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BANKRUPTCY

BANKRUPTCY. KEITH BONCHI, ESQ. MICHAEL CAMPBELL, CTC. “HANDS ON FROM A-Z”.

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BANKRUPTCY

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  1. BANKRUPTCY KEITH BONCHI, ESQ. MICHAEL CAMPBELL, CTC “HANDS ON FROM A-Z”

  2. Federal courts have exclusive jurisdiction over bankruptcy cases. Bankruptcy cases cannot be filed in state court. Each of the 94 federal judicial districts handle bankruptcy matters. The primary purposes of the law of bankruptcy are: (1) to give an honest debtor a "fresh start" in life by relieving the debtor of most debts, and (2) to repay creditors in an orderly manner to the extent that the debtor has property available for payment

  3. DISTRICT COURTS WITHIN THE 3RD CIRCUIT 3rd Circuit Delaware Bankruptcy Court New Jersey Bankruptcy Court Pennsylvania Eastern Bankruptcy Court Pennsylvania Middle Bankruptcy Court Pennsylvania Western Bankruptcy Court Virgin Islands District Court

  4. 3RD CIRCUIT NEW JERSEY BANKRUPTCY COURT COURT LOCATIONS WWW.NJB.USCOURTS.GOV NEWARK 50 WALNUT STREET 3RD FLOOR NEWARK, NJ 07102 TRENTON CLARKSON S. FISHER U.S. COURTHOUSE CAMDEN 401 MARKET ST. SECOND FLOOR CAMDEN, NJ 08101 NEWARK * *TRENTON * CAMDEN

  5. When a Taxpayer files a petition in the Federal Bankruptcy Court all creditors must stay all actions against the property under the protection. This includes the Tax Collector who must stop any collection or enforcement process at his disposal. A taxpayer will file his petition in the State he resides in, however it binds you as well as all other creditors to the Bankruptcy proceedings.

  6. Businesses may file in the state where they are incorporated. You may have to deal with other districts and may need to hire an attorney that can practice in that court!

  7. Bankruptcy Chapters Some of the most common methods that are used for protection are:

  8. Chapter 7 Liquidation The Trustee identifies all of the assets of the petitioner and sells them off to pay the creditors (some assets are protected from sale), first to priority creditors and then to general creditors. If there is not sufficient money to pay all creditors then the general creditors will be paid a percentage of the debt. The balance of the debt will be forgiven by the Court. A chapter 7 can be converted to chapter 11 or 13.

  9. Normally municipal liens are a secured debt and entitled priority. However, certain forms such as “proof of claim” forms must be filed by the municipality with the bankruptcy court to protect their claim. If the municipality fails to file a “proof of claim”, the municipal lien may be discharged in Bankruptcy.

  10. Any post petition debt is not protected, but creditors (Municipalities) must seek permission from the bankruptcy court to enforce collection through Tax Sale or Foreclosure. In any of the bankruptcy chapters a municipality may file a motion to obtain “relief from stay” for any undue delay in filing a plan (how the petitioner will pay his Creditors. Tax Collectors should monitor all Bankruptcies for excessive time in proposing a plan and/or non-payment of post petition taxes.

  11. Chapter 11 – Re-organization This chapter is normally used for businesses. Bankruptcies where the petitioner believes that it can pay most of the debt, but just needs time to work out the financial difficulties.

  12. The petitioner will come up with a plan to pay all debts off within five (5) years or less. The plan is submitted to the creditors for their approval. The tax collector should review the plan carefully and respond immediately to the court if the plan is not acceptable to the municipality. If the plan does not pay the municipality its’ lien in full with interest, the municipality must file an objection to confirm or the plan may be confirmed by the court. Once confirmed it is very difficult to have the plan modified.

