Law Blog

Law BlogLegal Blog on immigration, bankruptcy, family law (divorce, annulment and legal separation), personal injury, real estate, wills and estate matters.enThu, 30 Apr 2026 00:57:20 -040033847Jeffrey B. PeltzBankruptcyBankruptcy is not the problem; it is the solution to the problemBankruptcy is not the problem; it is the solution to the problem On most days I get a call inquiring about bankruptcy that starts like this: Caller: I don’t know what to do. I just received a summons for a credit card that I owe money on. I have been paying a company to deal with creditors. They told me not to pay my bills. I have been sending this company money for months. Now after sending them several thousand dollars, I am being sued! Can you help me?Wed, 26 Mar 2025 00:00:00 -0400Bankruptcy is not the problem; it is the solution to the problem On most days I get a call inquiring about bankruptcy that starts like this: Caller: I don’t know what to do. I just received a summons for a credit card that I owe money on. I have been paying a company to deal with creditors. They told me not to pay my bills. I have been sending this company money for months. Now after sending them several thousand dollars, I am being sued! Can you help me? <img alt="" src="/media/15802/bankruptcy_lawyer.jpg?width=375&height=500" data-id="33848" style="width: 375px; height:500px;"> Unfortunately, this type of situation is really common. Many people, when they get into debt turn to these companies that promise to negotiate with their creditors to reduce their debts. The truth they won’t tell you is the following: <ol> <li>Many creditors won’t negotiate a settlement.</li> <li>If a creditor agrees to a settlement, they may want a lump sum payment.</li> <li>If a creditor agrees to a settlement and payment plan, once the debt is paid as agreed, if a debt of $600 or more was forgiven, they will send you a form1099-C. That means that they will report the forgiven debt to the IRS as unearned income. You will be responsible for payment of income taxes on that amount</li> <li>The company that you are sending payments to collect their generous fees up front. That means that no money goes to your creditors until you pay them their fee.</li> </ol> After asking the caller questions to see if they qualify for chapter 7 bankruptcy, which almost always they do, I provide the following advice: <ol> <li>Call the company that you’re using to say that you want to stop using their services and you want a refund of any money that they are holding.</li> <li>Tell the company that they should stop withdrawing money from your bank account.</li> <li>Since I don’t trust that the company will stop withdrawing money from the caller’s bank account, I advise the caller to go to their bank to close their bank account and open a new account.</li> <li>I also advise the caller to make sure that all direct deposits are redirected to the new bank account.</li> <li>I recommend that the caller retain our office for chapter 7 bankruptcy. It is important to file bankruptcy as soon as possible so that the creditor suing doesn’t get a judgment and garnish the caller or freeze their bank account.</li> <li>I explain that once I file the bankruptcy petition, under the bankruptcy law, the creditors can’t proceed with their collection actions. Further, we would deal directly with the creditors.</li> </ol> At this point the caller sounds relieved, however they often ask, if I file bankruptcy will this stay on my credit report for 10 years? Will it ruin my credit? My response is: Your credit is already bad, filing bankruptcy won't make it worst. In fact, often your credit score will go up by about 100 points within a year of filing bankruptcy. Although bankruptcy stays on your credit report for 10 years, that often is not important. If you are working and have income, it is easy to rebuild your credit. That is because you won’t owe any money on those credit cards anymore. Furthermore, since you are not allowed to file another chapter 7 bankruptcy for 8 years, creditors will be glad to give you credit again quickly. In fact, if you have sufficient income and have saved enough money for a down payment, you should be able to qualify for a mortgage after 3 years. Over the 40 years that I have practiced bankruptcy law; I have had many clients thank me years later for turning their financial lives around. I have also represented many of them at closings on their new homes. Bankruptcy is not the problem; it is the solution to the problem. 2190Jeffrey B. PeltzArea of LawBankruptcySupreme Court Broadens What is Considered as Bankruptcy FraudOn Monday, May 16th, 2016, I had the honor of being present in the United States Supreme Court to be sworn in as a member of the U.S. Supreme Court Bar. While I was there, I had the unique opportunity of observing the courts deliver its decisions, including that of the case Husky International...Mon, 25 Jul 2016 00:00:00 -0400On Monday, May 16th, 2016, I had the honor of being present in the United States Supreme Court to be sworn in as a member of the U.S. Supreme Court Bar. While I was there, I had the unique opportunity of observing the courts deliver its decisions, including that of the case Husky International Electronics V. Ritz. The U.S. Supreme Court ruled in favor of Husky International Electronics 7 to 1. I was fortunate enough to be able to listen to Justice Elena Kagan speak for the majority and read through the decision. The case was an important one for bankruptcy attorneys such as myself, as