News & Resources

New York Bankruptcy Judge Bars Mortgage Modification on Debtor’s Two-Family Mixed-Use Home

By Michael L. Moskowitz and Melissa A. Guseynov

In an opinion dated March 9, 2017, Bankruptcy Judge Alan S. Trust dismissed the Chapter 13 petition filed by Mary C. Addams (“Debtor”) on motion of Michael and Jamie Shapiro (“Shapiros”). The motion to dismiss was based upon Debtor’s inability to confirm a feasible Chapter 13 plan. The Shapiros held a second mortgage lien against Debtor’s two-family house where she lived, as well as rented out part of the property. In response to the motion, Debtor sought to bifurcate the Shapiros’ mortgage into secured and unsecured claims. In re Addams, 2017 WL 944190 (Bankr. E.D.N.Y. Mar. 9, 2017). This opinion diverges from rulings in the First and Third Circuits and may ultimately lead to review by the Supreme Court. Read the full opinion here.

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Weltman & Moskowitz Attorneys Named Super Lawyers for 2017

Weltman & Moskowitz, LLP is proud to announce that founding partners Richard Weltman and Michael Moskowitz have both been selected as Metro New York Area Super Lawyers for 2017. This is the fourth consecutive year each has been recognized as a top bankruptcy/debtor and creditors’ rights attorney. This honor is a product of a rigorous investigative process by the publishers of Law and Politics. Attorneys are selected based on professional accomplishments, licensing and certifications, peer recognition and personal achievement. The final published list represents no more than 5% of the lawyers in each state. The firm is also proud to announce that Melissa Guseynov, an associate of the firm, has been selected as a New York Metro Rising Star! This selection is limited to no more than 2.5% of the attorneys in New York State. The Super Lawyers objective is to create a credible list of outstanding attorneys, and the lawyers of Weltman & Moskowitz, LLP are proud to be recognized for their hard work and client dedication.

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Lender Alert: New Jersey Bankruptcy Court Allows Debtor to Strip Lien Securing Spousal Obligation

By Michael L. Moskowitz and Melissa A. Guseynov

On September 23, 2016, Bankruptcy Judge Christine M. Gravelle, U.S.B.J. held that a chapter 13 debtor may strip off a wholly unsecured lien on a primary residence where the debtor is the sole owner of the property, even if the non-debtor ex-spouse is liable on the debt which the debtor seeks to strip. In re Mensah-Narh, 2016 WL 5334973 (Bankr. D.N.J.. Sept. 23, 2016).  Read the full opinion here.

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CIRCUIT SPLIT: Tennessee District Court Holds That Tax Debt Resulting from Late-Filed Tax Return May be Dischargeable in Bankruptcy

By Michael L. Moskowitz and Melissa A. Guseynov

On September 9, 2016, District Judge Waverly D. Crenshaw, Jr., sitting in the United States District Court for the Middle District of Tennessee, held that a debtor’s tax debt relating to a late-filed tax return may be dischargeable in certain circumstances. Biggers v. Internal Revenue Service, 2016 WL 5121893 (M.D. Tenn. Sept. 9, 2016). Read the full opinion here.

This decision widens the judicial split regarding the dischargeability of tax debt for late-filed returns in personal bankruptcy cases. Specifically, the First, Fifth and Tenth Circuits have held that if a debtor’s tax return is filed even one day late, the debt may not be discharged because of the language added to Section 523(a) of the Bankruptcy Code in 2005. However, the Fourth, Seventh, Eighth and Eleventh Circuits adhere to a four-prong test arising out of Beard v. Commissioner, a 1984 Tax Court decision. Courts employing the Beard test focus on the fourth factor, which analyzes whether there was an honest and reasonable attempt to satisfy the requirements of tax law.   

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Welcome to the Weltman & Moskowitz Team, Melissa!

Please help welcome our newest team member, Melissa Dlugokencky!

Melissa will be working closely with our bankruptcy, litigation and foreclosure attorneys. She brings to Weltman & Moskowitz proven legal assisting skills, an undergraduate degree from Dowling College and her paralegal certification from Queens College. Before joining us, Melissa concentrated on litigation and transactional matters at Cohen & Slamowitz (n/k/a Selip  & Styloanou, LLP), and Baker, McEvoy, Morrissey & Moskovits, P.C. You can reach Melissa at md@weltmosk.com.  

We hope you’ll say hello to Melissa the next time you call or stop in.  

