by the law office of:
Kennedy Karlson, Esq.
to practice before the Court of New York State
the Federal Courts of the Southern, Eastern, Northern and Western Districts of
TENANT'S CHOICES OF WHEN TO FILE FOR BANKRUPTCY
answer for many is never. A competent attorney representing Tenants
in Housing Court may accomplish a lot without ever having to resort to
bankruptcy. In most cases everything that needs to be resolved can be
resolved, either through a negotiated settlement or through litigation,
in the Housing Court. Most of my Housing Court clients never file
Bankruptcy. In some cases, however, the Tenant needs the
opportunity to reorganize his or her finances which requires the
involvement of the Bankruptcy Court. The question then becomes one of
timing and the 2005 bankruptcy reforms have affected that decision.
Prior to October of 2005 most
chose to completely exhaust their remedies in the Housing Court before
filing for Bankruptcy. They waited until after the trial, after the
judgment, after the orders to show cause and until the
strategy raises problems related to Section 362(b)(22) of the
Bankruptcy Code. Section 362(b)(22) only applies IF THE LESSOR HAS A
POSSESSORY JUDGMENT AGAINST THE TENANT PRIOR TO THE FILING OF THE
BANKRUPTCY. If that is the case then the Tenant is required to file an
affidavit and post one month's rent with the Bankruptcy filing. Worse,
that only buys the Tenant THIRTY DAYS of the automatic stay. In order
to make the stay last beyond the thirty days the Tenant is supposed to
file a certification that the monetary default upon which the
possessory judgment is based has been completely cured.
the Tenant is aware of this and sees to it that any Bankruptcy filing
which might be necessary is filed BEFORE the Lessor has obtained any
such possessory judgment then Section 362(b)(22) DOES NOT
The choice of when to file generally belongs to the person who is
filing the Bankruptcy. They should carefully consider the implications
Bankruptcy cases in the Southern,
Eastern, Northern and Western Districts of New York are now filed
ELECTRONICALLY. Special passwords and software is required for this.
Attorneys are issued passwords by the courts. One effect of this is
that Bankruptcy cases can be filed at night, on weekends and
13 is the primary Bankruptcy option for those who need to repay a large
amount of arrears over time.
You have to make current (post-petition) rent payments plus make
payments into a Chapter 13 Plan. The arrears can be paid off
through the Chapter 13 Plan. The
Chapter 13 Plan can go as long as 60 months. There are a number of
11 is used mostly by
business entities or by individuals
with large and complex financial situations. Much more expensive than a
Chapter 13, but it can be more flexible. Chapter 13 also has limits on
the maximum amount of unsecured debt and the maximum amount of secured
debt you can have to qualify. People coming in over the maximum are
ineligible for Chapter 13 and thus should consider Chapter 11.
7 is best considered by best considered by the Tenant in two
situations. The Tenant may have a large amount of dischargeable debt,
typically credit card debt. Some of these may have judgments and be
garnishing the Tenant's wages. It may be the case that if the Tenant
can stop these garnishments they may be able to pay the rent. Another
situation where Chapter 7 may be useful is when the Tenant is leaving
and wants a discharge of the rental arrears that have accrued prior.
12 is for
Family Farmers and has also been extended to Family Fishermen. It
appears somewhat similar to Chapter 13. Practicing in the New York
metropolitan area, I don't see Chapter 12
15 is new, as of 2005. It
is generally used by large foreign business entities who are filing
bankruptcy in some other country and want the US Bankruptcy Courts to
recognize the foreign proceeding as a Foreign Main Proceeding and
co-operate with it.
Chapter 9 is for use by municipalities
and municipal entities who file for bankruptcy.