it redefined what debts can and cannot be discharged in bankruptcy. More specifically, the case determined what the term “actual fraud” in the Federal Bankruptcy Code meant and what it encompassed. At issue in the case was whether or not the actions of Daniel Ritz—an individual who had ran up a nearly $164,000 debt to Husky International prior to filing for Chapter 7 Bankruptcy—constituted as “actual fraud” as defined under Section <a href="https://www.gpo.gov/fdsys/granule/USCODE-2011-title11/USCODE-2011-title11-chap5-subchapII-sec523" target="_blank">523(a)(2)(A) of the Federal Bankruptcy Code</a>. The Federal Bankruptcy Code prohibits the discharge of<a href="https://www.gpo.gov/fdsys/granule/USCODE-2011-title11/USCODE-2011-title11-chap5-subchapII-sec523" target="_blank"> “any debt . . . obtained by . . . false pretenses, a false representation, or actual fraud.” </a>Ritz had not made any false pretenses or false representations when taking on the debt, but rather, engaged in a fraudulent transfer of money from one business entity to another. Ritz took on debt from Husky under one corporate entity (Chrysalis Manufacturing), then transferred a majority of the funds from Chrysalis to a separate business in order to make it appear as if Chrysalis had minimal assets and thus was eligible for bankruptcy. The courts were asked to decide whether this conveyance of funds that occurred after the debt was established constitutes as “actual fraud.” If so, then the debts owed to Husky International would not be dischargeable under bankruptcy. The courts had previously ruled in favor of Ritz and had determined that the debts owed to Husky International were eligible for discharge since Ritz had neither made any false representations nor was there any false pretenses prior to the debt having been incurred. The lower courts held that a transfer of funds cannot be deemed as “actual fraud”—regardless of whether or not the transfer had been allegedly done to avoid paying debts owed. The lower courts interpreted “actual fraud” as being defined strictly by the phrases before it, that is, fraud conducted via “false pretenses” and “false representation.” The Supreme Court reversed this ruling. In the summary of arguments, Justice Kagan explained that Congress had specifically amended the law to include the term “actual fraud” at the end. If they only meant fraud through misrepresentation and false pretenses, then they would not have gone through the efforts of amending it. Justice Kagan also used historical precedent and common law to further bolster the Court’s argument in favor of Husky. Dating back to 1571, all the way to medieval England, the term “actual fraud” included <a href="https://www.supremecourt.gov/opinions/15pdf/15-145_nkp1.pdf" target="_blank">“transfer schemes designed to hinder the collection of debt”.</a> The Court thus deemed that Ritz was indeed responsible for the debt owed to Husky and reversed the rulings of the lower courts. With this Supreme Court Ruling, it is likely that bankruptcy courts will apply greater scrutiny to cases before them and be more likely to state that fraud has taken place even without a “smoking gun”.2205Jeffrey B. PeltzArea of LawBankruptcyRent Stabilized Apartments are Now Protected under NY Law When Filing BankruptcyFor the last several years, those considering filing bankruptcy in New York who lived in either a rent-controlled or rent-stabilized apartment had to consider the possibility of losing their home if they filed bankruptcy. It seemed crazy that some of the most vulnerable among us risked becoming...Thu, 27 Nov 2014 00:00:00 -0500For the last several years, those considering filing bankruptcy in New York who lived in either a rent-controlled or rent-stabilized apartment had to consider the possibility of <a href="http://www.nytimes.com/2014/11/21/nyregion/rent-stabilized-lease-cant-be-seized-in-bankruptcy-new-york-state-court-rules.html" target="_blank">losing </a>their home if they filed bankruptcy. It seemed crazy that some of the most vulnerable among us risked becoming homeless by seeking the protection and benefits allowed under the bankruptcy laws; however, this was the law until a few days ago. <a href="http://law.justia.com/cases/new-york/court-of-appeals/2014/180.html" target="_blank">In the matter of Marry Veronica Santiago-Monteverde v. John S. Pereira</a> before the New York Court of Appeals, the question considered was “May a bankruptcy debtor’s interest in her rent-stabilized lease be exempted from her bankruptcy estate pursuant to New York State Debtor and Creditor Law section 282 (2) as a ‘local public assistance benefit?’” On November 20, 2014, the Court answered that question by announcing, “We hold that <a href="http://codes.lp.findlaw.com/nycode/DCD/10-A/282" target="_blank">section 282 (2)</a> of the Debtor and Creditor law exempts a debtor-tenant’s interest in a rent-stabilized lease.” This means that, now, those in New York don’t need to worry that they will lose their rent-stabilized or rent-controlled apartment if they file bankruptcy. This seems like a common-sense answer; however, this decision wasn’t assured from the beginning. There were cases in the lower courts that decided that rent-stabilized apartments were not protected in bankruptcy. Even in this case, the <a href="http://www.aaalawyer.com/New-York-Lawyer-Blog/ArticleID/47/Update-Bankruptcy-in-NY-with-Rent-Control-and-Rent-Stabilized-Apartments.aspx">lower courts</a> decided against the debtor seeking to file bankruptcy and