  13. CHAPTER 12 –FARMERSRe-organization Farming operation Debts of less then $1,500.000.00 Income stable and regular

  14. 3. Chapter 13 This plan is used by individuals with regular income who need time to “reorganize their debt”

  15. Trustee is appointed. 2. Debtor must file a plan with the petition or within 15 days thereafter. 3.The income of the debtor is submitted to the trustee for distribution as directed by the plan. 4.Chapter 13 should provide for full payment to all priority Claims under ss 507.

  16. 5. Plans must be completed within 5 years. 6. Chapter 13 plans may be converted to chapter 7 or be dismissed, once dismissed by the court the municipality may proceed to enforce the collection. 7. As in chapter 11, if the monthly plan is not paid or the subsequent taxes are not paid on time the municipality may move to seek relief from stay.

  17. ONCE YOU ARE NOTIFIED BY THE COURT YOU MUST • STOP ALL ACTION TO: A. Foreclose B. Tax Sale C. Transfer to Lien You may take any payment that is voluntarily paid from the Trustee, Taxpayer, Lien holder, Mortgage Company or Servicing Agent.

  18. THINGS WHICH THE AUTOMATIC STAY ALLOWS THE TAX COLLECTOR TO CONTINUE DOING: • RECORD LIENS • MAIL BILLS • ASSIGN LIENS • ETC. IF YOU ARE NOT SURE CHECK WITH YOUR MUNICIPAL ATTORNEY FIRST

  19. BANKRUPTCY TRUSTEES CHAPTER 13 TRUSTEES Marie Ann Greenberg Newark www.13network1.com Albert Russo Trenton www.russotrustee.com/ Isabel Balboa Camden www.standingtrustee.com/

  20. FILE A PROOF OF CLAIM INTEREST CONTINUES UNTIL DELINQUINCY IS PAID AMORITIZE FROM DATE OF PETITION FOR 5 YEARS ATTACH A COPY OF THE AMORTIZATION SCHEDULE TO THE PROOF OF CLAIM INCLUDE A LIST OF ANY THIRD PARTY LIEN HOLDERS

  21. WHAT SHOULD YOU DO IF Not listed as a creditor Your told not to submit a proof of claim at this time Serial filer Irregular payments Partial payments Post petition becomes delinquent

  22. BANKRUPTCY DEFINITIONS PETITION The application which is filed to commence a bankruptcy case under federal law. AUTOMATIC STAY A federal order which prohibits any creditor from taking any action against the petitioner without the courts permission.

  23. CLAIM Any right topaymentof any type against the debtor DEBTOR The entity or person who has filed apetitionwith the bankruptcy court and is protected by that action. CREDITOR An entity or person that has a claim against the debtor that was owing prior to the filing of the bankruptcy petition.

  24. ORDER FOR RELIEF FROM AUTOMATIC STAY Once granted, this order allows a creditor to pursue a claim for the obligation DISCHARGEABLEDEBTS A debt that the bankruptcy court finds is unsecured or under-secured and arose prior to the confirmation of the plan

  25. PROOF OF CLAIM An official affidavit from a creditor that supports the financial claim of the creditor. The claim must be submitted to the Bankruptcy court in a timely fashion.

  26. DEBTORS ESTATE The filing of the petition creates an estate, that consists of the value of all the property and possessions of the debtor which may be used by the court to pay creditors PLAN OF RE-ORGANIZATION The debtor’s proposal or plan under chapter 11 or chapter 13 that will designate the classes of claim and the proposed payment.

  27. BANKRUPTCY WEB SITE http://pacer.psc.uscourts.gov

  28. AFTER YOU SIGN UP Login: Password: Client Code: A BILL SENT QUARTERLY ON USAGE

  29. ONCE INTO THE WEB SITE • CREDITOR LIST ARE YOU ON IT? WHO ELSE? • STATUS OPEN/CHAPTER/ CLOSED • SEE THE PLAN WHEN & HOW MUCH WILL YOU BE PAID? • ALL MOTIONS WHO MAY BE CHALLENGING WHAT?

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