Recent Blog Posts

    • Bankruptcy 101 for Lenders: Key Points to Consider in a Chapter 7 Filing With the advent of the bankruptcy law changes in 2005, individuals have fewer alternatives when considering bankruptcy. An individual facing bankruptcy has three options to consider filing under, those being Chapter 7, Chapter 11 or Chapter 13 of the code. For a lender, the consumer’s choice of chapter has unique implications to be considered, and the devices and methods available to the lender under Chapter 7 will be considered in this article. The lender’s options for protective actions in Chapters 11 and 13 will be discussed in later articles.   Since Chapter 11 is typically used by small businesses we’ll start off by comparing Chapter 7 and 13 proceedings. The key difference between Chapter 7 and Chapter 13 is the repayment of debt. Chapter 7 is bankruptcy liquidation, meaning your assets are liquidated to pay lenders, with certain exceptions. Chapter 13 allows consumers with a regular income to establish a payment plan to pay back all or some of their debts ....
    • Recent Cases and Bankruptcy Amendments Impacting Lessors Jennifer D. Gould and Bari J. Gambacorta, Shareholders in Stark & Stark’s Bankruptcy & Creditor’s Rights Group, co-authored an article for the December edition of Equipment Finance Advisor entitled, Recent Cases and Bankruptcy Amendments Impacting Lessors. The article discusses equipment leasing issues dealing with authentication of assignments of equipment leases and repossession of equipment when late payments are accepted after notice of default. The article provides a summary of these cases as well as recent amendments to the Federal Rules of Bankruptcy Procedure which may impact a lessor’s current business practices. ....
    • Preference Litigation Back in Another Homebuilder Bankruptcy Case The rise in bankruptcy filings has heightened the angst of contractors and suppliers working with residential builders who are worried that more companies will follow the path of Orleans Homebuilders and seek bankruptcy protection. To make matters worse, many contractors and suppliers will be pulled into the world of preference litigation, a very ugly experience.   Recently, the Unsecured Creditor Agent appointed by the Court in the Orleans Homebuilders bankruptcy case sent demand letters to select creditors of Orleans seeking to compel the creditors to return money they received during the 90 days before the filing of the bankruptcy case. In the end, many contractors and suppliers will be searching far and wide to understand why they have to return money to a company who stiffed them by filing for bankruptcy. This seemingly unfair consequence is the result of Congress’ inclusion of the preference laws in the United States Bankruptcy Code.   What Was Congress Thinking? ....
    • Ponzi Schemes-Will They Ever End Jeffrey S. Posta, Shareholder in Stark & Stark Bankruptcy& Creditor’s Rights Group, authored the article, Ponzi Schemes-Will They Ever End?, for World Leasing News. The article discusses the recent rise in “Ponzi” and “Pyramid” schemes and the differences between the different types of scams. Mr. Posta also discusses the more recent schemes perpetuated by Tom Petters, Allen Stanford and Bernard Madoff. Mr. Posta states, “These schemes actually differ somewhat in their design. Pyramid schemes promise investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods. They may purport to sell a product, but often simply use the product to hide their pyramid structure. Some tell-tale signs that a product is simply being used to disguise a pyramid scheme are inventory loading and a lack of retail sales.” You can read the full article online here. ....
    • Bankruptcy Court Rules that "Absent" Owner in Chapter 7 Must Pay, So Long as They Remain Owner In a recent decision, our firm successfully defended an Association’s ability to collect post-petition assessments in a Chapter 7 bankruptcy case. The decision reaffirmed the 2005 amendments to the Bankruptcy Code. Following these Amendments, a debtor remains liable for post-petition assessments, so long as he or she holds “mere” legal title ownership.     In In re Brown, Bankruptcy Judge Donald Steckroth held that a debtor remained liable for post-petition association assessments in a Chapter 7 proceeding. This liability remained, even after the unit was abandoned by the Trustee and the debtor did not live at the unit, so long as the debtor held legal title.    The matter was brought before the Court on the debtor’s motion to compel the Association to release monies levied in a bank account, post-petition, after the bankruptcy case was closed. As background, the Association had received a state court judgment for only post-petition ....