keep her home, and there were dissenting opinions by two of the seven justices. It’s good to see that the majority in the Court of Appeals got it right. This should help millions of tenants in New York sleep better tonight.2214Jeffrey B. PeltzArea of LawBankruptcyNew Protection Granted to Those Sued in New YorkEvery year over 100,000 people in New York are sued on debts such as credit cards, car loans, or medical bills. Many don’t know they have been sued until they find that their bank accounts have been levied or wages garnished. This happens because many creditors don’t actually serve a copy of the...Fri, 03 Oct 2014 00:00:00 -0400Every year over 100,000 people in New York are sued on debts such as credit cards, car loans, or medical bills. Many don’t know they have been sued until they find that their bank accounts have been levied or wages garnished. This happens because many creditors don’t actually serve a copy of the summons to the debtor. That may be either due because the creditor doesn’t know where the defendant resides and doesn’t make an effort to find the person, or perhaps they even overtly try not to serve the debtor. This is known as “sewer service,” and as the name implies, it refers to throwing the summons in the sewer and claiming service on the debtor. Once the creditor has a judgment by default, because the debtor didn’t respond to the summons, they then find the debtor and his/her assets and grab them. This practice has gone on for many years; however, as of October 1, 2014, things will change. Thanks to <a href="http://www.nytimes.com/2014/09/17/nyregion/new-york-state-judiciary-adopts-rules-to-protect-debtors.html?_r=0">new rules</a> issued by Judge Lippman, the chief judge of the New York Court of Appeals, <a href="http://nypost.com/2014/09/16/court-announces-new-rules-for-debt-collection-agencies/">new rules</a> will go into effect to protect New Yorkers from being sued on debts. Under the new rules, the court will mail a notice to the person being sued. If the notice is returned by the post office as undeliverable, a default judgment will not be entered. In addition, there are other new protections being given to those being sued. The creditor will be required to provide an affidavit that contains “detailed proof in support of default judgment application, including the validity of the debt at issue and the chain of ownership for that debt.” Also now required will be the original credit agreement and the most recent monthly statements. These new requirements will be a great step forward in protecting those being sued. Currently, creditors are known to take underhanded actions against defendants. For example, creditors have been known to sue on debts <a href="http://www.consumer.ftc.gov/articles/0117-time-barred-debts">barred</a> by the <a href="http://www.creditcards.com/credit-card-news/credit-card-state-statute-limitations-1282.php">statute of limitations</a>. Also, often the party suing is not the original creditor, but instead a party that bought the debt for pennies on the dollar. This often makes it difficult or impossible for someone being sued to defend him- or herself because of a lack of information on the debt. Furthermore, since a debt may be sold over and over, it could be possible to be sued more than once for the same debt! Although these new requirements present increased consumer protection, I note that these new rules have been created by the Court and not the New York legislature. A bill with these protections has been created this year and in past years by the <a href="http://assembly.state.ny.us/Press/20140528/">New York Assembly</a>, but not the Senate. It would be better to see these protections be passed by Albany. If you live in a state <a href="http://www.nolo.com/legal-encyclopedia/state-consumer-protection-offices-30181.html">other than New York</a>, you may have more or fewer protections than that offered by New York. States in the South and in Republican states tend to offer less protection to consumers.2215Jeffrey B. PeltzArea of LawBankruptcyUpdate: Bankruptcy in NY with Rent-Control and Rent-Stabilized ApartmentsAs discussed in previous blogs, due to a loophole in the law, those who file bankruptcy in New York and who live in rent-controlled or rent-stabilized apartments risk losing their homes. Although there has been no resolution of this unfortunate situation, there have been some developments in two...Fri, 06 Jun 2014 00:00:00 -0400As discussed in <a href="http://www.aaalawyer.com/New-York-Lawyer-Blog/ArticleID/39/Rent-Controlled-and-Rent-Stabalized-Tenants-Filing-Bankruptcy-Still-at-Risk-to-Lose-Homes.aspx">previous blogs</a>, due to a loophole in the law, those who file bankruptcy in New York and who live in rent-controlled or rent-stabilized apartments risk losing their homes. Although there has been no resolution of this unfortunate situation, there have been some developments in two different arenas. The first arena is in the courts and particularly in a case known as <a href="http://www.nytimes.com/2013/10/21/nyregion/widows-bankruptcy-case-poses-risk-to-millions-with-rent-stabilized-leases.html?