Be the attorney you dreamed of being. Jump start your career with Tully Rinckey PLLC: http://www.tullylegal.com/careers/ May, 2015 - This course will be led by Tully Rinckey PLLC Senior Counsel Robert J. Rock, Esq. Mr. Rock will draw upon his over thirty years of experience as a bankruptcy attorney. Mr. Rock will provide guidance to attorneys on alternatives to bankruptcy, evaluating client qualifications for bankruptcy, types of bankruptcy cases, and major laws and rules practitioners should know. Mr. Rock will also provide insight into tactics to avoid potential pitfalls with clients and their bankruptcy petitions.

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Robert J. Rock, Esq.
Tully Rinckey PLLC
441 New Karner Road
Albany, New York 12205
518-218-7100
rrock@1888law4life.com
Bankruptcy Basics: Understanding Your
Client’s Options
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About YourPresenter
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 Managing Partner of Tully Rinckey’s Albany, NY office
 Over 3 decades of experience in both state and federal courts.
 His experience includes disputes between individuals, businesses,
non profit organizations, municipalities, and the full range of legal
entities.
 As a long-time ally of distressed and insolvent businesses and
individuals throughout New York’s Capital Region, Bob has been
expanding Tully Rinckey PLLC’s bankruptcy practice, particularly in
the areas of Chapter 11 (business) and Chapter 12 (farm)
reorganization.
 Bob received a juris doctorate from Albany Law School and a
bachelor’s degree in political science from Le Moyne College.

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Is Bankruptcy the Appropriate
Option?
 Debt Consolidation
 Deed in Lieu
 Short Sale
 Home Affordable Modification Program
(“HAMP”)
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Bankruptcy Basics
 The current bankruptcy law enacted by
Congress in 1978 is known as the Bankruptcy
Code
– The code consists of nine Chapters:
 Chapters 1, 3 and 5 are of general applicability
 Chapters 7, 9, 11, 12, 13 and 15 deal with a
particular type of bankruptcy case
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 First alteration: change the standard for dismissal under
11 U.S.C. §707 from "substantial abuse" to "abuse: in
order to lower the standard and, presumably, make
dismissal easier.
 The second change was to attempt to implement an
objective test for abuse based on a statutory formula and
IRS expense standards with the intent of establishing a
"bright line“ test for abuse. This objective test is known as
"the means test.”
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Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005