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Weltman & Moskowitz Founding Partners Named Super Lawyers for 2016

Weltman & Moskowitz, LLP is proud to announce that Richard Weltman and Michael Moskowitz have both been selected as Metro New York Area Super Lawyers for 2016. This is the third consecutive year each has been recognized as a top bankruptcy/debtor and creditors’ rights attorney. This honor is a product of a rigorous investigative process by the publishers of Law and Politics. Attorneys are selected based on professional accomplishments, licensing and certifications, peer recognition and personal achievement. The final published list represents no more than 5% of the lawyers in each state. The Super Lawyers objective is to create a credible list of outstanding attorneys, and the partners of Weltman & Moskowitz, LLP are proud to be recognized for their hard work and client dedication.

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SCOTUS: False Representation Now Unnecessary to Find Consumer Bankruptcy Fraud

By Richard E. Weltman and Melissa A. Guseynov

SCOTUS: False Representation Now Unnecessary to Find Consumer Bankruptcy Fraud by Richard E. WeltmanWe previously reported on the split among the federal circuit courts of appeal concerning circumstances under which a debtor’s discharge with regard to a particular debt may be denied based on actual fraud if, prior to filing, the debtor transferred assets away from creditors without directly misleading them. In Husky International Electronics, Inc. v. Ritz, the United States Supreme Court settled the split of opinion among the lower courts, holding that debtor’s actual misrepresentation is not a necessary prerequisite to demonstrate “actual fraud” under section 523(a)(2)(A). Husky Inter. Elect., Inc. v. Ritz, 136 S.Ct. 1581 (2016).

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Bankruptcy Update: New Jersey Bankruptcy Judge Allows Debtor to Retain Inherited IRA

By Michael L. Moskowitz and Melissa A. Guseynov

Bankruptcy Update: New Jersey Bankruptcy Judge Allows Debtor to Retain Inherited IRA by Michael L. Moskowitz and Melissa A. GuseynovIn 2013 the Supreme Court held that funds held in an inherited non-spousal IRA were not exempt under Section 522 of the Bankruptcy Code. You can read our blog article on Clark v. Rameker here. However, in a New Jersey bankruptcy court decision handed down last month, Bankruptcy Judge Christine M. Gravelle held that an inherited IRA is not property of the debtor’s bankruptcy estate, regardless of whether it would be characterized as an exempt asset under the Bankruptcy Code. In re Norris, 2016 WL 2989234 (Bankr. D.N.J. May 20, 2016).

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Bankruptcy Update: Seventh Circuit Holds That Tenant’s Pre-Petition Termination of Lease May be Voidable in Bankruptcy

By Michael L. Moskowitz and Melissa A. Guseynov

Bankruptcy Update: Seventh Circuit Holds That Tenant’s Pre-Petition Termination of Lease May be Voidable in Bankruptcy by Michael L. MoskowitzOn March 11, 2016, the Court of Appeals for the Seventh Circuit held that a tenant debtor’s pre-petition lease termination may be voidable as a fraudulent conveyance or a preferential transfer in the tenant’s subsequent bankruptcy case. In re Great Lakes Quick Lube LP, 816 F.3d 482 (7th Cir. 2016).

In this case, fifty-two days prior to filing for bankruptcy protection, Great Lakes Quick Lube LP (“Debtor”), surrendered two profitable commercial leases to its landlord for various business-related purposes. Following Debtor’s chapter 11 filing, its official committee of unsecured creditors commenced an adversary proceeding seeking to void the lease terminations, arguing the lease terminations were either preferential or fraudulent transfers. After trial, the Bankruptcy Court ruled in favor of Debtor holding, among other things, that the lease terminations did not constitute transfers. The decision was directly appealed to the Seventh Circuit.

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Condominium Associations in New Jersey Score Big Win Protecting Pre-Petition Liens in Consumer Bankruptcy Cases

By Michael L. Moskowitz

Condominium Associations in New Jersey Score Big Win  Protecting Pre-Petition Liens in Consumer Bankruptcy Cases by Michael L. MoskowitzPost-petition claims of condominium associations for common charges have always held a protected status when a consumer debtor files for bankruptcy relief. Under 11 U.S.C. §523 (a)(16), as amended in 2005, chapter 7 debtors who retain legal, equitable and/or possessory ownership interest in their condominium unit remain liable for post-petition condominium charges.

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Don’t Be Fooled: Bankruptcy Exemptions & Dollar Amounts Rose Again on Apr 1

By Richard E. Weltman

Don’t Be Fooled: Bankruptcy Exemptions & Dollar Amounts Rose Again on April 1 By Richard E. WeltmanA 3% cost of living adjustment became effective for new bankruptcy cases filed on and after April 1, 2016, according to the Judicial Conference of the United States. This means certain dollar amounts relating to small business chapter 11 cases, preference claims, means testing, and property exemptions went up. These adjustments to the federal Bankruptcy Code are automatically issued every three years to keep up with inflation.