_r=0">Santiago-Monteverde v. Pereira</a>. In this matter, Ms. Santiago-Monteverde, who lives in a rent stabilized apartment, filed a Chapter 7 Bankruptcy in Manhattan after the death of her husband when she found that she could not afford to keep up with her bills. The bankruptcy trustee, John Pereira, was approached by Ms. Santiago-Monteverde’s landlord, who offered Mr. Pereira money if Ms. Santiago-Monteverde would vacate the apartment. Under a provision in the bankruptcy code, Mr. Pereira accepted the offer. Ms. Santiago-Monteverde’s bankruptcy attorney then amended her bankruptcy petition to exempt the rent stabilized lease under a New York exemption that protects a “local public assistance benefit”. Mr. Pereira objected and the bankruptcy court decided in favor of Mr. Pereira. Ms. Santiago-Monteverde appealed to the United States District Court for the Southern District of New York. The District Court also <a href="http://law.justia.com/cases/federal/district-courts/new-york/nysdce/1:2012cv04238/397209/7">decided</a> in favor of Mr. Pereira. Ms. Santiago-Monteverde once again appealed, this time to the United States Court of Appeals for the Second Circuit. On March 31, 2014, the U.S. Court of Appeals <a href="http://www.google.com/url?url=http://volo.abi.org/santiago-monteverde-v-pereira-in-re-santiago-monteverde/opinion/download&rct=j&frm=1&q=&esrc=s&sa=U&ei=gLaQU4n9CbOhsAS71YDQDA&ved=0CB0QFjAB&sig2=vNmQN5WOSl7a_soVItPEzg&usg=AFQjCNHd93Lhg6YuS9zdV65AjgdbEg3LRg">decided</a> that this was a matter of interpreting New York law and sent the matter to the New York Court of Appeals. On May 13, 2014, the New York Court of Appeals accepted the question of whether the rent stabilized apartment is exempted as a public benefit. It will likely be several months before the matter is heard and there is a decision. The second arena in which this matter may be decided is the New York legislature. There is a bill that would protect rent controlled and rent stabilized tenants who file bankruptcy. The bill has been in the assembly’s judiciary committee for some time. If the judiciary committee votes in favor of the bill, it will be presented to the New York State Assembly, where hopefully there will be a vote and the bill will be approved. However, even if the Assembly approves the bill, it will not become law unless a corresponding bill is introduced into the New York State Senate and approved. Another complication with the legislative resolution of this matter is the fact that the legislative session ends on June 20, 2014. The next session will begin in January, 2015. If the Assembly and the Senate do not both vote in favor of the bills by June 20th, they will need to start the whole process over in January. Not every person who lives in a rent controlled or rent stabilized apartment and files bankruptcy is in danger of losing the person’s home. Only an experienced bankruptcy lawyer will be able to make that determination.2220Jeffrey B. PeltzArea of LawBankruptcyTop 5 People Who Have Filed BankruptcyWe all love a story about a person overcoming hardship and setbacks to achieve success and to find happiness. There are many such stories. Here are my 5 favorites. #1 Abraham Lincoln – We typically think of Lincoln toward the end of his life during his difficult years as president of the United...Mon, 05 May 2014 00:00:00 -0400We all love a story about a person overcoming hardship and setbacks to achieve success and to find happiness. There are many such stories. Here are my 5 favorites. #1 <a href="http://www.cnn.com/2008/LIVING/personal/11/19/mf.successful.people.survived.bankruptcy/">Abraham Lincoln</a> – We typically think of Lincoln toward the end of his life during his difficult years as president of the United States. He led the country through <a href="http://www.civilwar.com/">the Civil War</a>. We think of him as one of our greatest presidents and speakers. We think of his <a href="https://www.youtube.com/watch?v=BvA0J_2ZpIQ">Gettysburg Address</a> and <a href="http://www.archives.gov/exhibits/featured_documents/emancipation_proclamation/">the Emancipate Proclamation</a>. However, that is not how he started out. Lincoln was not always a rich and powerful man. In 1833, Lincoln and a friend bought a general store in the town of New Salem, Illinois. Because Lincoln had no money for his share of the store, he gave a promissory note to one of the sellers of the store. When the note became due, Lincoln did not have the money to pay it. He had to turn to bankruptcy. #2 <a href="http://www.cnn.com/2008/LIVING/personal/11/19/mf.successful.people.survived.bankruptcy/">Henry Ford</a> –Ford became one of the most successful businessmen at the beginning of the 20th Century. However, his first two efforts to manufacture cars failed. Ford turned to bankruptcy both times. Within 10 years, he found great success in his <a href="http://en.wikipedia.org/wiki/Ford_Model_T">Model T</a> and went on to create an <a href="http://en.wikipedia.org/wiki/History_of_Ford_Motor_Company">automotive empire</a>. This is a great example of learning from your mistakes and not giving up. #3 <a href="http://business.time.com/2012/02/16/top-9-celebrity-bankruptcies/slide/walt-disney-3/">Walt Disney</a> – The man who would create such major successful movies as <a href="http://en.wikipedia.org/wiki/Snow_White_and_the_Seven_Dwarfs_(1937_film)">Snow White and the Seven Dwarfs</a>, <a href="http://en.wikipedia.org/wiki/Cinderella">Cinderella</a>, <a href="http://en.wikipedia.org/wiki/Fantasia_(film)">Fantasia</a>, <a href="http://en.wikipedia.org/wiki/Mary_Poppins_(film)">Mary Poppins</a> and <a href="https://www.google.com/search?newwindow=1&biw=1920&bih=911&q=walt+disney+movies&oq=walt+disney+&gs_l=serp.1.5.0l10.61335.68576.0.71601.20.11.4.5.5.0.219.1497.1j9j1.11.0....0...1c.1.42.serp..0.20.1597.HEr9dQJBJwg">many more</a>, did not allow a setback and bankruptcy to deter him from