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Thursday, 02 August 2018 19:19

Debt Settlement

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I routinely meet with people who have been in a so-called debt settlement plan that is making their situation worse with every passing month. The ongoing monthly payments are not within their budget, the plan is failing because they are now being sued and facing garnishment, and other debts that are not covered by the debt settlement plan are causing their own hardship. My biggest beef with all the debt settlement companies is the lack of full disclosure on the options available to their customers. How someone handles their debts is a personal issue and decision, but when someone seeks professional advice, they should be provided with an accurate picture of the options so they can make the choice that is best for themselves and their families.

Debt settlement companies never seem to be constrained either morally or ethically to fully evaluate the options. I recently met with a woman who started a debt settlement program at a time she owed over $40,000 in credit card debt, and her monthly mortgage payment exceeded one half of her entire take-home pay per month. She was using her 401(k) plan to make ends meet in her home, and causing tax problems each year because of the 401(k) withdrawals. To add insult to injury, the plan failed, and she is now being sued and is on the verge of facing garnishments. She has spent thousands of dollars with the company, ran up large income taxes, has created enormous stress on herself, and none of it is solving her problems. Had she been presented legitimately within the option to file bankruptcy, she could have saved vast sums of money, and had the problem solved in very short order. Some companies make a proposition that sounds too good to be true. Make sure that you ask them about options so that you decide the best course to take.

An important benefit of a bankruptcy filing is the ability to nullify certain liens. For this column, the focus will be on liens attaching to homestead real estate. Liens attached to non-homestead real estate may be susceptible to removal or modification in a chapter 13 bankruptcy.

The most common situation is a typical judicial lien for a monetary judgment acquired by a creditor and filed in the county within which the bankruptcy debtor owns his or her home. For judicial liens, the applicable statute is 11 USC §522(f)(1)(A). The fundamental basis to be able to remove a judicial lien is demonstrating that the debtor's equity in their homestead is less than the permissible bankruptcy homestead exemption. The debtor's equity is determined simply by calculating the sum of the market value of the homestead, less the current balance on any mortgages and outstanding property taxes. If the amount of the equity is less than the applicable exemption, then any judicial lien is almost universally susceptible to being removed ("stripped off") by motion in the bankruptcy proceeding. The applicable homestead exemption in New York ranges from a low of approximately $80,000 in certain counties, to over $130,000 in Saratoga County per debtor. The amounts are periodically adjusted. In most instances the debtor's equity is within the exemption level, and removal of the liens will be successful. Note that judicial liens fall within the type of lien that can be removed, but nonjudicial liens, such as IRS liens and those filed by DSS, are not susceptible to be removed. Also, judicial liens for child support and maintenance cannot be removed (11 USC §522(f)(1)(A) excludes debts under §523(a)(5) that are Domestic Support Obligations). While I have read one bankruptcy court decision outside New York that removed a nonjudicial lien, to my knowledge the practice is not currently being allowed in the Northern District of New York.

Childhood Disability benefits claim requires proving that the disability existed before age 22. The problem in one recent case was that the client was almost 45 years old when he applied. In order to be successful, we had to prove disability going back 23 years. By working with the client, we were able to develop a record that supported the claim. The Judge required two hearings, and finally awarded benefits.

I was able to be successful because of personal attention. I spend time with my clients to determine how to best assist the client with their claim. Every person and every claim is different. Trying to figure out the claim over the phone just does not work. I personally meet with clients. By getting to know my clients, I can advise them on what can be done to help their claim. This personal attention is crucial.

Social Security Disability Backlog of Claims is growing:

The backlog of Social Security disability claims is growing. The Social Security Administration had made great strides on shortening the appeal time, but all those gains have been lost in the last year. Why is this happening? People in the Social Security Administration, or perhaps politicians, have decided that Social Security disability cases need to be more closely reviewed. There was a view that too many people who are not truly disabled were receiving benefits. To address this misperception, two things have changed: first, up until about a year ago, if someone had a very strong case of disability, instead of requiring the person to wait for a hearing with the judge, an attorney in the Social Security Administration was able to write a favorable decision, and therefore get benefits to the person a lot sooner. That program has all but been shut down. Second, the Social Security Administration began a much more intense examination of all of the decisions being issued by their judges. The Social Security Administration has more actively criticized judges decisions when the Social Security Administration believed that the judge did not have adequate support to find someone disabled. What this means is that the judges are spending even more time holding their hearings, and writing their decisions, to avoid criticism from the Social Security Administration. Up until fairly recently, when the case appeared relatively strong, the judges were able to move to a decision quite quickly. That has all changed. The result is that in Albany, where the hearings were held about one year after the appeal was filed, they now are being delayed for about 15 months after the appeal is requested. The timeframe seems to be growing, especially in light of an increase in the number of disability claims being filed.

