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If a customer, tenant or other person has filed for bankruptcy and owes you money, you have a problem.
If a Bankruptcy Trustee has contacted you about payment from a person who is now in bankruptcy, you have a problem.
If your former or soon to be former spouse has filed for bankruptcy and owes you money you have a problem.
If the person who injured you in a car accident has filed for bankruptcy you have a problem.
We have solutions.
Our firm has significant experience in dealing with the many ways in which non-debtors can be forced to interact with the Bankruptcy system. Creditors need to take particular care in dealing with bankrupt debtors so as to protect their interests while avoiding violating the rights of the Debtor, which can have significant penalties. In some cases, the bankruptcy system can add insult to the injury of not getting paid when a Trustee comes calling, asking for money that you were paid and SPENT months ago.
When dealing with these issues, an ounce of prevention is worth a pound of cure. Our experienced attorney can help you negotiate the complexities of the bankruptcy system to resolve these issues and mitigate the risks of not complying with the bankruptcy code.
Don’t go it alone. We can help you. Contact our office to arrange a consultation today.
Bankruptcy involves more than debtors. If you are a creditor, or if you rent property to a debtor, then you are involved in a bankruptcy whether you want to be or not. And you need legal advice to ensure your rights are protected.
Scott J. Goldstein represents creditors and other interested parties in bankruptcy litigation. This is the time to reach out to an experienced attorney for advice on how to proceed. If you do not act now, you could easily lose property or see your rights wiped out. A little legal advice upfront can help you avoid a giant headache later, so call us today.
The Bankruptcy Trustee Does Not Represent You
Bankruptcy cases are administered by a trustee, who is supervised by the court and the Office of the U.S. Trustee. Because the trustee gathers assets and distributes proceeds to creditors, some creditors think this person represents them. Wrong!
The trustee doesn’t represent creditors, or the debtor for that matter. Many creditors are disadvantaged by the trustee’s actions. Trustees have reached out to our clients to claw back money or property they received from a debtor, often years before. If a trustee reaches out to you, pick up the phone and call Scott J. Goldstein.
The Automatic Stay & Collection Activity
If you are trying to collect on a debt, any bankruptcy filing dramatically changes the landscape. An automatic stay goes into effect which halts all collection activity against the debtor. From this point on, you need to be extremely careful in what you say or who you contact. If you violate the automatic stay, the court can hit you with steep penalties—thousands and thousands of dollars.
For example, with the automatic stay in effect, you:
- Cannot perfect a security interest
- Cannot contact the debtor
- Must stop any foreclosure or eviction
- Halt all litigation and collection efforts
If you are in the middle of a collection effort, contact our law firm. We will advise you, so you do not run afoul of the automatic stay.
Lifting the Automatic Stay
Under 11 USC § 362, we can ask the court to lift the automatic stay for our creditors if they qualify for an exception. Some of the more common include:
- You have cause, e.g., the debtor has stopped making post-petition payments or lacks insurance for an asset.
- The debtor filed bankruptcy to delay, hinder, or defraud a creditor.
- The debtor has no equity in the property. For example, you might want to foreclose on collateral.
- A debt is excluded from discharge, so you should be able to continue collection efforts.
- If the debtors’ bankruptcy case is dismissed, then the automatic stay should be lifted as well.
Our law firm can file the motion and represent creditors before the judge. The burden is on the creditor to prove they qualify for an exception to the stay. We help our clients pull together solid evidence that a judge will find persuasive and present it in a compelling way. It is also vital not to jump the gun and start up collection efforts until a judge gives approval.
Landlord Eviction & the Automatic Stay
The automatic stay also halts an eviction for non-payment of rent if you do not yet have a judgment of possession. Indeed, many tenants will quickly file bankruptcy to prevent an eviction from going through for unpaid rent.
We can often get the stay lifted, especially where the tenant still refuses to make payments after filing their bankruptcy petition. However, we recommend meeting with an attorney to ensure you follow the process to the letter. It’s hard enough to get tenants evicted in New Jersey, as is. But violating the automatic stay will make things even tougher on landlords.
Proof of Claim
When filing for bankruptcy, debtors list their debts on a schedule. Unfortunately, many of them make errors. You might need to submit a proof of claim to the bankruptcy court within 70 days of the debtor filing if you see an error.
This proof of claim must include certain information, such as:
- Debtor’s name
- Case number
- Your contact information
- The amount of the debt owed
- Whether the debt is secured or unsecured
- The basis for your claim
You can lose your right to payment if you delay. We review all schedules to check whether you need to file a proof of claim.
The bankruptcy code gives the trustee the power to unwind certain transactions as fraudulent. This means the trustee can seek return of property or money, and they can look back two years from the date the debtor filed bankruptcy.
We can help anyone facing a fraudulent transfer action:
- As a creditor, you might want the trustee to unwind a transfer, since that will increase the amount of money you receive. If the debtor gave a car to her sister, for example, then you want to alert the trustee to this transfer so you can receive some of the equity.
- You might have received a transfer of assets, which the trustee is trying to unwind. If so, you should meet with an attorney to review any defenses.
Bankruptcy is an orderly process designed to treat all creditors fairly. Unfortunately, some of our clients are treated very unfairly.
For example, the trustee might bring a preference action to claw back money the debtor paid you on a debt. A clear example involves a debtor who decides to pay off a $15,000 personal loan before filing for bankruptcy. The trustee might require that you pay that money back so it can be distributed fairly between all creditors. Many of our clients have already spent the money and paying it to the trustee could jeopardize their finances.
We can raise certain defenses under 11 USC § 547(c) to fight off a preference action:
- The transfer was made at the same time in exchange for new value.
- The transfer created a security interest for new value.
- The transfer was the payment of a debt incurred during the ordinary course of business.
- The transfer was too small (less than $600 for primarily consumer debts or $5,000 for non-consumer debts).
Before handing over the asset or money, contact an attorney to review.
Objections to Discharge
When debts are “discharged,” they are wiped out, and the creditor cannot collect on them. Creditors can sometimes prevent a debt from being discharged for various reasons. If the debt survives discharge, you can then start up collection once bankruptcy is completed and/or the automatic stay is lifted.
We can object to the discharge of certain debt:
- Large credit card charges for luxury goods or services within the 90-day window before the debtor filed for bankruptcy.
- Large cash advances (more than $1000) in the 70-day period before the debtor filed for bankruptcy
- Any money the debtor obtained by misrepresentation, false pretenses, or fraud.
In an adversary proceeding, we can present evidence to the judge showing the reason why the debt should not be discharged.
Contact a Creditor Rights Attorney in New Jersey
Creditors have rights in bankruptcy, but you can’t expect the trustee or the bankruptcy judge to stand up for you. Instead, reach out to Scott J. Goldstein immediately. Our law firm has helped creditors in a variety of cases in bankruptcy court. We also provide advice to creditors, so they stay on the good side of the automatic stay and avoid a judge’s wrath and monetary penalties. To learn more about how we can help, please call us today at 973-453-2838 to schedule a confidential consultation.
Call the Law Office of Scott J. Goldstein Today
At the Law Offices of Scott J. Goldstein, our New Jersey bankruptcy attorney is experienced and knowledgeable in the bankruptcy process. To learn more about filing for personal bankruptcy in New Jersey, call us today at 973-453–2838.