    • What to do When the Bank Comes Knocking at Your Door Timothy P. Duggan, Shareholder and Chair of Stark & Stark's Bankruptcy & Creditor's Rights Group, authored the article What to do When the Bank Comes Knocking at Your Door for the October issue of the New Jersey Lawyer. The article discusses the various options available when dealing with defaulted loans and provides an overview of the more important issues and challenges attorneys face when negotiating a commercial workout or loan modification with a lender. You can read the full article online here. (PDF) ....
    • Bankruptcy for Non‐ Bankruptcy Attorneys Thomas S. Onder, Shareholder in Stark & Stark’s Bankruptcy & Creditor’s Rights Group, will present a seminar as part of the Mercer County Bar Association’s Xtreme CLE program. The seminar entitled, Bankruptcy for Non‐ Bankruptcy Attorneys, will take place Wednesday October 27, 2010 from 10:30 AM – 12:30 PM at the Conference Center at Mercer County Community College in West Windsor, New Jersey.   Mr. Onder will join the Honorable Kathryn C. Ferguson, U.S.B.J., and Graig P. Corveleyn, Esq. as they guide the non‐bankruptcy attorney through the twists and turns of the bankruptcy process. For registration information, please contact the Mercer County Bar Association. ....
    • Notice That a Unit Owner Has Filed Chapter 13 Bankruptcy, the Importance of Preserving the Association's Rights Receiving notice that a unit owner has filed for Chapter 13 Bankruptcy Protection is not the end of a Homeowner’s Association, Cooperative or Condominium Association’s (collectively referred to as the "Association") rights to receive unpaid Association fees. However, action must  be taken by the Association quickly in order to preserve its rights in the bankruptcy proceeding. A proof of claim should be filed to ensure that the amount of the pre-bankruptcy debt, including all arrearages, are properly documented. If a proof of claim is not filed, the Association may lose its right to receive payment on account of its pre-bankruptcy claim.   Under the Rules of Court, an objection to confirmation of a Chapter 13 plan must be filed with the court and served within a defined time period. A properly filed proof of claim that asserts a claim that is greater than the scheduled amount of the claim or the amount of the claim designated in the plan by the unit ....
    • Repayment of 401 (k) Loan is Not Disposable Income Under Chapter 13 Bankruptcy Plan, But Creditors May be Entitled to Step Up Plan In a letter opinion dated June 14, 2010, the Bankruptcy Court confirmed that under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) a debtor is not required to contribute money to a Chapter 13 Plan that is presently being used to repay a loan borrowed against a 401(k) plan. However, a creditor(s) challenging the confirmation of the plan may (1) inquire as to the terms of repayment and (2) the debtor may be required to propose a plan that steps up payment at a later date.    In In Re Todd R. Roth, 10-13287 (JHW), the largest unsecured creditor of the debtor, a law firm, filed a motion to dismiss the debtor’s Chapter 13 case and objected to the confirmation of the Plan. The Court scheduled an evidentiary hearing to decide the motion to dismiss, but addressed the movant’s objection to the confirmation of the Plan.   As to confirmation of the Plan, the moving creditor argued that 401(k) contributions and repayments of a ....
    • So You Thought You Had A Lease? Jeffrey S. Posta, Shareholder in Stark & Stark's Bankruptcy & Creditor's Rights Group, authored the article, So You Thought You Had A Lease? for the April 2010 Lease Enforcement Attorney Network Newsletter.   In the article, Mr. Posta states that there is uncertainty in the law about whether a transaction is a sale or a true lease, and stresses that this distinction is especially important when and if the owner/lessee of an asset files for bankruptcy. Mr. Posta advises lessors desiring true lease treatment to carefully document their transactions in order to protect their interests.   You can read the full article online here. ....
