As many readers over blog posts are aware, at Shenwick & Associates we practice personal and business bankruptcy law and workouts. With respect to our personal bankruptcy practice, we do not have a volume practice and we are generally referred more complex personal bankruptcy filings, rather than the run-of-the-mill filings, which we also do.
Recently, a client contacted us and wanted a second opinion regarding his personal bankruptcy filing. Briefly, the facts were as follows, the individual was a relatively high income earner with a lot of personal debt and a significant amount of student loans, including graduate student loans. He had consulted with a number of personal bankruptcy attorneys, who indicated that based on his income, he did not qualify for Chapter 7 bankruptcy but rather Chapter 13, which would entail a 3 to 5-year payment plan.
We met with the client and got detailed background financial information. Many of the clients' student loans were graduate student loans, were related to his profession or his ability to earn an income and accordingly case law held that they may be classified as business income and not personal income. In the way of background, if an individual's income is greater than the state's “Median Income” and they fail the “Means Test”, they cannot file for chapter 7 bankruptcy.
We asked the client for documentation regarding his graduate school attendance and did exhaustive research regarding treating graduate student loans as business income, rather than personal income. We put together a research memorandum, containing documents, case law and articles and based on our reviews of his file and our research, we believed that he would qualify for a Chapter 7 bankruptcy.
We did not over-promise and indicated that we thought his chances of success were approximately 60% and that the Chapter 7 bankruptcy trustee and the United States Trustee would question the treatment of the graduate loans, review the filing and possibly challenge the bankruptcy filing.
The client was happy about the news, but concerned about his chances of success and spoke with his father who advised him to move ahead with our law firm and file for Chapter 7 bankruptcy.
We spent a lot of time preparing the client for his 341 hearing had we forward our research memo to the chapter 7 trustee, who sent it to the United States Trustee and we were thrilled to find out this week that the client received his Chapter 7 bankruptcy discharge
The client wrote us a letter of recommendation which is provided below.
Bankruptcy, particularly personal bankruptcy is a specialized area of the law and clients having questions about which type of bankruptcy to file, if any and what chapter to file should contact Jim Shenwick for a consultation or a second opinion.
Jim Shenwick, Esq. jshenwick@gmail.com 212 541 6224
Client Recomendation
“I needed to file bankruptcy which was a very difficult and stressful decision. I never wanted to get to the point of having to file chapter 7, but I knew in order to have a fresh start it was the only way out. I spoke with several attorneys, most said I could only file chapter 13. I was single, no kids, and employed; my career and lifestyle were getting better but the debt was still substantial and I couldn't save any money. I felt overwhelmed thinking I had to figure out how to pay off the debt. James was the only attorney that firmly said you need to file for chapter 7. He didn't promise it would happen, in fact he was honest saying I had a 60/40 chance but he believed I had a good chance. I'm so glad I followed my instincts and went with him. He was aggressive and direct and got the job done. He prepared me for the court day and it went in my favor. I'm not gonna lie, I'm not proud of the situation, but I'm happy to be debt free with a new promising start. Thanks James!”
Not mentioned in the article, but many incomes taxes can be discharged in a chapter 7 bankruptcy filing. Jim Shenwick, Esq 212 541 6224 jshenwick@gmail.com