What Bankruptcy Actually Does with Attorney Barry Levine

Well, you know, the real problem is they listen to their friends who heard it from a friend who read it on Google. So none of none of what you hear is reality. Like no one comes to your house to see what your assets are worth. Trustees don't sell houses because generally and we can get it to this in greater length. Most. Bankruptcies, Chapter 7s, liquidations that individuals file are what are called assetless cases. If I would file your case here today in Massachusetts, four months from now you'd get your discharge and life would go on. 99% of the time you'd still own your home because it's exempt. The cars are exempt. pension plans are exempt. It's, you know, it's, it's, it really, it, you know, when I, there's a creditors meeting that some people may have heard about, and I tell clients the anxiety is held a lot worse than the reality, you know, because if you could see me, I'm wearing a purple t-shirt that I'm one of Jerry's kids, Jerry being Jerry Garcia of the Grateful Dead. And that's usually my appearance outfit at the 341 meetings because I'm appearing before another attorney. My assistant finally convinced me that when I have court hearings, because for years during COVID, we were only doing it by phone, I hadn't put a suit or a jacket on in five years. She told me I should start wearing a shirt and a tie because wearing eyesore Jerry, even though they see me from the neck up, is not appropriate for the court. Being a Jewish husband, former Jewish husband, I guess, I do what I'm told.

I look at. it as a business decision. You know, when it comes down to things, you have to put food on the table, you have to pay the rent, you have to put gas in the car, you know, if you have kids, you know, I'm old enough, I played in the band in junior high school, in high school, I didn't have to pay for it. Now you have to pay for all these things. And, you know, that's more important than the credit cards, because the problem with the credit cards, listen, You know, if in the States here, if you have $100,000, they maybe will give you, if they're sports, a 4% interest rate. They don't even give you gifts anymore, you know. I actually went to San Francisco once when I opened up a CD. But, you know, if you have a credit card with them, what do they charge you interest? 26%. 28 percent. If you start defaulting, they not only charge you high interest, they reduce your they reduce your line of credit. And for lack of a better phrase, it's like shoveling shit against the tide. You know, when you look, you know, I don't know if any place else other than the United States has the that thing on the bill that says if you pay the minimum payment, your children's children's children are going to pay it off. You know, you really have to look at it as a business decision and that you're at war with your creditors because they're taking food out of your mouth. They want to take your rent away.

I talk a lot. No worries.