great success. Disney began a business making movies in 1922. By 1923, he needed to file bankruptcy. However, in 1928, he created <a href="http://en.wikipedia.org/wiki/Mickey_Mouse">Mickey Mouse</a> and years later <a href="http://en.wikipedia.org/wiki/Disneyland">Disneyland</a> and <a href="http://en.wikipedia.org/wiki/Walt_Disney_World">Disney World</a>. #4 <a href="http://abcnews.go.com/Politics/donald-trump-filed-bankruptcy-times/story?id=13419250">Donald Trump</a> – Today, when asked to name the most successful business people in the world, most people put Donald Trump near the top of the list. A keen business person, Trump understands that bankruptcy is a tool to be used to get the most out of a situation. Although Trump has not filed personal bankruptcy, he has<a href="http://www.forbes.com/sites/clareoconnor/2011/04/29/fourth-times-a-charm-how-donald-trump-made-bankruptcy-work-for-him/" target="_blank"> filed 4 corporate bankruptcies.</a> He truly has found a way to make lemonade from lemons. #5 <a href="http://www.nydailynews.com/news/money/bankrupt-celebs-gallery-1.2915?pmSlide=10">Cyndi Lauper</a> – This is actually my favorite recent bankruptcy story. Lauper is not a great person from history or a business person who is hard to like. She is an <a href="http://www.biography.com/people/cyndi-lauper-17169536#awesm=~oDjboHzcQovjKz">ordinary</a>, likable person, who struggled in her early career but went on to achieve great success. In 1981, Lauper had a dispute with her manager, who sued her for $80,000. She turned to bankruptcy to get out of debt. However, she did not allow this to define her. She enjoyed such hits as <a href="https://www.youtube.com/watch?v=VdQY7BusJNU">Time After Time</a> and <a href="https://www.youtube.com/watch?v=LPn0KFlbqX8&feature=kp">True Colors</a>. Today, Lauper has the Broadway hit and Grammy Award winner <a href="https://www.youtube.com/user/kinkybootsbway">Kinky Boots</a>. Each of these stories teaches us a valuable lesson. Bankruptcy does not need to define you as a loser. Bankruptcy is a tool to be used to help you reach your goals. If you don’t succeed, learn from your setback, use bankruptcy to clean the slate, and try, try again.2230Jeffrey B. PeltzArea of LawBankruptcyRent Controlled and Rent Stabalized Tenants Filing Bankruptcy Still at Risk to Lose HomesWhen then Governor David Patterson signed into law a bill in 2011 increasing the amount of assets that a person is allowed to keep when filing bankruptcy in New York, I expressed concern that individuals living in rent-stabilized and rent-controlled apartments were in danger of having their leases...Wed, 30 Apr 2014 00:00:00 -0400When then Governor David Patterson signed into law a bill in 2011 increasing the amount of assets that a person is allowed to keep when filing bankruptcy in New York, I expressed <a href="http://www.newyorkbankruptcyattorney.com/english/newyorkbankruptcyattorney/2012/5/5/new-york-bankruptcy-trustees-now-taking-certain-debtor-apartments.aspx">concern</a> that individuals living in rent-stabilized and rent-controlled apartments were in danger of having their leases treated as assets in personal bankruptcy cases. I was concerned that bankruptcy trustees, who earn a commission based upon the assets they take from debtors to pay off creditors, would offer to sell a rent-controlled or rent-stabilized lease back to the landlord. This would result in the tenants being forced out of their homes. I promised to explore avenues of amending existing state bankruptcy exemptions to include protection for renters, just as it does homeowners. I contacted several state legislators and made personal recommendations in amending the current legislation. I suggested a simple two-part amendment to the existing New York State bankruptcy exemptions that would protect: a) The value of a rent stabilized or rent controlled lease b) The value of a lease in a building that has converted to either Cooperative or Condominium units. Since then, I am happy to see that New York State Assemblywoman Linda Rosenthal of the 67th district has <a href="http://assembly.state.ny.us/leg/?default_fld=&bn=A00853&term=&Summary=Y&Actions=Y&Memo=Y&Text=Y">sponsored a bill</a>, acknowledging the importance of granting tenants the “same legal protections currently extended to homeowners.” The bill extends the value of bankruptcy proceedings and ensures that “people who find themselves in dire financial circumstances are not forced to choose” between bankruptcy and their home. The bill would exempt up to $150,000 in value of a lease. Married couples filing bankruptcy together would receive up to a $300,000 exemption for the value of their lease. Currently, the bill has been recommended to the Senate Judiciary Committee where it is being evaluated. According to a statement from Ms. Rosenthal’s office, the bill has received positive feedback from the committee. However, due to budget negotiations, the bill has been stalled until April. I will update the status of the bill on this blog when more information is available. Even if the bill gets approved by the assembly’s judiciary committee and approved by the full New York State Assembly, it the same must be done in the New York State Senate and then signed into law by the Governor. The passage of such a bill in the Senate is less certain because the landlord lobby has more influence there. There is another way in which rent stabilized and rent controlled tenants can receive legal protection when filing bankruptcy; through the courts. As discussed in a <a href="http://www.newyorkbankruptcyattorney.com/english/newyorkbankruptcyattorney.aspx">previous post</a>, a bankruptcy and a Federal District Court have ruled against protecting rent-stabilized apartments, and now the United States Federal Court of Appeals for the Second Circuit is <a href="http://www.nytimes.com/2013/10/21/nyregion/widows-bankruptcy-case-poses-risk-to-millions-with-rent-stabilized-leases.html?