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Lender Advisory: Second Circuit Approves Debtor’s FDCPA Lawsuit After Receiving Bankruptcy Discharge

By Michael L. Moskowitz and Melissa A. Guseynov

Lender Advisory: Second Circuit Approves Debtor’s FDCPA Lawsuit After Receiving Bankruptcy Discharge by Michael L. MoskowitzIn a recent decision of relevance to lenders, Garfield v. Ocwen Loan Servicing, LLC (“Ocwen”), 2016 WL 26631 (2d Cir. Jan. 4, 2016), the Court of Appeals for the Second Circuit held that a debtor may commence a lawsuit to dispute a lender’s collection practices under the Fair Debt Collection Practices Act (“FDCPA”) after receiving a discharge in bankruptcy.  

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Lender Alert: Chapter 13 Debtor Can't Compel Secured Lender to Accept Title to Surrendered Collateral

By Michael L. Moskowitz and Melissa A. Guseynov

Lender Alert: Chapter 13 Debtor Can't Compel Secured Lender to Accept Title to Surrendered Collateral by Michael L. MoskowitzIn a recent opinion, Bankruptcy Judge James L. Garrity, Jr., sitting in the Southern District of New York, held that a debtor cannot confirm a chapter 13 plan over a lender’s objection where the plan would compel the transfer of title to the secured creditor, explaining that forcing title onto the creditor would transform the creditor’s right to recover its collateral into an obligation, thereby rewriting the Bankruptcy Code and the underlying loan documents. In re Sherwood, 2016 WL 355520, at * 7 (Bankr. S.D.N.Y. Jan. 28, 2016).

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Foreclosure Alert: Failure to Establish Proper Mailing Practices Can Lead to Foreclosure Case Dismissal

By Michael L. Moskowitz and Michele Jaspan

Foreclosure Alert: Failure to Establish Proper Mailing Practices Can Lead to Foreclosure Case Dismissal by Michael L. MoskowitzWe previously reported on the importance of strict compliance with the mailing of the 90-day pre-foreclosure notice pursuant to RPAPL §1304 (“Notice”). Such strict compliance has become fodder for defendants’ lawyers as failure to give such notice to all persons signing either the note or mortgage, as a borrower, is a fatal defect. Lender’s failure to comply with this important condition precedent will result in case dismissal.

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Lender Update: Louisiana Bankruptcy Judge Allows Chapter 7 Debtor to Strip-Off Wholly Unsecured Judicial Lien

By: Michael L. Moskowitz and Melissa A. Guseynov

Lender Update: Louisiana Bankruptcy Judge Allows Chapter 7 Debtor  to Strip-Off Wholly Unsecured Judicial Lien by Michael L. MoskowitzA chapter 7 debtor in Louisiana recently succeeded in avoiding a $180,000 judgment lien on her home after a bankruptcy judge concluded that the United States Supreme Court's holding in Dewsnup v. Timm, 502 U.S. 410 (1992) is not applicable to non-consensual judicial liens. In re Mayer, 2015 WL 7424327 (Nov. 20, 2015).  

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Supreme Court Expected to Take Close Look at Student Loan Debt in Bankruptcy: ‘Fresh Start’ or ‘Undue Hardship’?

By Richard E. Weltman and Melissa A. Guseynov

Supreme Court Expected to Take Close Look at Student Loan Debt in Bankruptcy: ‘Fresh Start’ or ‘Undue Hardship’ By Richard E. WeltmanWe have previously reported on judicial treatment of student loan debt dischargeability in bankruptcy—more specifically, how federal courts construe section 523(a)(8) of the Bankruptcy Code, which prohibits bankruptcy courts from discharging most student loan debt “unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents.” 11 U.S.C. § 523(a)(8).  

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Lender Advisory: E.D.Pa. Clarifies Interplay Between FDCPA and Bankruptcy Code

By Richard E. Weltman and Melissa A. Guseynov

Lender Advisory: E.D.Pa. Clarifies Interplay Between FDCPA and Bankruptcy Code By Richard E. WeltmanIn a recent decision important to lenders, Torres v. Asset Acceptance, LLC, the Hon. Eduardo C. Robreno, U.S.D.J., held that filing a stale proof of claim in bankruptcy court cannot form the basis of a claim under the Fair Debt Collection Practices Act (“FDCPA”).

The facts are as follows: Margaret Torres filed for relief under Chapter 13 in the United States Bankruptcy Court for the Eastern District of Pennsylvania. Creditor, Asset Acceptance, thereafter filed a proof of claim for “money loaned.”

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Foreclosure Advisory: Mortgagee's Lack of Good Faith May Lead to Forfeiture

By Michael L. Moskowitz and Melissa A. Guseynov

Foreclosure Advisory: Mortgagee's Lack of Good Faith May Lead to Forfeiture By Michael L. MoskowitzIn the recent case of Federal National Mortgage Assoc. v. Singer (Case No. 850039/2011, Sup Ct, NY County, July 21, 2015), Manhattan Supreme Court Justice Peter Moulton determined that two mortgage banks, Federal National Mortgage Association and Bank of America, N.A. (“Lenders”), must forfeit more than $100,000.00 in accrued mortgage interest for acting in bad faith regarding borrower requests for mortgage modifications.   