Well, to me. You know, there used to be a comedian. You know, his funny line was he was quadrosexual. He would do anything with anyone for a quarter. But his other shtick was, and I don't know if they still do it, you used to be able to send correspondence if you were traveling abroad, if you needed money from your parents, you could send it to the American Express office, like if you were in Paris or London. So his shtick was he used to send his bills to the American Express offices and eventually they go around the world and they hit his house again and take another trip around the world. But the reality of the situation is, you know, you need to be more proactive because every, at least again, because of consumer protection statutes. Every letter that you're going to get from a creditor is going to have in it that if you dispute the amount we claim is due, you're entitled to dispute it in writing. And first off, you know, nowadays, unfortunately, everybody gives their creditors their cell phones and this, you know, so instead of the rule of thumb when I had a lot more hair used to be three months in arrears, that's when you heard from a creditor. Now you hear from them the day before they text you to tell you a payment is due when they tell you that the payment was due and you didn't make it. You know, which is one of the reasons when my mother was alive, I had, what is it, I have Verizon and I got to get her on my family plan. And when she passed away, I decided to keep her number. And that's the number I gave out to people. Did I ever check it? No, but they had someplace to call. So again, first off, the collection, the creditors don't want to do anything more than bother you and maybe you'll make a payment. So they'll send that letter. And if you have a computer and a printer, you make yourself a form letter in return and say, I dispute the amount due. Total bullshit. It's a credit card nine times out of 10. You either use it or you don't use it. You know, it's not a tort case where your neck hurts. Maybe it does. Maybe it doesn't. And then eventually the creditor will get get tired of nudging you because you're not paying them. They're wasting their time. And ultimately, they're all they are wasting their time. So they'll send it to a collection agency. Now, a collection agency can sue you. All they can do is nudge you, which means pester in Yiddish in case nobody knows. And like my mother used to nudge me all the time. And they send you that same letter. And, you know, what happens in response to the first letter to the creditor is they send you copies of all your invoices. So now the collection agency, when you send that response and be sure to change the addressee. They then have to go to the credit card company, get copies of all the invoices, and they'll send you copies of all the invoices. Well, you're not going to pay them if you're not paying anybody. But again, it's buying you time. What then happens is they eventually get fed up because collection agencies, like I said, can't sue you. They send it to an attorney. Maybe they send it to an attorney where you live, like in Massachusetts. Perhaps they send it to an attorney in California and you live in Massachusetts or some other state. You know, that to me is a waste of time because any judgment they're going to get if you're going to bother with it, not that you have a defense to it, they have to come in force in your state. So them getting a judgment in some other state, you know, let them have a nice time. Finally, they'll sue you because. First off, the collection attorney, again, sends you that same letter. And even though here stamps are, what,82 cents or some such crazy number, you send them that same letter back. I dispute the amount due. And they have to then go to the collection agency who goes, it's like playing telephone, goes to the creditor who sends back. You now get another shitload of documents. Maybe use them to print out on your computer, use the fresh bag. Again, meaningless, because if you're not paying, you're not paying. Or if you can't pay, you can't pay. So they'll sue you. From my perspective, it's not the end of the world. I know it's annoying, but I've been doing this a long time. You know, suing you doesn't get them their money. Attorneys have drawers filled with judgments that you can't do anything with because the. When you have to look at yourself in these terms, if you're in business or something like that, you want to make sure that you're judgment-proof because if the shit hits the fan, there's nothing you could lose. So they'll sue you, and as a courtesy, when I used to do bank, I still do bankruptcies for people, but I used to do like a pro se answer because to retain an attorney to defend a lawsuit that you have no defense to, Cost you more than the bankruptcy is going to cost. So I would draft general denials and all sorts of other bullshit in there and go out over the client's name. But the problem now is with technology, and I find myself to keep telling myself the computer is my friend. The collection firms who specialize in this stuff inundate you. I don't know if your listeners know what discovery is. context of a lawsuit, interrogatories, questions that need to be answered, requests for admissions. Are they true? Are they false? And requests for production of documents. Basically, you send them back all the bills they sent you. So, and nobody, you know, most lay people, attorneys don't like to deal with this stuff. I don't do this sort of work. So eventually what happens, and in most states it's the same, they'll get a judgment against you. And what happens when they get a judgment is the way a judgment gets enforced, and this is in most states, and this is maybe six months, eight months, a year down the road, because they have to go through all sorts of hoops. They have to get a default judgment and then assess damages. And you can sit there if you want and look at all this stuff online. Chuckle. So they get their judgment. Now, most states, they'll hand the judgment off to a deputy sheriff or a constable who'll come to your house, which is a bit annoying, you know, and if you decide to answer the door. They'll have the judgment which says you owe them $48,000. And of course, in a perfect world, you'll say, let me get my checkbook. I'll be right back. But being an inveterate cynic, and as I mentioned, being from Brooklyn, there's no such thing as a perfect world. So the poor sheriff goes back to the court with the judgment not satisfied. At this point, and this is so far down the line that if you acknowledge you're having financial problems and you've spoken with an attorney, you probably filed bankruptcy by then. It's something akin to what was once called debtor's court. A creditor can have the court issue a summons and summons you into court and inquire about your ability to repay. In my opinion, that's the one thing, if you pay attention to things, that you need to show up to, because if you don't, the courts will issue, and other states do the same thing, a capius for your arrest, basically an arrest warrant. And you'll be tooling down the mass pike and get pulled over by a trooper, and they'll say, ah, arrest warrant, the next thing you're going to the barracks and being escorted off to the Salem District Court. holding cell. You know, the way to avoid that is you just show up at the hearing and lots of them are by Zoom and telephone nowadays. And if you've retained an attorney, you tell the judge, I've retained an attorney to file a bankruptcy. And the judge will say, you give them like my name and number and the judge will say, come back in six months. And that's really the end of it. You know, from a Other aggravating things from a litigation lawsuit point of view, the only thing that would sort of force you to file a bankruptcy would be to stop a foreclosure. Because filing a bankruptcy, there's something called the automatic stay that goes into effect, which stops the foreclosure. You know, if I filed it a minute before the foreclosure is scheduled, that. let them know even though I don't have to. It's stayed, meaning the auction is not going to take place. The other thing is wage garnishments, pretty much a post-judgment remedy. And the only way you can stop a wage garnishments, especially if you're not in a position to pay anything, there's no deals to be cut, is the file of bankruptcy. Again, that stops it in its tracks. If you happen to have a business with bank loans on it, securing the collateral of your business, that too is the only thing. A bankruptcy stops the seizure of the collateral. You know, so basically, and rather than fearing the process, you know, I always tell people that. You know, it's better to be aware of what your situation is now, be it from, you know, you're an employee making a lot of money. What are my liabilities? What's my downsides? Do you have a business? What have I guaranteed? What's my downside? Then, you know, you're suddenly in financial problem and you convey your house, which has half a million dollars worth of equity in it. to your best friend for $1 in love and affection. That's not going to pass muster. You know, if you do it when you buy the house or when you go into business, as time passes, it settles in and there's nothing that can be done with it. You know, I was just, for instance, very often, I don't know how many of your listeners are entrepreneurs, but, you know, entrepreneurs. If they bootstrap their business, it's mostly credit card debt that they use. You know, they read those books and stuff. And you can discharge all of that in the bankruptcy and move along into the same business with no debt. But we can talk about that another day.