_r=0">hearing an appeal</a> from Ms. Santiago-Monteverde - a tenant who was removed from her apartment of 50 years after the trustee assigned to her case sold her lease back to her landlord. If the appeal is decided in favor of the tenant, Ms. Santiago-Monteverde, this may provide protection to rent stabilized and rent controlled tenants filing bankruptcy. However, there would be no better protection than a law being passed providing such protection. It is ironic, that the most vulnerable and most in need of the protection of bankruptcy are the ones who risk losing their homes and becoming homeless if they file bankruptcy. As I had stated <a href="http://www.newyorkbankruptcyattorney.com/english/newyorkbankruptcyattorney/2012/5/5/new-york-bankruptcy-trustees-now-taking-certain-debtor-apartments.aspx">before</a>, I think when the state legislature expanded the homestead exemptions and increased the financial protection of homeowners from $50,000 up as much as $150,000, they omitted protections for renters only because they did not foresee that creative bankruptcy trustees would find a loop-whole that would put those with the least most at risk to lose their homes. This situation has already gone on too long. I urge you to contact your New York State <a href="http://assembly.state.ny.us/mem/?sh=search">assembly</a> and <a href="http://assembly.state.ny.us/mem/" target="_blank">senate</a> members today to pass a law that would protect rent stabilized and rent controlled tenants when filing bankruptcy.2228Jeffrey B. PeltzArea of LawBankruptcyPending Legislation to Make Private Student Loans Dischargeable in BankruptcyCurrently, Americans owe more than 1.2 trillion dollars in student loans. This exceeds all other categories of consumer debt, including credit cards and auto loans. Some predict that this massive amount of student loan debt will be the next big crisis for our economy. A private student loan is a...Wed, 16 Apr 2014 00:00:00 -0400Currently, Americans owe more than <a href="http://www.forbes.com/sites/specialfeatures/2013/08/07/how-the-college-debt-is-crippling-students-parents-and-the-economy/">1.2 trillion dollars</a> in student loans. This <a href="http://www.washingtonpost.com/blogs/college-inc/post/student-loans-surpass-auto-credit-card-debt/2012/03/06/gIQARFQnuR_blog.html">exceeds</a> all other categories of consumer debt, including credit cards and auto loans. Some predict that this massive amount of student loan debt will be <a href="http://www.businessweek.com/articles/2014-01-16/student-loans-the-next-big-threat-to-the-u-dot-s-dot-economy">the next big crisis</a> for our economy. A private student loan is a student loan made by a private lender. These loans are not federally guaranteed. Private student loans, like all student loans, are nearly impossible to discharge in bankruptcy. This was not always the case. Prior to 2005, private student loans could be discharged in bankruptcy. That year, however, Congress passed <a href="http://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_and_Consumer_Protection_Act">The Bankruptcy Abuse Prevention and Consumer Protection Act</a>, also known as BAPCPA. Under heavy lobbying from the banking industry, a provision was added to BAPCPA that treats private student loans the same way that federally guaranteed student loans are treated in bankruptcy. As the result of this change, to discharge a privately held student requires proof that paying the loan would be an <a href="http://www.lexisnexis.com/legalnewsroom/bankruptcy/b/bankruptcy-law-blog/archive/2012/10/29/quot-undue-hardship-quot-under-section-523-a-8-can-the-debtor-s-student-loans-be-discharged.aspx">undue hardship</a>. Unfortunately, the court’s interpretation of “undue hardship” has made it nearly impossible to <a href="http://www.usnews.com/education/blogs/student-loan-ranger/2013/06/12/bankruptcy-case-offers-hope-for-student-borrowers">discharge student loans</a> in bankruptcy. Consequently, private banks are able to make loans at any interest rate without having to worry about the borrowers being able to get out of the loans through bankruptcy. The lenders have found this arrangement quite<a href="http://www.npr.org/2014/03/27/294858103/senator-warns-of-a-student-loan-bubble"> profitable</a>. Many think that this is a very unfair situation for those taking out student loans. It’s bad enough that, for all practical purposes, federally guaranteed or direct federal student loans are not dischargeable, but at least they offer benefits, such as a lower interest rate. However, privately made student loans don’t offer such benefits. Why should such private lenders get the benefit of having their loans, for all practical purposes, non-dischargeable in bankruptcy? There is a glimmer of hope for those with private student loans. Bills have been filed in the <a href="http://beta.congress.gov/bill/113th-congress/house-bill/532?q=%7B%22search%22%3A%5B%22hr+532%22%5D%7D">House</a> and the <a href="http://beta.congress.gov/search?q=%7b%22congress%22:%22113%22,%22source%22:%22legislation%22,%22search%22:%22s.