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Supreme Court Asked to Resolve Circuit Split Regarding Consumer Bankruptcy Fraud

By Richard E. Weltman and Melissa A. Guseynov

Supreme Court Asked to Resolve Circuit Split Regarding Consumer Bankruptcy Fraud By Richard E. WeltmanThe United States Supreme Court has been asked to resolve another split among the circuit courts assessing fraud in consumer bankruptcy cases. At issue is whether debtors in chapter 7 and chapter 13 cases can have their debt discharges blocked under section 523(a)(2)(A) of the bankruptcy code, following pre-petition efforts to transfer assets away from creditors without directly misleading them. The First and Seventh Circuit Courts of appeal have both issued holdings that directly conflict with a recent ruling by the Fifth Circuit. The Second Circuit has not directly addressed whether a court may find “actual fraud” absent a specific finding of misrepresentation by a debtor.

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2015 Mid-Year Review of Supreme Court Bankruptcy Decisions: Part 5

Harris v. Viegelahn

Debtor Who Converts to Chapter 7 Is Entitled to Return of Funds Not yet Distributed By Chapter 13 Trustee

 By Michael L. Moskowitz and Melissa A. Guseynov

2015 Mid-Year Review of Supreme Court Bankruptcy Decisions: Part 5 By Michael L. MoskowitzOn May 18, 2015, in Harris v. Viegelahn, the United States Supreme Court unanimously held that undistributed plan payments made by a debtor from his or her wages, and held by a Chapter 13 trustee at the time of the case’s conversion to Chapter 7, must be returned to the debtor. Harris v. Viegelahn, 135 S.Ct. 1829 (2015). The decision resolves a Circuit split, as well as an issue that has divided bankruptcy courts for decades.

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2015 Mid-Year Review of Supreme Court Bankruptcy Decisions: Part 1

Bank of America, N.A. v. Caulkett

Junior Mortgages Remain Viable Liens Even if Residential Property is Completely Underwater in a Chapter 7 Case

By Michael L. Moskowitz and Michele K. Jaspan

2015 Mid-Year Review of Supreme Court Bankruptcy Decisions: Part 1 By Michael L. Moskowitz and Michele K. JaspanThe United States Supreme Court recently reversed a ruling from the Eleventh Circuit in the case of Bank of America, N.A. v. Caulkett, which had permitted individual chapter 7 debtors to “strip” junior liens off their homes when the first mortgage lien was underwater. The Supreme Court held that a debtor in a chapter 7 proceeding may not void a junior mortgage lien under section 506(d) of the Bankruptcy Code when the debt owed on a senior mortgage lien exceeds the current value of the collateral, if the creditor’s claim is both secured by a lien and allowed under section 502 of the Bankruptcy Code.

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Lenders Beware: Automatic Freezing of Debtor’s Account Without Legal Review Can Be Costly

By Michael L. Moskowitz

Lenders Beware: Automatic Freezing of Debtor’s Account Without Legal Review Can Be Costly By Micahel MoskowitzIn December 2014, the Chief U.S. Bankruptcy Judge for the Southern District of New York, Cecelia Morris, handed a setback to lenders (In re Weidenbenner, Bankr. S.D.N.Y., No. 14-35443, 12/12/14), when she concluded a financial institution violates the automatic stay imposed upon the filing of a chapter 7 petition pursuant to 11 U.S.C. §362, simply by freezing a debtor’s bank account where it turns out no right of setoff exists.

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Lender Alert: New Jersey Appeals Court Holds that Homeowners May Sue Over Denial of Mortgage Modifications

By Michael L. Moskowitz

Lender Alert: New Jersey Appeals Court Holds that Homeowners May Sue Over Denial of Mortgage Modifications By Michael L. MoskowitzA New Jersey Appeals Court recently held that homeowners who enter into trial agreements to modify their mortgages under the Federal Home Affordable Modification Program (“HAMP”), and comply with the terms thereof, may commence suit for breach of contract, and possibly consumer fraud, if lenders deny them permanent modifications.

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Supreme Court Rules Inherited IRAs are Not Protected in Bankruptcy

Supreme Court Rules Inherited IRAs are Not Protected in Bankruptcy By Michael L. Moskowitz and Melissa A. GuseynovPartner Michael L. Moskowitz and Associate Melissa A. Guseynov co-authored an article published in the December 2014 issue of Nassau Lawyer. They discussed the Supreme Court decision that inherited IRAs are not protected in bankruptcy, a timely topic Weltman and Moskowitz has been following and reporting on regularly.