What does this all mean for someone considering applying for disability? First, a person who wants to seek Social Security disability should not delay in starting the application, because from the time of the initial application until a judge hears the case, and makes a ruling, can now approach two years. Second, because of the long processing time, a person seeking disability has to do everything they can to obtain proper medical documentation to give themselves the best chance possible to win their claim.

Beware of false claims of debt collectors.

In this day and age, debt collectors continue to use illegal and immoral tactics to try to collect debts. They will claim that you will be arrested, they will claim that legal action will be taken against you if you don't immediately return their phone call, and they will make other false claims. They may even pose as court officers or other officials, as a threat to collect a debt. The state and federal government tries to shut down improper debt collectors, and they have done so, but it seems that every time one is shut down another one pops up. Very recently the state and federal government targeted two firms in Western New York, Vantage Point Services and Four-Star Resolution, accusing them of improper practices. When you add the improper practices to the fact that certain debts are "bought" improperly by some debt collectors, including debts that are no longer valid for various reasons, you should be extremely cautious and skeptical upon receiving any contact from a debt collector. Debt collectors have no power over you or your money. In New York State, for anybody to try to take money from you through a garnishment or other means, they have to start by filing a lawsuit and properly serving you with a summons.

If you are receiving multiple calls from debt collectors, it may be helpful to talk to an attorney about your rights and your options. And whatever you do, do not give out personal information to any stranger over the phone, and certainly not over the Internet.

Social Security Blog

November 7, 2013

 The Social Security Administration is now processing claims for same sex couples following a recent U.S. Supreme Court case that struck down the Defense of Marriage Act as unconstitutional.  The Social Security Administration is accepting claims for couples who live in states where gay marriage is legal, as well as states where civil unions and domestic partnerships are legal.  Currently, the Social Security Administration is processing and approving claims for spouses of retired workers if the couple is married and currently live in a state that recognizes same sex marriage, which includes New York State.

Source: NOSSCR Volume 35, Number 8, August 2013.

Monday, 11 November 2013 15:30

Inherited IRA's

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November 7, 2013

 The U.S. Supreme Court is to resolve the issue of inherited IRA’s.  Two different Circuit Courts, the Fifth Circuit and the Seventh Circuit, have ruled different ways as to whether inherited IRA’s are exempt under the bankruptcy code.  The Seventh Circuit ruled that inherited IRA’s were not exempt, while the Fifth Circuit ruled they are exempt for non-spouse beneficiaries.

 The Supreme Court decision will have a far-reaching impact on inherited IRA’s.

Source: Consumer Bankruptcy News October 28, 2013, Volume 24, Issue 2.

Monday, 11 November 2013 15:27


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November 7, 2013

 The Eighth Circuit has ruled that some equity needs to be shown in property in order to claim an exemption.  This issue most commonly arises when a motion is made to strip a judgment lien off a home using the Homestead exemption.  Some judges have ruled that equity needs to be shown to take the exemption.  In other words, if the mortgage is higher than the value of the home listed on the petition, there may be no ability to strip under 11 U.S.C. 522(f).  This is apparently the law within the Eighth Circuit.  In the Albany District, this rule does not take effect.  See: Goben v. Corydon State Bank Eighth Circuit, 9/23/13.

Source: Consumer Bankruptcy News October 28, 2013, Volume 24, Issue 2.

Thursday, 07 November 2013 20:34

Misunderstanding of Mental Illness

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Reported in vol. 33, no. 10 criticizing an ALJ’s analysis and revealed an all too common misunderstanding of mental illness, “The very nature of bipolar disorder is that people with the disease experience fluctuations in their symptoms, so any single notation that a patient is feeling better or has had a ‘good day’ does not imply that the condition has been treated.”


cited: Scott v Astrue, 647 F.3d 734 (7th Cir. 2011)


Cited: Holder of Note & Mortgage Had Standing to Seek Relief

Consumer Bankruptcy News Dec 22, 2011 vol. 22, issue 4

The holder of a note and mortgage has standing to bring a motion to lift stay.  Capital One Bank received an assignment from Mortgage Electronic registration system (MERS) was able to overcome an objection to the lift stay motion by a chapter 7 trustee.  The court in essence determined that whether Capital One Bank would ultimately prevail in a state court foreclosure, is an issue for state court determination.  However in 11 usc 362(d) the MERS possession of the note and mortgage in the assignment is enough to establish standing for Capital One to pursue a lift stay motion.

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We are a debt relief agency proudly assisting persons file for bankruptcy under the Bankruptcy Code. We serve clients in Fulton County, Montgomery County, Saratoga County, Warren, Washington, Albany, Rensselaer, Essex and Hamilton Counties