Well, now we see. You know, what I'm talking about is, for instance, you know, you start a business and who are the easiest people to tap into? Your family and friends, right? And why should your family and friends, from an insulation point of view, protecting your business going forward, why should not they not be like a bank if they've actually lent you money? You know, so the thing to do is, you know, if somebody's lent you 50 grand, your dad or your mom or both your parents, you sign a provisory note, you give them a security interest on your business. And then to make it real schmaltzy, you give them a mortgage securing your guarantee on the house. Now you're eating up equity because getting back to. being judgment proof and having a no asset case, that's the perfect world, even for this Brooklyn boy.

Well, being judgment proof means that if creditors try to collect from you, you have no assets for them to satisfy their client. Being judgment proof means that there is nothing you can lose if the shit hits the fan. You have to look at it, like I was saying before, early to see what assets from, let's say, a bankruptcy point of view, you could lose. And if everything you have, like, for instance, in Massachusetts, aside from Florida, we probably have the best homestead act in the country. You protect up to a million dollars worth of equity. in your primary residence, which is why most people who go through a bankruptcy, you know, the house is worth 700,000. Let's say the house is worth a million too. It has a $600,000 mortgage on it. The house would have to be worth with the million dollar homestead exemption 1.6 and it isn't. So When you go through your bankruptcy meeting, you provide the trustee with a copy of the deed, a copy of the mortgage statement, a copy of the homestead, and a copy of an appraisal. You know, the best example I give, I don't know if anybody else, I used to play basketball when I was young, I don't look it. But, you know, the kid who couldn't play, but he was the guy who brought the ball every week. If you didn't let him play, he took the ball home. trustees don't look to sell homes for the hell of it. In an assetless case, they get paid $60. They don't spend a lot of time. And then the interesting thing about, even if you're not judgment-proof, a trustee's path of least resistance when dealing with a debtor who has unexempt assets, I can give you an example. I have a debtor right now, who has a house in a suburb called Melrose. That's their primary residence. She owns a family something or other up in New Hampshire in the woods. And there is unprotected equity in the house in New Hampshire because you only have one homestead. And that's probably in every state. The path of least resistance for Chapter 7 trustee and actually for most people is to get money and not do any work. It's my favorite time. And we're my client is buying back her interest in the real estate from the trustee. So when she gets her discharge, she'll own her house in Melrose and she'll own her house in New Hampshire. free and clear of all of her creditors. All I can say is America is a wonderful place.

