Banking & Financial Services Industry Legal Blog

There are numerous provisions built into the Bankruptcy Code which restrain a debtor from abusing the system by filing for bankruptcy over and over again. This includes periods of time in which filing is barred and an inability to obtain multiple discharges during a specified length of time, to name a few. Further, dismissal of a bankruptcy action may have a negative impact on the debtor and provide some relief for creditors in a future action.

This Blog is Part I in a series of Blogs designed to provide business owners with a high-level overview of the legal process for collecting on past-due accounts receivables. Specifically, Part I focuses on the steps a business owner can take prior to filing a lawsuit against a delinquent customer.

Isn’t tax season a wonderful time for creditors seeking to collect on a judgment? A time when all that money flowing from the federal government to debtors could go straight into your pocket. Or can it? Can you garnish the Internal Revenue Service (“IRS”) in order to take that refund check before the debtor gets a hold of it and the money disappears?

Stop me if you have heard this one: An attorney receives a call from a desperate potential new client. Somehow the business transaction this international client was dealing with has hit an unexpected bump in the road, and because the client is dealing with an international business set here in the U.S., the situation now requires the fine eye of an experienced business litigation attorney. The company the new client claims he works for and the debtor checks out so the attorney draws up representation papers and accepts the new client. Within no time at all the client calls and informs his lawyer a settlement to be paid to the lawyer’s trust account within days. Time is of the essence, and the client convinces the lawyer it needs the money wired as soon as the lawyer receives the money order or cashier’s check.

Is a provision in a contract waiving a party’s right to file a bankruptcy action, or limiting that party’s rights in a future bankruptcy action, valid?  In short, it depends.  In general, contractual agreements which limit or deny a party’s ability to file a bankruptcy action have been held to […]

In every bankruptcy action that is filed, a stay of any collection-type activities automatically comes into place for the duration of the pending action.  However, there are certain proceedings that are exempted from this automatic stay and allowed to proceed against the debtor during a pending bankruptcy action.  One such […]

Section 362 of Title 11 of the United States Code provides for the Automatic Stay in all bankruptcy proceedings, including Chapter 7, 11 and 13 filings. The Automatic Stay is invoked immediately upon a debtor filing for bankruptcy and once invoked it instantly halts all actions by creditors to collect on pre-bankruptcy debts.

By Hans Wahl, Esquire

The first consideration for creditors during bankruptcy proceedings is the Automatic Stay provision of the Bankruptcy Code. Section 362 of the United States Bankruptcy Code provides the provisions governing the Automatic Stay. The Automatic Stay works as an immediate “injunction” that halts all actions by creditors and potential creditors to collect on pre-bankruptcy debts from a debtor who has declared bankruptcy.

The Automatic Stay applies in all bankruptcy proceedings, including Chapters 7, 11 and 13, and this provision is invoked automatically and immediately upon the debtor filing for bankruptcy. The Automatic Stay is a benefit to debtors because once invoked it works to immediately stop all actions and proceedings to recover claims against the debtor. Conversely, it is a detriment to creditors as they can no longer continue with either collection efforts or legal action for their claims against the debtor.

However, there are exceptions to the Automatic Stay which provide relief to creditors. For creditors seeking to avoid the Automatic Stay, there are three subsections of Section 362, which can be invaluable if taken advantage of properly. These include §§§ 362(b), (d) & (f), which can be considered the creditor’s best allies within the Bankruptcy Code.

What happens to the rights of a member of a limited liability company when that member files bankruptcy?  In Florida, that member is automatically terminated from membership in the LLC and any remaining interests in the LLC become property of the bankruptcy Trustee.  But is it really that simple? Limited […]

Aside from foreclosing on a piece of real property, a Lender may utilize numerous other methods to recoup monies left unpaid on a mortgage note and to take control of a piece of property that may be losing value based on improper management.  In this first installment piece, we will […]