Read an excerpt of the article below.

Supreme Court Rules Inherited IRAs are Not Protected in Bankruptcy 

By Michael L. Moskowitz and Melissa A. Guseynov

On June 12, 2014, in a unanimous 9-0 decision in Clark v. Rameker, the United States Supreme Court ruled that inherited individual retirement accounts(IRAs) are not retirement funds within the meaning of the Bankruptcy Code.1 This decision resolves a split among the federal appellate courts about the status of IRAs that parents leave to their children and others.

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NY’s Highest Court to Rule on NYC Debt Collection Statute

By Richard E. Weltman

NY’s Highest Court to Rule on NYC Debt Collection Statute By Richard E. WeltmanNew York State’s highest court recently agreed to consider whether New York City's effort to limit law firms’ ability to collect debts violates the state's exclusive power to regulate attorney conduct.

The Court of Appeals will take up two certified questions from the United States Court of Appeals for the Second Circuit, which ruled that the case — in which Eric Berman PC and Lacy Katzen LLP contest the legality of Local Law 15 — raises unresolved and significant issues about the scope of New York State’s exclusive authority to regulate attorney activities. Berman v. City of New York, 2014 WL 5463299 (Oct. 29, 2014).

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ALERT: New York’s Highest Court Rules for Debtor’s Right to Protect Rent-Stabilized Lease in Bankruptcy

By Michael L. Moskowitz

ALERT: New York’s Highest Court Rules for  Debtor’s Right to Protect Rent-Stabilized Lease in Bankruptcy By Michael L. MoskowitzA long journey has finally come to an end for Mary Veronica Santiago-Monteverde (“Debtor”), an elderly widow, who has resided in a Manhattan rent-stabilized apartment for more than 40 years. We have reported previously on Debtor’s opposition to her chapter 7 trustee’s efforts to sell her rent-stabilized lease to her landlord as a so-called asset of the bankruptcy estate.   

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ALERT: Update on Debtor Efforts to Strip-Off Underwater Mortgages in Chapter 7 Supreme Court Grants Certiorari to Mortgage Lender

ALERT: Update on Debtor Efforts to Strip-Off Underwater Mortgages in Chapter 7  Supreme Court Grants Certiorari to Mortgage Lender By Michael L. MoskowitzWe have previously reported on an Eleventh Circuit case entitled Bank of America, N.A. v. David Lamar Sinkfield (No. 13-700), in which the Supreme Court denied Bank of America’s petition for certiorari regarding whether section 506(d) of the Bankruptcy Code allows a debtor to remove or strip-off a wholly unsecured—or “underwater”—mortgage lien in chapter 7 bankruptcy. See the original article here.

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Update on NYC Rent Stabilization: City and State Officials Advocate for Debtor

Update on NYC Rent Stabilization: City and State Officials Advocate for Debtor By Michael L. MoskowitzWe have reported several times in connection with the chapter 7 case of Mary Veronica Santiago-Monteverde (“Debtor”), an elderly widow, who has resided in a rent-stabilized apartment in New York City since the 1970s. To see the prior articles click here.

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NY Appellate Division Sets Boundaries on Mandatory Foreclosure Conferences Held Pursuant to NY CPLR §3408

By Michael L. Moskowitz

NY Appellate Division Sets Boundaries on Mandatory Foreclosure Conferences Held Pursuant to NY CPLR §3408The New York Supreme Court Appellate Division for the Second Department recently clarified that New York’s CPLR§ 3408, which requires parties in a residential foreclosure action to participate in a settlement conference, was not applicable where the mortgage collateralized a personal guaranty of a commercial loan to a corporation. Independence Bank v. Valentine, 113 A.D. 3d 62 (2d. Dept 2013).  

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Stern v. Marshall Update: Sixth Circuit Confirms Bankruptcy Court Power to Enter Money Judgments in Non-Dischargeability Actions

By Richard E. Weltman

Stern v. Marshall Update: Sixth Circuit Confirms Bankruptcy Court Power to Enter Money Judgments in Non-Dischargeability ActionsIn its recent decision, Hart v. Southern Heritage Bank, 2014 WL 1663029 (6th Cir. April 28, 2014), the Sixth Circuit Court of Appeals determined that the United States Supreme Court’s seminal holding in Stern v. Marshall, 131 S. Ct. 2594 (2011) does not preclude a bankruptcy court from issuing final judgments in non-dischargeability challenges under section 523(a)(2)(B) of the Bankruptcy Code.