Oh, no problem. You know, we'll talk about the religious sacrifice before you have to file the case, but I can leave that for later. Basic difference between the two is a chapter seven, and it's all based on household income. The chapter seven, like I think I said, I don't even remember. I think I said earlier, if I filed your case today, four months from now, you'd get your discharge. That's it. And you'd get new credit card solicitations and do whatever you want to do. A chapter 13 is what's called a wage earner plan. And people, and it pains me when I've had a few cases where they're 100% chapter 13, so it does indeed pay me. But for instance, to be a chapter 13 candidate and you're a household of four. your gross annual income would have to be almost $179,000. And if it is, then you do something called the means test, which determines what your disposable income is, which is sort of like my father used to say, if he had wheels, he'd be a baby carriage. Sometimes it has no relationship to reality. which is, you know, they'll determine your monthly disposable income is $800, but your income and expenses, which appear in another part of the petition, you're underwater by $1,000. That's why I keep Kafka on my desk. None of it makes any sense. So the other reason people file Chapter 13s is because if you have mortgage arrears, you can file a 13. And pay your mortgage arrears out over five years with no interest while you pay your current mortgage payment. Sometimes easier said than done. But, you know, it's a way to save a house.

Discharge of everything except certain tax debts. Income tax can be discharged. It has to do with how old they are and if you filed the taxes on time more than three years old. And student loans, though the... Government has changed their stance on student loan discharge. Five or so years ago, I used to say, pick a bus that you want to walk in front of or a train, and that'll take care of your student loans. But in the past few years, I've been thinking of getting a counter on my website. I think I've discharged over half a million. And they look at a lot of factors having to do with good faith. whether the loans are more than 10 years old, whether the school is still open that you graduated from, whether whatever degree you had, you know, it turned out to be the job you're doing, good faith if you've made payments, if you've been deferred. There's another process that I usually, once I file a client's bankruptcy, Chapter 7. In fact, like I said, being computer challenged, I was doing starting one today and it wouldn't let me upload. There's a website where you can find all of your federal loan information. And that's what we use to get, you know, everything necessary to look at the student loans. But otherwise, getting back to Chapter 7, yeah, that's basically it. You know, you discharge, I guess the legal term would be all your dischargeable debt. Wow.

Well, it's paying it's paying your creditors your what you pay them is based on two factors. whether you have any equity in your assets that would be available to your creditors. And like I said, most people, even in Chapter 13, don't. And then it comes down to the means test, which determines, you know, your mortgage payments, car loans, everything out of pocket. Like I said, expenses for the kids. You know, I'm finding that nowadays. I'm doing bankruptcies and chapter 13s, like I said, it pains me for young people who have high income but don't have any real expenses. You know, they don't have a mortgage payment that you take off the top. They don't have the costs associated with it. And as a result, their plan payments have been quite high, which, again, is sometimes easier said than done to make the plan payment.

Well, I've actually, it's mostly for people who are in business. You know, if you're in business, you shouldn't be a sole proprietor because then you'd probably have to file a Chapter 11 if your business is of a certain size. But a chapter 11 is more of a, in Yiddish, it's called the Gansa Megillah, a big deal. It's, it's the, it, the costs are higher. The work that needs to be done is more, you know, you have to file monthly cashflow statements. You have to do open up better in possession accounts. It's a lot of work. And even the subchapter five chapter 11s, which is supposedly a streamlined 11, are both costly and a lot of work. And the thing is,90 percent of them don't last out a year. You know, and I have, which is really why you don't hear about individuals at certain times. Recently, I had the woman with her house in New Hampshire. She was originally a Chapter 11 because she had more assets and liabilities that then could be filed in a Chapter 13. And I also represented this couple who their income and their debt was above the Chapter 13 limit because of their student loans. And I had to file a chapter 11 for them. But, you know, all was not lost because one of them lost his job and their income got cut in the half. And we cut it, converted it to a chapter seven. They got their discharge and life is going on because, you know, the only way a chapter 13 works, you know, if if you have a house, that's a different story. But even then you could sell the house, pay off the mortgage and be done with it. dire habits, God forbid, a medical emergency. I mean, I had one guy, he died before his plan was before he paid four years and died in his fifth year. And I had never filed a suggestion of death before with the court. And but, you know, if you lose your job and your income is cut, you know, you don't necessarily have to stay in that 13. And the other thing I may have forgotten to mention. is when we determine whether you're a 7 or a 13 candidate, we look at six months' worth of your pay stubs. Income tax return is meaningless. If you can work less overtime, which sometimes puts people over the Chapter 13, we encourage it because you can plan to file a bankruptcy. I have people who... Right now, she'd be a chapter 13, but she's retiring in two months. Her income's not going to be the same. So why get into it? But it's really, you know, I guess it's sort of strategy.