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The “Means Test”
 Compares a debtor's hypothetical future income, based
upon a review of the last six (6) months of actual income,
with certain actual and hypothetical expenses.
 Used to determine whether a presumption of bankruptcy
abuse exists under Section 707.
 All gross income, whether taxable or not must be
included.
 After this analysis, if a debtor has disposable income
sufficient to pay creditors $100.00 to $166.67 dollars per
month, then bankruptcy abuse is presumed.
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Financial Education Requirements
 Another creation of the 2005 Amendments to the "Code"
are the mandatory financial education classes for debtors
filing for Chapter 7 or Chapter 13 bankruptcy protection.
 Individuals filing for bankruptcy must complete an
approved Credit Counseling Course before a bankruptcy
petition can be filed.
 The failure to complete these courses will result in either
the dismissal of the bankruptcy case or the failure to
obtain an Order of Discharge.
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Chapter 7 Cases
 Available to natural persons and business entities
 Section 109(h):
– "may not be a debtor ... unless such individual has, during
the 180-day period preceding the date of filing ... received
from an approved nonprofit budget and credit counseling
agency ... an individual or group briefing ... that outlines the
available credit counseling and assisted such individual in
performance of a related budget analysis.“
 Section 707(b):
– amended to provide for dismissal of Chapter 7 cases or
conversion to Chapter 13 (with or without debtor's consent)
upon a finding of "abuse" by an individual debtor with
primarily consumer debts.
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 Certain assets may be claimed as exempt property
 Secured creditors usually retain their interests in
collateral
 In exchange for the potential loss of his or her pre-
bankruptcy assets, an individual debtor filing for Chapter
7 relief receives a discharge of personal liability for pre-
bankruptcy debt and keeps assets acquired after a filing
for use in a "fresh start.“
 The bankruptcy discharge is the primary incentive for a
voluntary Chapter 7 filing.
 When the debtor is an entity, other than a natural person,
no discharge may be granted.
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Chapter 11 Cases
 Originally designed as business reorganization, natural
persons are eligible for Chapter 11 relief as well.
 A debtor pays its debts, in whole or in part, through a
plan that must be confirmed in accordance with specific
statutory criteria.
 The debtor is referred to as a debtor-in-possession and
remains in control of its assets, unless a trustee is
appointed "for cause.“
 Upon confirmation of a reorganization, individuals or
businesses may obtain a discharge of "personal" liability
for debt incurred prior to confirmation.
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Chapter 13 Cases
 Debt reorganization opportunity available only to individuals
with regular income.
 Specific eligibility criteria limit accessibility to Chapter 13 to
persons with less than $1,081,400 in non-contingent,
liquidated secured debt and less than $460,475 in non-
contingent, and liquidated unsecured debt.
 Chapter 13, the debtor's assets are not liquidated. Instead,
the debtor pays his or her debts, in whole or in part, through
a plan that must be confirmed in accordance with specific
statutory criteria. Creditors do not have the right to vote on
the plan.
 Referred to as the debtor, the Chapter 13 debtor remains in
control of his assets. A Trustee, however, is appointed.
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Differences Between Chapters 11 and 13
 Chapter 11 bankruptcy is available for businesses and
individuals with a very large amount of debts and income.
 Chapter 13 bankruptcies are available for almost all
individuals as well as sole proprietorships; however there
are debt/income limits for eligibility. These limits change
each year.
 In both Chapter 11 and Chapter 13 bankruptcy, the debtor
and the debtor's attorney create a plan to reorganize and
consolidate all debt.
 In Chapter 13 bankruptcy, the creditors must accept this
plan provided that it meets certain legal standards.
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13.  In Chapter 11 Bankruptcy, the creditors cast votes to determine
whether they will accept or reject the plan.
 Under Chapter 11, if the creditors reject the plan, the debtor
may come up with a new plan.
 The judge may force the creditors to accept the debtor's plan or
the negotiations may simply fail.
 If the negotiations fail, the business will either have to file for
business Chapter 7 bankruptcy, or, the case may be dismissed.
13
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Principal Bankruptcy Code
Sections and Rules
 Section 362(a) of the Code provides for a statutory stay
that goes into effect automatically upon the filing of
most bankruptcy cases.
– Provides most debtors with a respite from collection activities
when a bankruptcy case if filed.
 Section 362(b) provides a list of exceptions to the
automatic stay.
 Section 362(c) sets forth the temporal extent of the
stay.
– Examples of the time limits imposed on the extent of the stay
include the grant of a discharge and the closing or the dismissal
of a bankruptcy case. The stay for individual debtors who are
serial filers or who file without complete documentation is much
more limited (as short as 30 or 45 days unless extended).
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 Code sections 362(d)-G) describe the process for obtaining relief
 from the automatic stay.
 Section 362(k) allows individual debtors injured by a willful violation
of the stay to recover monetary damages. Code Section 105 may
be used for the imposition of appropriate sanctions. Ruse 9011 may
also be employed where appropriate.
 Section 363 governs the sale, use and other dispositions of a
debtor's property.
 Section 365 governs executory contracts and unexpired leases.
Such contracts and leases may be "assumed" or "rejected" by the
debtor.
 Section 541 delineates the property of a debtor's bankruptcy estate.
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Robert J. Rock, Esq.
Tully Rinckey PLLC
441 New Karner Road
Albany, New York
518-218-7100
rrock@1888law4life.com
©2015
Questions?