    • Recently Passed New Jersey Foreclosure Fairness Act Effective January 26, 2010 and February 16, 2010 The State of New Jersey recently (on January 17, 2010) passed the New Jersey Foreclosure Fairness Act (the “Act”) which will effect how foreclosures cases are handled in the State of New Jersey.  The Act becomes effective February 16, 2010, however, certain notice requirements become effective January 26, 2010 as noted below.   RESIDENTIAL UNITS WITH TENANTS A person who takes title to a residential property containing tenants by way of a sheriff’s sale or deed in lieu of foreclosure, must provide notice no later than ten (10) business days after the sale, to any tenants of the property informing them that ownership has changed hands and that the tenants are not required to vacate the premises.  This notice must be served by the new owner on the tenants by regular and certified mail, must be in both English and Spanish, must contain contact information to whom future rent is due and include a basic explanation of the tenant’s rights under the ....
    • Bankruptcy Do's & Don'ts for Personal Injury Attorneys Stark & Stark Bankruptcy & Creditor’s Rights Group Chair, Timothy P. Duggan, authored the January 18, 2010 New Jersey Law Journal article, Bankruptcy Do’s & Don’ts for Personal Injury Attorneys: Ease your pain with a useful road map for the system. The article discusses the recent increase in consumer bankruptcy filings and how a bankruptcy filing can impact a personal injury lawsuit.  Mr. Duggan offers several “Do’s & Don’ts” in order to assist personal injury lawyers through the United States Bankruptcy Code after their clients have been forced to file for bankruptcy.   You can read the full article online here. (PDF) ....
    • Stark & Stark Shareholder Comments on Financial Advisors Bankruptcy Filings Timothy P. Duggan, Chair of Stark & Stark’s Bankruptcy & Creditor’s Rights Group, was quoted in the September 1, 2009 FinancialPlanning.com article, Staying Alive. The article discusses the challenges financial advisors have faced for years when economic troubles being. While filing for bankruptcy looks bad for anyone, when a financial advisor files for bankruptcy, the repercussions could cost them their future, and their future business. However, in today’s economic climate, it is important for financial planners to understand how filing for bankruptcy could affect their job, from a legal and financial standpoint. Mr. Duggan states, “Advisors should find counsel as soon as they begin to consider bankruptcy as an option. All too often, in an effort to keep their business afloat, small business owners deplete resources that could otherwise be protected in a bankruptcy case.”   You can read the full article online here. ....
    • Bankruptcy Basics for Boards: Don't Leave Money on the Table Collect Post-Petition Assessments from Chapter 13 Trustee in a Converted Chapter 7 Case Bankruptcy filings around the country are up, due to among other things, the decline in the real estate market.  Previously, debtors used the equity in their home to fund a Chapter 13 bankruptcy plan and pay back condominium, homeowners, and cooperative associations (“Associations”).  Now, many debtors no longer have any equity in their homes. As such, this is leading some Chapter 13 cases to be converted to Chapter 7 liquidation cases.    For Associations, such a scenario often means that the debtor stops paying their post-petition assessments.  But what happens to all the money that the debtor paid the Chapter 13 Trustee during the  bankruptcy? Does this money get distributed to creditors, the debtor or does the Chapter 13 Trustee keep it?  And importantly, can the Associations get any of those funds back?   Opportunity to Recoup Post-Petition ....
    • Credit Card Reform - What Does It Mean? Timothy P. Duggan, Shareholder and Chair of Stark & Stark's Bankruptcy & Creditor's Rights group, authored the article, Credit Card Reform - What Does It Mean?, for the July 2009 edition of Mercer Business Magazine.   The article discusses the Credit Card Accountability, Responsibility and Disclosure Act which was signed by President Barack Obama in May of 2009. The Act mandates specific reforms to the credit card industry in an attempt to curb the abuse by certain credit card companies while at the same time allowing financial institutions the ability to price credit against risk. You can read the full article online here. (PDF) ....