Sure, sure. Usually, you know, by the time you're thinking about bankruptcy and hopefully you've stopped making payments on the credit card companies, your credit's gone to shit anyway. You'd be surprised that I mentioned I keep Kafka on my desk. There's a reason for all of this stuff. People who go through a Chapter 7 who make a decent income will get new credit card solicitations right after, sometimes before they get their discharge. Because creditors look at post-discharge debtors as a good credit risk. You make a decent amount of money. They'll give you a, you know, $500 credit limit, see what happens. And you can't file a bankruptcy again for eight years. So what's their real risk? You know, the other thing lots of people have going for them if they're continuing to make mortgage payments and car payments, you know, nowadays it's been a long time since people file a bankruptcy. just because, you know, they charged up. I once had a guy who uses American Express card in Manhattan to buy $35,000 worth of clothes and in three days filed a bankruptcy. And while he was going bankrupt, he had a new American Express card that he was using. None of it makes any sense. But the thing is that they look at you as a good credit risk. And then, of course, there's always And this is also easier said than done. I suggest trying to find, develop a relationship with a credit union or a small bank that can look at you with something more than a FICA score. You know, most people getting back to games players who file bankruptcy nowadays are people who have catastrophic medical costs not covered by insurance. People who've lost the job, you know, if you were making $140,000 a year and suddenly you lost the job or downsized, how do you keep all the balls up in the air and pay your credit cards? You know, unfortunately, natural people take money out of their 401ks and do shit like that, which is another issue. And, you know. If all else fails, you know, if you're going to take the kids to Disney World and rent the car, you're not going to take $2,000 in 20s to have the deposit for the rent-a-car. There are banks offer it, you can find them online, called secured or collateralized credit cards. You know, in fact, if you're... You know, in the position now where you sort of realize you're shoveling shit against the tide, you'd be better off opening up one of those. At least it's good money going after new things as opposed to good money going after old things. And, you know, again, they work the same way. They put the money in a CD or a savings account, then they give you a line of credit. You don't make the payments, they take your money. Very simple.

Well, you know, unfortunately, too many people act like ostriches and figure if they put their head in the sand, it goes away. If I ignore the notices, it goes away. You know, I remember, you know, as a kid, you used to love to get mail as an adult. Nobody likes to get mail, but it pays attention to you need to pay attention to what's going on. You know, if somebody is going to sue you, that's going to be left on your doorstep. You know, if you're getting behind in payments and you're it's difficult, you know, like I said, it comes down to, you know, what at the end of the week, do you have one hundred dollars left over to put food on the table and gas in the car? And that's absolute mischagas, insanity. I mean, you know, you really need to take a look at what your debts are and what you have and what. would be preserved when you file a bankruptcy. And if it turns out that there is stuff that can be exposed, you have to think about a way to stop that exposure. And the sooner you do it, the better it is, because, you know, you may know about Madoff, you know, his bankruptcy and his scheme, they made popular the term clawback. Nobody really uses that, but that's the term of art for what's called a fraudulent conveyance. Like I said before, a month before, I have great examples. Case I took over, he filed a Chapter 11, the beginning of some business, the beginning of June. Less than two weeks before the filing of the Chapter 11, He failed. He conveyed it from the corporation. He recorded the conveyance out of the corporation to his mother's trust. Didn't disclose it in the bankruptcy petition because his attorney at the time thought it didn't have to be. And that's a classic fraudulent conveyance. You've taken an asset and conveyed it away from your your creditors ability to reach it. You know, getting back to I know I've spoken about a lot, but, you know, putting friends and family on, you know, giving them collateral early on when they give the loans, you avoid that situation. It's like the same way, you know, I tell people if they haven't done that, then you should list them as creditors in your bankruptcy because it's one thing to have a. no legal obligation to pay friends and family. And if you want to pay them out of the goodness of your heart, you can always do that. But, you know, again, one of the examples I give is dad marries your stepmother and your stepmother says, you're no good son. He owes you 50 grand. I want you to collect it. And you didn't list it in your bankruptcy. Could be a problem. You know, on the other hand, you listed it. And if you wanted to pay him, you could. If you didn't want to, you had no legal obligation. Gotcha.