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More Judicial Oversight to Expedite NY’s Mandatory Foreclosure Conferences

More Judicial Oversight to Expedite  NY’s Mandatory Foreclosure ConferencesNew York’s Office of Court Administration recently announced relief for lenders and homeowners frustrated by high case volume delays affecting mandatory foreclosure settlement conferences in certain courts. Litigants will soon enjoy immediate and direct access to judges at these conferences in Kings, Queens, Nassau and Suffolk counties, the four counties with the highest foreclosure case volumes in the state.

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New York Courts Target Rules on ‘Zombie Debts’

By Richard E. Weltman

New York Courts Target Rules on ‘Zombie Debts’ By Richard E. WeltmanResponding to what he termed a “continuing stream of complaints,” New York’s Chief Judge Jonathan Lippman on May 1 announced that New York courts are proposing new rules to crack down on the filing of so-called “zombie debts,” insufficiently documented claims for default judgments against consumer debtors.

Judge Lippman wants creditors seeking to collect the debts—some of which may have been sold and resold by third-party credit buyers—to prove the obligations are actually outstanding and owed by those named in collection actions before New York courts will enforce them on behalf of creditors.

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Update: Supreme Court Rules That Inherited IRAs Are Not Protected In Bankruptcy

By: Michael L. Moskowitz

Supreme Court Rules That Inherited IRAs Are Not Protected In Bankruptcy By Michael L. MoskowitzLess than three months ago, we reported on a case in which the Supreme Court heard oral argument concerning whether or not inherited IRA accounts constitute retirement funds. See previous article (Supreme Court to Decide Dispute Regarding Inherited IRAs in Bankruptcy) here. On June 12, 2014, in a unanimous decision, the Supreme Court, in Clark v. Rameker, 13-299, ruled that inherited IRAs are not retirement funds within the meaning of the Bankruptcy Code.

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Update on Bankruptcy Exemptions: Bankruptcy Court Order Protects Debtor from Eviction

Update on Bankruptcy Exemptions: Bankruptcy Court Order Protects Debtor from EvictionWe recently reported on whether a bankruptcy debtor’s rent-stabilized lease constitutes an exempt asset in the form of a “local public assistance benefit” under New York Debtor and Creditor Law. The case is presently under consideration before the New York Court of Appeals.

Weltman & Moskowitz began following the case in October, when we reported on the chapter 7 trustee’s efforts to sell the rent-stabilized lease of Mary Veronica Santiago-Monteverde (“Debtor”), a 79-year-old widow. Many readers have been following the debtor’s opposition to the chapter 7 trustee’s efforts to sell the debtor’s interest in her rent-stabilized lease to the landlord as an asset of the bankruptcy estate.

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Update on Debtor Efforts to Strip-Off Unsecured Mortgage Liens: Supreme Court Denies Certiorari to Mortgage Lender in Sinkfield

Update on Debtor Efforts to Strip-Off Unsecured Mortgage Liens: Supreme Court Denies Certiorari to Mortgage Lender in SinkfieldThe United States Supreme Court recently denied a creditor’s petition for certiorari in an Eleventh Circuit case entitled Bank of America, N.A. v. David Lamar Sinkfield (No. 13-700). The issue concerns whether section 506(d) of the Bankruptcy Code allows a debtor to remove or strip-off a wholly unsecured—or “underwater”—mortgage lien in chapter 7 bankruptcy.

 

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Bankruptcy Fees Rise as of June 1

The United States Judicial Conference recently approved changes to the federal court miscellaneous fee schedules, including certain bankruptcy filing fees.

As of  Sunday, June 1, 2014, the filing fees for most bankruptcy matters will rise. These fees are collected from both debtors and creditors accessing the federal bankruptcy courts, whether in person or online.

 

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Update On NYC Rent Stabilization: Bankruptcy Law Meets Public Policy

By Michael L. Moskowitz

Last October we reported on the travails of Mary Veronica Santiago (“Debtor”), a 79-year-old widow embroiled in a dispute with her chapter 7 bankruptcy trustee John Pereira. The issue is whether the “value” in her New York City rent-stabilized lease can be considered an exempt asset protected from sale in a bankruptcy case. At stake is the Debtor’s ability to continue to reside in her apartment free of creditor claims. Given the many thousand rent protected tenants, this is where public policy and federal bankruptcy law intersect. To see the prior article click here.

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Supreme Court to Decide Dispute Regarding Inherited IRAs in Bankruptcy

On March 24, 2014, the United States Supreme Court heard oral arguments in the matter of Clark v. Rameker (In re Clark). The court appeared to be divided over reconciling the plain language of the Bankruptcy Code with what could be considered a windfall for the debtor. Clark involves the dispute over whether creditors can reach a debtor’s non-spousal inherited individual retirement account (“IRA”) in bankruptcy.

The Bankruptcy Code allows debtors to claim certain property as exempt by utilizing exemptions under state law or those specifically provided in the Bankruptcy Code.[1] Sections 522(b)(3)(C) and (d)(12)[2] allow debtors to exempt retirement funds, even where the state has opted out of the federal exemptions.