    • New Jersey Judiciary Foreclosure Mediation Program Update On May 18, 2009, the United States Bankruptcy Court for the District of New Jersey issued a General Order with respect to the New Jersey Judiciary Foreclosure Mediation Program.  This Order clarifies that participation in the Foreclosure Mediation Program, where the homeowners have filed for Bankruptcy, does not violate the automatic stay.  Furthermore, a mortgagee does not have to obtain relief from the automatic stay to participate in the Foreclosure Mediation Program. In addition, this Order makes it clear that in Chapter 13 cases, the debtor is obligated to continue to make regular monthly mortgage payments as well as required payments to the Chapter 13 trustee during the time the mediation process is pending. This Order further makes clear that if the automatic stay was in place during participation in the program, it remains in place.  If the mortgagee wishes to continue with any foreclosure proceeding, relief from stay must be granted by the Bankruptcy Court. ....
    • Stark & Stark Shareholder Comments on Kara Homes Bankruptcy Update Timothy P. Duggan, Shareholder in Stark & Stark's Bankruptcy & Creditor's Rights group, was  quoted in the March 29, 2009 Asbury Park Press article, Already owed thousands, Kara Homes contractors now told to pay back what they already got.   Mr. Duggan discusses the effects the Kara Homes bankruptcy is still having on contractors throughout New Jersey over two years after the company initially filed for bankruptcy. Contractors who were paid by Kara Homes within 90-days of the bankruptcy filing are now being told they have to pay back any money they received from the builder. You can read the full article here. (PDF) ....
    • Bankruptcy Basics for Boards - Chapter 7 Debtors' Liability for Post-Petition Assessments With the downturn in the economy, many New Jersey residents are strapped for cash. A possible reprieve for some people is to file for bankruptcy protection. In the past, many unit owners with equity in their units would simply file for Chapter 13 bankruptcy protection.  Chapter 13 protection would allow the debtor to pay their secured debt in-full and their unsecured debt pro rata through a three to five year bankruptcy plan, while keeping current their monthly obligations.  For condominium, homeowners, and co-operative associations (“Associations”), a successful Chapter 13 proceeding would lead to payment in-full, overtime of their pre-petition secured condominium lien, a pro rata payment of any unsecured claim and being kept current with the Association’s monthly assessments.   Many Debtors Now Filing for Chapter 7 Bankruptcy Protection However, now many units are “underwater” - meaning that the value of the home is less than the ....
    • Stub Rent Revisited: No entitlement to immediate payment Timothy P. Duggan, Shareholder in Stark & Stark's Bankruptcy & Creditor's Rights group authored the article Stub Rent Revisited: No entitlement to immediate payment for the January 12, 2009 edition of the New Jersey Law Journal.   Mr. Duggan discusses the fact that the recent increase in retail bankruptcies has caused the bankruptcy courts and litigants to revisit a variety of legal issues, including the debtor’s obligation to pay post-bankruptcy rent while it decides which leases to assume or reject. You can read the full article online here. ....
    • New Jersey's Foreclosure Mediation Program This installment of the New Jersey Legal Update is an interview with Bari Gambacorta, Shareholder in Stark & Stark's Bankruptcy & Creditor's Rights group, Allyson Cofran, member of Stark & Stark's Bankruptcy & Creditor's Rights group, and Kevin Wolfe, of the State of New Jersey's Civil Practice Division. The podcast is a discussion of the New Jersey Foreclosure Mediation Program which went into effect Monday January 5, 2009 in order to assist homeowner's throughout New Jersey who are facing foreclosure delinquencies.   The State of New Jersey has released the list of CDR (Complimentary Dispute Resolution) point persons, who will be creating mediation calendars and coordinating the foreclosure mediation program in county courthouses. You can access the list here. (PDF)   You can download the full interview here. (15.5 MB) ....
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