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Bankruptcy Info

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IRS Loses $93K Proof of Claim – Asleep at the Wheel?

IRS – Asleep at the Wheel?

IRS began collection efforts for penalties for failing to pay withholding taxes on a Debtor’s business.

Shortly after the collection began, the Debtor filed a bankruptcy and the IRS filed a Proof of Claim.  The Debtor filed an objection to the IRS’ Proof of Claim and sent a copy to the address on the Proof of Claim.

21 days passed and the IRS sat on their rights and did not file a response.   The Bankruptcy Court sustained the objection and disallowed the claim.

IRS moved to vacate the Order disallowing its claim.

The bankruptcy judge agreed with the IRS and vacated the Order.

Debtor appealed to District Court and the Order of the Bankruptcy Court was affirmed and claim was allowed.

Debtor appealed to the 8th Circuit Court of Appeals and the matter was reversed and remained.

Appellant Court agreed with the Debtor and the IRS’ $93K claim was not allowed.

The Debtor won –  It pays to appeal and fight for your rights – The IRS fell asleep at the wheel.    Deadlines work both ways – IRS must follow deadlines as all taxpayers must.

Bankruptcy is a specialized field and you should always hire a Board Certified Attorney to fight for your rights.

Call me (201) 446-5904: Ralph A. Ferro, Jr., Esq. – Board Certified Bankruptcy Lawyer.

Unemployment Overpayments: Dischargeable in Bankruptcy?

Now, when unemployment is high in New Jersey (approximately 16.6% in July), it is a good time to look at unemployment and bankruptcy.

There have been times, when unemployment is overpaid or paid at a higher amount than is should have been.

We need to look at the reason for the overpayment and the dischargeability in bankruptcy:

  1. Fraud or misrepresentation by the Debtor:

         Example, Debtor is working, collecting unemployment and does not report earnings: Non-Dischargeable – must be paid back

2. Mistake by the unemployment office on payments owed to Debtor:

Example, Debtor properly advises unemployment of correct earnings, work history and end of unemployment: Dischargeable – Debtor does not have to pay any amount overpaid back since the mistake or miscalculation was of no fault of the Debtor

It is important to work with a Board Certified Bankruptcy attorney to be sure your rights and obligations are carefully reviewed.

Remember:   Unemployment is calculated into your income but not the COVID or CARES ACT payments for bankruptcy eligibility.

Now may be a good time to evaluate your finances and see if Bankruptcy is a good option for you.

I am here to help you.   Call me directly:   Ralph A. Ferro, Jr., Esq.   (201) 446-5904

Fines and Penalties in Municipal Court are Dischargeable in Chapter 13 Bankruptcy


Debtor filed for Chapter 13 Bankruptcy and listed the Neptune Township Municipal Court as a creditor.

Debtor’s driver’s license was suspended by the Municipal Court for non-payment of fines and penalties.  The Bankruptcy Court entered  an order voiding the Municipal Court’s suspension of Debtor’s driver’s license.

Debtor’s Chapter 13 case was discharged and the Municipal Court was notified that pre-petition fines and penalties could not be pursued.

Municipal Court continued to pursue collections in violation of the automatic stay and discharge order and even threatened to suspend the Debtor’s driver’s license.   The Debtor reopened the bankruptcy case and filed an adversary proceeding against the Municipality seeking damages.  


The Bankruptcy Court found in favor of the Debtor. 

Municipal Courts cannot continue to collect pre-petition fines and penalties .  However, punitive damages could not be assessed to the Municipality.   However, NJ Tort Claims Act was not barred against the municipality.

If you have municipal court fines and penalties, these can be discharged in a Chapter 13 Bankruptcy.   When you file bankruptcy, your suspended license must be restored.

Beekeepers Make Changes & So Can You to Bounce Back

The economy has faced a major setback with COVID but I am optimistic.  I encourage my clients to take a positive step, make changes and you will bounce back.  

If you look at nature, in the 2018-19 winter, there were a record 37.7% less honeybees than the previous year.

Honeybees rebounded this previous winter, (reported the Associated Press). This previous winter, there was only a loss of 22.2% of their colonies — considerably better than the average of 28.6%, (Bee Informed Partnership).

During the ongoing 14-year survey, that percentage was the second-smallest winter loss on record.

Honeybee populations often follow a cyclical formula with good seasons following bad ones.  

I believe our bad season will be followed with a good one.

Beekeepers make changes, e.g. bringing their hives indoors during the winter. You can make positive steps to improve your financial situation and find out if bankruptcy will help you.

Honeybees are crucial to the world’s food supply and face numerous obstacles just like all of us do, but they push forward.

I am here to help you, give me a call today.

Some facts about honeybees when you think you are struggling: 

Bees have to fly over 55,000 miles to make 1 lb. of honey

Honeybees never sleep! No wonder worker bees have such a short lifespan!

—1 lb. of honey takes 556 workers and 2 million flowers.

—50-100 flowers are pollinated during one collection trip.


Options – Remote or In-Person Meetings

Options available for remote or in-person meetings.

As always, my initial bankruptcy consultations are provided at no charge.  I look forward to in-person consults again but I am still offering you the choice.   So much is lost when you cannot meet face to face.