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BAPCPA: Monumental Failure or Work in Process?

In 2005, after 12 years of Congressional wrangling, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”).

 

The avowed purpose of BAPCPA was to reduce abusive filings by limiting consumer debtor’s access to chapter 7 relief. The financial service industry argued the change was needed to curb consumers’ “profligate spending” and perceived lax bankruptcy rules. By reducing access to chapter 7, lenders suggested that they would see increased distribution from those new chapter 13 cases due to limitations placed upon chapter 7 flowing from the so-called “means test.”

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Understanding Reaffirmation Agreements

Attached is a wonderful reference guide published by the City Bar Justice Center titled Understanding Reaffirmation Agreements. A reaffirmation agreement is a contract between a debtor and creditor wherein the debtor agrees the creditor’s debt will survive the bankruptcy discharge. The authority for entry into a reaffirmation agreement can be found in 11 U.S.C. §524(c). Debtors and creditors alike are typically barraged with misinformation regarding when reaffirmation agreements are appropriate.

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Creditor’s Rights Update: New York Bankruptcy Court Declares Debt Owed to Sexually Abused Child Non-dischargeable in Mother’s Bankruptcy

Not every debt is entitled to be forgiven in bankruptcy. In a recent Northern District of New York bankruptcy decision, Chief Bankruptcy Judge Robert Littlefield Jr. held that a woman’s $3.75 million default judgment against her mother for negligent infliction of emotional distress would be excepted from discharge in her mother’s subsequent bankruptcy case. In re Irene Chaffee (Chaffee v. Chaffee), No. 07-90171 (Bankr. N.D.N.Y. September 3, 2013).

 

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Upcoming Event: January 29, 2014 - Partner Michael Moskowitz Speaks on Consumer & Corporate Bankruptcy Issues

Michael Moskowitz will be a featured speaker at the New York State Bar Association’s Annual Meeting on January 29, 2014. Mr. Moskowitz’s panel, one of  three to be presented by the Young Lawyers Section, will focus on consumer and corporate bankruptcy issues.  insert excerpt info here.

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Rent Stabilization & Bankruptcy: Nightmare for NYC Tenants or Boon for Landlords and Owners?

We recently re-tweeted an article published in The New York Times on Monday October 21, 2013, entitled “Widow’s Bankruptcy Case Poses Risk to Rent-Stabilized Tenants.” 

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Chapter 13 Creditor’s Success Story Starts With Engagement of Skilled NY Bankruptcy Law Team

One of our lender clients, a New York City-based Federal Credit Union, came to us with a dilemma.

It seems the credit union was not receiving post-petition mortgage payments from its borrower, a chapter 13 debtor. Nor was the client receiving distribution payments from the debtor’s chapter 13 trustee. The lender had relied upon foreclosure counsel to handle the chapter 13 filing. Unfortunately, foreclosure counsel, not familiar with chapter 13 practice, only filed a Notice of Appearance and nothing else, not even a proof of claim.

 

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Loss Mitigation: How Borrower Bankruptcies Impact Lenders

Between 1998 and 2007, home mortgage debt nearly tripled from 4 trillion dollars to 10 trillion dollars. This mortgage boom resulted from easy lending and questionable subprime market practices. When the housing bubble burst, the economy tumbled. Many borrowers found themselves both unable to make mortgage payments and owners of real property worth less than what they owed. In response, many homeowners filed bankruptcy petitions either under chapter 7 to surrender their home, or chapter 13 to stop a foreclosure, repay pre-petition arrears, and hold on to their home.

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Student Loans in Bankruptcy Update

In re Marlow, the United States District Court for the Eastern District of Tennessee affirmed that the debtor failed to demonstrate that paying his graduate and law school student loans constituted an undue hardship pursuant to the Brunner test, which was adopted by the Sixth Circuit.  In re Marlow, 2013 WL 3515726, at * 3 (E.D. Tenn. 2013).

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Tide May be Turning for Student Loan Dischargeability in Bankruptcy

Several recent decisions demonstrate that courts are reconsidering the treatment of student loan debt dischargeability in bankruptcy under the “undue hardship” exception of section 523(a)(8) of the Bankruptcy Code. If the trend continues, the long-standing Brunner test may become a mere “relic of times gone by.” Roth v. Educational Credit Management Corp., 490 B.R. 908 (9th Cir. BAP 2013).

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9 Videos About Bankruptcy Basics

The United States Courts created 9 videos to help explain the basics of filing for bankruptcy relief. Whether you are a debtor or a creditor, these resources will be helpful to understand bankruptcy process.

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New Bankruptcy Rule 3002.1: A Trap for Unwary Secured Creditors?

