it.  
• The income tax debt must have been assessed by the IRS at least 240 days prior to your filing (or not at all).  This is the scary looking document that is provided below. These are essentially collection letters by the IRS or other taxing authority.

If you meet these requirements, you may have dischargeable tax debt. You should, however, always consult with a bankruptcy professional to confirm. 

In the end, Ben Frank was right, Taxes are certain. Whether or not you will need to pay the taxes may not be so certain. Contact our office to discuss.                  

Tax Assessment:

A New Year and New Phone Numbers

Greetings and Salutations:

As we welcome in the New Year at Anderson Shen, we would also like to introduce new phone and fax numbers at our office to better serve your needs. 

Our new telephone number is (718) 521-6041 and our new fax number (718) 504-8626. Please contact these new numbers during our regular business hours, Monday to Friday, 9am to 7pm. Any after-hour phone calls should be made to (929) 251-5191. 

From our family to yours, Happy New Years!

Mail Bag: Warranty of Habitability; Illegal Lockouts; Seeking an Adjournment in Housing Court

This week we tackle some common landlord tenant issues. If you have any questions, you can always contact us at 929-251-5191, email us at manderson@andersonshen.com, or follow us on twitter at @andersonshenlaw. 

If I don't have heat or hot water, what can I do?

If you are having constant problems with warranty of habitability issues, do something about it. Examples of breaches of the warrant of habitability are as follows: 

___ Water leaks or floods 
___ No hot water 
___ No heat 
___ Problem with pipes 
___ Radiator problems (too much heat, broken, exploding, noisy) 
___ Electric (broken outlets or light fixtures, exposed or bad wiring) 
___ No electricity or only extension cords 
___ Mice/Rats/Vermin 
___ Roaches/Insects/Bugs 

If you are having these issues, file an HP Action at your local housing court. In this proceeding, the court will conduct an inspection and see if there are any violations. If so, your landlord can face fines and be forced to remediate the issue. 

To start an HP Action either contact us or visit your local housing court. 

Can my landlord lock me out of my apartment or evict me without using the courts in New York City?

No landlord may use self-help measures to forcibly evict a tenant, such as shutting off utilities, denying access to the leased premises or by threatening the tenant. If they do, he or she may be subject to damages to the tenant (sometimes up to triple the value of the property that was removed). Self help is evicting someone without court or police assistance. I would contact a lawyer or your local housing court to file an illegal lockout proceeding.

If I am in housing court, can I adjourn my case? How many times?

It depends. Each side, Petitioner (Landlord) and Respondent(Tenant) get one adjournment as a matter of right. Technically, according to RPAPL 745, an adjournment can be obtained in housing court, but not longer than ten days, UNLESS the tenant deposits all amounts demanded with the clerk of court. The typical reason for the tenant is to obtain an attorney. 

However, this rule is often not followed or honored, due to practical considerations. Because of the court's heavy docket, cases often get adjourned because they just don't have time to hear them. So, if a case is moved from the settlement part (Part A, B, C, etc) to the trial part (Part X) and your case is adjourned because there are no judges available to hear the case, an application to receive rent for said adjournment are unlikely because the adjournment was out of the tenant's hands. Even if it is the tenants fault, the adjournment without rent monies is likely.

However, if you are a tenant in part 52 (commercial part), the judge may likely order a rent deposit on a 2nd adjournment. Things are a little more serious there. 

That's all for today. Stay tuned for further posts. Follow us on twitter at @andersonshenlaw. 

Mail Bag: Debt Collection, Information Subpoenas and Liens

This week, we have assortment of debt collection and bankruptcy questions. We hope you find this helpful. 

Question: I currently got my wages garnished by a creditor collection agency. I called them and they told me it was for a account back in 2001. I called the credit card company and explained that I never had a card with them. If I don't feel like I owe the money, what can I do?

Answer: If you feel as if you do not owe the amounts due in the judgment and you have reasonable excuse for not showing up to court (e.g. you were not served with papers), then you should file an order to show cause (motion) to vacate your default. Once this motion is filed, a court date will be generated. On the court date given, the credit card attorney will have to provide you and the court with proof as to the amounts owed and the contract which indicates the obligation. Although this action can be taken without an attorney, I would advise that you at least consult with one prior to submitting your motion with the court.

Question: What is an information subpoena and do I need to answer it?

Answer: An information subpoena is a fairly lengthy list of questions that aim at finding assets of a debtor. If the questions do not satisfy the creditor, then they can hold a deposition where the creditor will have an opportunity to ask more pointed questions about the debtors assets. If the debtor has no assets and has no wage, they are what some call "judgment proof," meaning they have nothing that the creditor can get. However, if the debtor has some money or property, a creditor can do many things to execute on a judgment: bank garnishments, wage garnishments (income execution), property liens, and the list goes on. If the debtor willfully disregards the information subpoena or notice of deposition, they can be held in contempt. If you have a judgment against you and you don't have a lot of assets, one thing to consider would be bankruptcy. 

Question: I don't have any income, not a lot of assets, and only a little equity in my house, what can I do if my mortgage company received an information subpoena in the mail?

Answer: If someone has obtained a judgment against you then one way that they can execute on that judgment is by placing a lien on your house. If you have low or no income, then the creditor will likely not choose to garnish your wages or bank account because you don't have enough for the creditor to take. However, if the creditor learns that you own property that has significant equity, they may opt to place a lien on the property. By doing so, the creditor will be able to obtain monies if/when your property is sold, assuming there is something left over from the satisfaction of your mortgage and other priority liens. The letter your mortgage company received is likely the creditor attempting to see if its worth going through the effort of putting a lien on your property. If you have a low income, low equity in your home, and very few assets, one thing to consider would be bankruptcy, which can discharge certain debts that are the basis of a judgment.

We will be back next week to answer more questions. If you have any questions, call or email us at manderson@andersonshen.com.