Well, what I my charge, I mean, everybody is different. I mean, what I charge is is about twenty five hundred bucks for a straight chapter seven. There's a filing fee, which is, you know. controlled by the government is 338. If we have a house to appraise, we pull an appraisal, which the trustees and the courts use. That's cost 17. And then we pull a credit report if you're one debtor or A couple, one is 50, a couple is 100, which gives us all the current information about your creditors. Because as you may know, debt is a commodity. In fact, there used to be a website, if you like to gamble, that you could buy debt in any state for 10 cents on the dollar. Maybe you get 90% of people who've gone through bankruptcy, but you get a few business people who have lots of money. I don't gamble. I only go to the casino to eat at the restaurants and go to the spas. But that's, hey, listen. But that's pretty much it. And like I said, you know, in a perfect world, you'll say, Barry, who do I make the check out to? But I said, I'm an inveterate cynic and I'm from Brooklyn. There's no such thing as a perfect world. So in order to retain us, and once we've been retained, and I'm assuming most other lawyers do the same thing, then for lack of a better phrase, we jerk your creditors around until you file a case. And to retain us, you pay us $250. You basically meet with my assistant, Kathy, who would go over everything we need to get to get your case filed. We only ask that you pay the balance off. You know, people are having financial problems within six months. We don't charge interest or penalties, but we only file the case when everything is paid. But in the meantime, you know, if you're inclined to answer the calls nowadays, you know, caller ID, most people don't. I tell people my mother should only know how lucky she was. There was no caller ID when she used to call me every Sunday when I was in college in 1971. She kept it up for about 35 years after caller ID that the tides had turned. And the same thing if you get a letter, you send the letter to me. You know, if you've gone through all that other stuff with my responses, if you finally get a letter from filing a bankruptcy, you send it to me and I send them a very nice letter telling I've ever been retained to file a bankruptcy. Call me back in three months, four months, five months. Whatever amount of time I feel like that day.

Well, you know, I tell people I not that I can handle cases in other states. I used to do them in New Hampshire, but it's actually been representing a creditor. I've been to Florida. But. You know, I do answer emails if people want to email me, you know, certain questions I'd be happy to answer because, again, you have to look at it as filing of a bankruptcy. It's not the end of the world. You know, its concept is that fresh start that you're entitled to. And most people do get it. I mean. By hook or by crook.

It's my email address is Barry. That's a small B at Levine's law, L-E-V-I-N-E-S-L-A-W dot com. Or I think you can communicate with me on my website, which is W-W-W Levine's law dot com. And if you want to see some of my podcasts where I rail about other bankruptcy things, it's because I have also written a book on bankruptcy called Through the Looking Glass. I'm almost ready to retire by the Amazon sales. You may not see me next time. But my YouTube page is called Bankruptcy Through the Looking Glass. And, you know, people tell me there's a lot of good information, you know, the debt settlement companies that have the special program for the guy who's missing his right leg and right arm, you know, there are no special programs. Don't fall for the bullshit. You get 1099 forgiveness of debt if they settle anything. And most of the time you wind up paying their monthly fee. And I have had lots of people who fall for who wind up filing a bankruptcy. But, you know, there's a lot of good deals out there.

Tiffany, I would love to, you know, I can say, have your people talk to me.

stay well, everybody. I've enjoyed myself.