On December 1, 2011, changes to the Federal Rules of Bankruptcy Procedure (“Bankruptcy Rules”) complicated the filing of proofs of claim by secured creditors in chapter 13 cases. These new rules require secured creditors to file and continually update filed proofs of claim.

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ELEVENTH CIRCUIT REVERSES LOWER COURTS AND PERMITS LIEN STRIPPING IN CHAPTER 7 CASE

NEW YORK, NYThe U.S. Court of Appeals for the Eleventh Circuit recently ruled that chapter 7 bankruptcy debtors can strip off, or cancel, wholly unsecured mortgage liens. The per curiam opinion, issued May 11, 2012, marks a significant departure from the standard Chapter 7 practice in most districts.

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OUT-OF-COURT WORKOUT OR CHAPTER 11?

As credit markets tighten, professionals and business owners alike have trouble finding access to credit to fund and grow business operations. Media reports indicate loans are harder to obtain and asset-to-debt ratios are stricter than ever. As cash dwindles the debt load rises. For the overwhelmed business owner bankruptcy is only one answer. There are other alternatives.

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CREDIT UNION LENDER MUST IMMEDIATELY RETURN TO DEBTOR REPOSSESSED VEHICLE UPON NOTICE OF BANKRUPTCY FILING

On December 22, 2010, an upstate New York bankruptcy court in an adversary proceeding filed by debtor Christopher Weber against SEFCU (“Credit Union”), granted Credit Union’s motion for summary judgment. 

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New Website! PaperStreet launches weltmosk.com re-design!

PaperStreet Web Design's development team just wrapped up the brand new re-design of weltmosk.com.   The new site not only has a modern design but is using the latest web technologies, JavaScript libraries, and web standards.

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Game Changing Year-End Legislation Offers More Choices to New Yorkers Facing Personal Bankruptcy

NEW YORK, NY - On December 23, 2010, outgoing Governor David Paterson signed major new legislation increasing the New York homestead exemption and other New York property exemptions. The law makes New York more competitive with other states. A chart of the major changes is set forth below.

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MICHAEL L. MOSKOWITZ TEACHES COURSE CONCERNING IMPACT OF BANKRUPTCY REFORM ON CONSUMERS TO DELOITTE, LLP STAFF MEMBERS

NEW YORK, NY - On September 25, 2008, Michael L. Moskowitz, a founding member of the law firm of Weltman & Moskowitz, LLP, presented an informative seminar to Deloitte, LLP professionals and support personnel at their New York City headquarters. Deloitte, LLP is one of the largest accounting and consulting firms in the world. The seminar was sponsored by the Deloitte Women's Initiative Learning and Development Committee.

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RICHARD WELTMAN TEACHES COURSE TO ESTATE PLANNERS ON IMPACT OF BANKRUPTCY REFORM

NEW YORK, NY - Richard E. Weltman, a founding member of the law firm of Weltman & Moskowitz, LLP, recently presented an informative seminar to members of the Estate Planning Committee of the New York State Society of Certified Public Accountants at their FAE Conference Center in New York City.

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Collect with Confidence: 12 ways to get paid when Key Customer or Supplier Files (or Threatens) Bankruptcy

Whether you sell goods or services, your chance of doing business with a company now or soon to be embroiled in bankruptcy proceedings is probably not as remote as you'd hope it to be. While it may not be your job to keep another business from falling in with the chapter 7 or chapter 11 crowd, it makes sense to limit your exposure to the financial woes of a key customer or supplier.

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RICHARD WELTMAN QUOTED IN RECENT ARTICLE ON BANKRUPTCY TRENDS IN NEW JERSEY LAWYER

NEW YORK, NY Despite claims earlier this year that bankruptcy practice would return to normal, the bottom is continuing to fall out.

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RICHARD WELTMAN AND MICHAEL MOSKOWITZ TEACH BANKRUPTCY REFORM TO NEW YORK STATE SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS

NEW YORK, NY - Richard E. Weltman and Michael L. Moskowitz, founding members of Weltman & Moskowitz, LLP, presented a practical seminar on recent changes to the Bankruptcy Code in a Half-Day Bankruptcy Conference to the New York State Society of Certified Public Accountants at their FAE Conference Center.

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CONGRESS PASSES MAJOR BANKRUPTCY REFORM BILL AND DELIVERS BILL TO PRESIDENT BUSH FOR SIGNATURE

NEW YORK, NY - By a vote of 302 to 126, on April 14, 2005, the U.S. House of Representatives passed a bankruptcy reform bill which will become, for the most part, effective 180 days after it is signed into law by President Bush on April 20. The reform bill, which has stalled in Congress for more than seven years, will make filing for bankruptcy more difficult and costly, and will enhance the rights of creditors.

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