%20114%22%7d">Senate</a> that would once again make private student loans dischargeable in bankruptcy without having to meet the undue hardship test. With all of the <a href="http://www.commoncause.org/site/pp.asp?c=dkLNK1MQIwG&b=4764307">money</a> that is in politics and the staunch opposition of the banking industry lobby, passing this legislation is an uphill battle, at best. I urge you to contact your members of Congress in the <a href="http://www.house.gov/representatives/find/">House</a> and the <a href="http://www.senate.gov/general/contact_information/senators_cfm.cfm">Senate</a>. Tell them that you want them to vote for these bills. UPDATE: As of today, October 30, 2015, there has been no movement on this issue in Congress.2235Jeffrey B. PeltzArea of LawBankruptcyJustice Department Takes Courageous Step in Eliminating DiscriminationAs I’ve written before, the federal government has taken swift action to ensure that same-sex couples are being treated equally under federal law, post United States v. Windsor. Prior to the decision, only opposite-sex couples were recognized by the federal government as legally married. Since then,...Thu, 20 Feb 2014 00:00:00 -0500As I’ve written <a style="font-style: inherit; font-weight: inherit;" href="http://www.aaalawyer.com/New-York-Lawyer-Blog/ArticleID/29/Married-Same-Sex-Marriage-Couples-and-Immigration-Update.aspx)">before</a>, the federal government has taken swift action to ensure that same-sex couples are being treated equally under federal law, post <a style="font-style: inherit; font-weight: inherit;" href="http://www.supremecourt.gov/opinions/12pdf/12-307_6j37.pdf">United States v. Windsor</a>. Prior to the decision, only opposite-sex couples were recognized by the federal government as legally married. Since then, federal agencies have been ensuring that same-sex couples are recognized as married by federal law, and are able to enjoy the same federal benefits that opposite sex couples enjoy. Now, the United States Justice Department has taken another courageous step in eliminating discrimination based on sexual orientation. Attorney General Eric Holder has issued a <a style="font-style: inherit; font-weight: inherit;" href="http://www.justice.gov/iso/opa/resources/9201421014257314255.pdf">memo</a> stating that the Justice Department is “committed to using every tool and legal authority available to combat discrimination and safeguard the rights for all Americans.” The memo details the current DOJ practices regarding same-sex couples, and outlines new extensions that will further “treat all individuals as equal, regardless of sexual orientation.” The new rules concretely establishes same sex couples as equal under federal law. I had <a style="font-style: inherit; font-weight: inherit;" href="http://www.aaalawyer.com/New-York-Lawyer-Blog/ArticleID/26/Legally-Married-Same-Sex-Couples-May-Now-File-Joint-Bankruptcy.aspx">commented before</a> on uncertainties regarding whether or not same sex couples would receive all federal benefits, or if it would depend on the state they were married in. With this announcement, same sex couples are now protected by the all legal provisions guaranteed to opposite sex couples. Same sex couples will be allowed spousal prison visitation, will receive all federal marriage benefits, and will not be forced to testify against their same sex spouse. Same-sex couples who had been affected by the 9/11 terrorist attacks will be able to apply for the 9/11 Victim Compensation Fund. Equal protection will be guaranteed in “every courthouse, in every proceeding, and in every place where a member of the Department of Justice stans on behalf of the United States,” <a style="font-style: inherit; font-weight: inherit;" href="http://www.justice.gov/iso/opa/resources/9201421014257314255.pdf">says </a>Attorney General Eric Holder. In addition, same-sex couples will now clearly be able to <a style="font-style: inherit; font-weight: inherit;" href="http://www.cnn.com/2014/02/08/politics/holder-same-sex-marriage-rights/">apply for federal bankruptcy </a>across the United States, including jurisdictions that still do not recognize same-sex marriages. Prior to this announcement, if a same-sex couple married in New York moved to Florida and filed for joint federal bankruptcy, it’s possible they could have been denied. The announcement answers part of the question I had raised in my <a style="font-style: inherit; font-weight: inherit;" href="http://www.aaalawyer.com/New-York-Lawyer-Blog/ArticleID/30/Same-Sex-Marriage-Update.aspx)">previous post</a>, whether same-sex couples would “still be legally recognized as a married couple in a new state of residence, and have all of the rights of a legally married couple?” The United States Justice Department has ensured that it will be, at least on the federal level. On the state level, legally married same-sex couples living in states that don’t allow such marriages will still not have the same rights as opposite-sex married couples. While this is an important decision in the fight for marriage equality, there is still a lot more work needed to be done. Currently, only seventeen states allow same sex marriages in their borders. Of the remaining thirty three states, thirty one<a style="font-style: inherit; font-weight: inherit;" href="http://www.ncsl.org/research/human-services/same-sex-marriage-laws.aspx"> outright ban same sex marriage </a>with 29 states embedding the ban in their state constitution. No doubt, the Supreme Court, in the near future will need to decide on the constitutionality of these state bans. Although the Obama administration has made remarkable strides, there are still immediate actions available that the federal government has hesitated taking. For example, President Obama has yet to sign an executive order that would prohibit federal contractors from discriminating based on sexual orientation in the workplace. The executive order would be a bold statement supporting the rights of all American citizens. It would let every American know that the United States government will fight for every the freedom and equality of every individual. <a style="font-style: inherit; font-weight: inherit;" href="http://www.aaalawyer.com/New-York-Lawyer-Blog/ArticleID/54/Marriage-Equality-is-Now-the-Law-Throughout-the-United-States.aspx">UPDATE: Thanks to a Supreme Court ruling, same sex marriage is now legal throughout the U.S.</a>2237Jeffrey B. PeltzArea of LawBankruptcyStudent Loans, the Next Big Crisis?The weak economy and an uncompromising job market has led individuals to seek refuge through higher education. However, a rising cost of education and the high interest rates of private student loans has suffocated recent graduates. University graduates are unable to afford rent, housing, and...Tue, 21 Jan 2014 00:00:00 -0500The weak economy and an uncompromising job market has led individuals to seek refuge through higher education. However, a rising cost of education and the high interest rates of private student loans has suffocated recent graduates. University graduates are unable to afford rent, housing, and transportation due to the unprecedented level of student debt. Student loan debt in the United States is reaching crisis levels, amounting <a href="http://www.forbes.com/sites/specialfeatures/2013/08/07/how-the-college-debt-is-crippling-students-parents-and-the-economy/">more than 1.2 trillion dollars</a> and standing at the second highest consumer debt in the US, closely behind mortgages.The weak economy and the high unemployment numbers have forced borrowers to pay as much as 25% of their income on monthly student loan payments. The dollar amount of student loans has tripled since 2004, and delinquency rate amongst borrowers is now <a href="http://www.newyorkfed.org/newsevents/mediaadvisory/2013/Lee022813.pdf" target="_blank">close to 20%</a><a href="http://www.nytimes.com/2013/03/10/opinion/sunday/student-debt-and-the-economy.html)%20">.</a> There are few consumer protections available for individuals taking out loans to pursue higher education. Borrowers struggle to repay the harrowing costs and are often forced into default. <a href="http://www.nytimes.com/2012/09/01/business/shedding-student-loans-in-bankruptcy-is-an-uphill-battle.html?adxnnl=1&ref=bankruptcies&adxnnlx=1390300198-OE38J4yVlgcjLN26wqJm2w">Before 1998,</a> the United States student loan debt could be discharged through bankruptcy. However, Congress changed the laws to make bankruptcy near impossible for students, amidst concerning reports that doctors and lawyers were abusing the system by filing for bankruptcy to clean their debt. The new standard, persisting to this day, allows student loans to be considered for bankruptcy only if the borrower can prove “undue hardships.” “Undue” hardship has proven difficult to define in the courts. The courts first determine if the individual exhausted every option before filing for bankruptcy. Cases still continue to emerge where loan companies lead ruthless campaigns against unfortunate individuals presented with “undue” financial hardships. <a href="http://www.nytimes.com/2014/01/02/us/loan-monitor-is-accused-of-ruthless-tactics-on-student-debt.html?_r=0%20">One woman</a> had been fighting pancreatic cancer was unable to pay both her student and medical monthly debt payments. She took more than one job, sold her car, and even charged her young son rent to live in the house, but could not keep up with the payments and opted to declare bankruptcy. However, lawyers siding with the student loan companies defeated her bankruptcy claim by successfully arguing that she spent too much money on dining out, pointing to $12 she had spent on a value meal at McDonalds to share with her family. Planned bankruptcy with sound legal guidance provides viable solutions to those suffering from unfortunate financial circumstances. Bankruptcy has helped many Americans restructure and rebuild their lives. It helps individuals from going into default on their debt repayments, and it can be claimed for debts from a variety of sources, including gambling debt, credit card debt, and mortgage. Opening the option of bankruptcy to student loan debt would relieve much of the hardships facing college graduates. Introduced <a href="https://www.govtrack.us/congress/bills/113/hr532" target="_blank">Legislation</a>* that suggests easing the standard of bankruptcy for student loans has stalled in Congress. Finding a solution is within the interest of the United States. College graduates starting their lives should not suffer from a crippling debt. The federal government needs to prevent another debt crisis that will again hurt the country’s delicate recovering economy. Student loans should be dischargeable through bankruptcy. This will increase pressure on private companies to offer relief and repayment options to borrowers. If the federal government does not increase attention on the student debt crisis, the United States risks another possible economic collapse. *As of November 13, 2015 this legislation was not acted upon.