Below are precautions my office is taking to protect you for meetings in my office conference room:

  • Upon arrival, clients call from their car so no clients are in contact with another.
  • Forehead temperature will be taken prior to the meeting.
  • I will be wearing a mask and masks are available for you, too.
  • No handshaking.
  • You can wear gloves if you wish.
  • 6’ seating distance at the conference room table.
  • Conference room table and other items will be disinfected between client meetings
  • Handrails will be disinfected between meetings.

I look forward to meeting with you so we can move forward…..and plan your financial options

Dog’s History of Escaping which Caused Injury – Is Debt Dischargeable in Bankruptcy?


Two German Shepherd dogs (Daisy and Oden) lived with their owner in a mobile home park.   No matter what the owner tried, the dogs found a way to escape.

City animal welfare issued a Notice of Dangerous Dog.  Their Notice indicated:  Determination/Irresponsible owner for both dogs.  An Order was entered wherein the dog owners did not appear in Court Also, City law required an owner of a dangerous dog to have a $500,000 insurance policy for possible injury, which the owner did not obtain.

Daisy again escaped and ran into a neighbor’s property and bit the neighbor causing her to fall and hurt her leg.

The injured party sued the dog owners and was awarded a $25K default judgment.

Dog owner filed for Chapter 7 Relief.

After the owner filed for Chapter 7 Bankruptcy, the injured party  filed an adversary proceeding.

Court Ruling:

Dog owner’s acts were negligent and indifferent to the fact that Daisy and Oden might be able to escape again.  However, there was no prior knowledge of Daisy and Oden biting anyone in the past. Dog owners violated the strict City law for insurance but that is negligence only.

The Debt was dischargeable since nothing done by the Dog owners rose to the level of malicious and willful. Section 523(a)(6)  of the bankruptcy code is a strict standard.

A Board-Certified Attorney would know this before filing the adversary proceeding for the injured party.   Now the injured party sustained physical damages and monetary damages to pay for her attorney.

Cannot Hide Under the LLC Umbrella and Want the Court to Pierce the Veil for Bankruptcy


Debtor had several businesses that were limited liability corporations (LLC).   The Debtor’s personal residence was owned by his LLC as an asset. During a period of 14 years, Debtor transferred his home between his LLC and himself and did several refinances.  Debtor files for bankruptcy and his residence is owned by the LLC.   Debtor wants to exempt the residence.  Debtor has a month to month lease for his residence.

Court Ruling:

Residence which Debtor rents cannot be exempted in bankruptcy.  Trustee takes the home and does not renew his month-to-month lease.  You cannot ask the Court to pierce your corporate veil.

Lawyer Files Skeleton Petition for Dead Person

Skeleton Petition for Dead Person????


  • Lawyer filed a Chapter 13 Petition for a woman who died 10 years earlier.
  • Filed another Petition for same dead woman 2 years later.
  • Lawyer stated he was asked by the woman’s daughter to file.
  • Lawyer filed the skeleton petition on the eve of foreclosure of house in estate.
  • Informed court he did not know that he could not file bankruptcy for a probate estate.
  • Both cases were eventually withdrawn when he was told by the Trustee that dead people cannot file for bankruptcy.
  • Judge issued significant sanctions against the Lawyer.

Court Ruling:

  • Lawyer made false statements and no excuse for alleging ignorance about rules on filing for a dead person.  
  • Lawyer did not conduct reasonable investigation into the debtor’s eligibility.
  • Lawyer appealed Judge’s ruling and sanctions.
  • Nice try by lawyer but no one believed the attorney…..Shame on the attorney.

Bankruptcy is a Specialized Field of Law; Hire a Board Certified Bankruptcy Lawyer and Avoid Mistakes

Slick Deal Ends Up Bad for Debtor

Slick Deal backfires


  • Company Principals sold their Company A to Company B
  • All become employees of Company B that bought them out
  • One month later, all 3 principals did the following:
    • Left Company B
    • Went to work for a competitor
    • Took trade secrets to their new employer
    • Recruited a significant amount of employees
  • Company B that bought out the original company suffered significant losses and their competitive abilities were severely affected
  • Profits and customers fell dramatically
  • Company B sued the original principals of Company A who went to work for the new company
  • There was a significant favorable ruling and award against the principals
  • One of the original principals of Company A filed Chapter 7 Bankruptcy

Court Ruling:

  • The Principal who filed Chapter 7 could not discharge the debt.
  • Debtor was liable on the tortious interference claim and his actions were willful and malicious.
  • Bankruptcy is not set up for those who deceive others and when they are caught, they want to walk away from the “punishment”

Honesty is the best policy when filing bankruptcy.

Watches Worth over $400K Cannot be Found – Lost in the Shuffle?


  • Debtors (both surgeons) filed for Chapter 7
  • $5.6 million in Debt
  • $400K in assets which included jewelry they valued at less than $15K
  • Chapter 7 Trustee noted a potential fraudulent transfer wherein the Debtor returned about 20-30 valuable watches.
  • The Debtors could not and did not keep accurate records of these watches.
  • Debtors would get watches from a jeweler and keep the ones they wanted and return the rest.  However, the receipts and returns did not match at all.
  • The jeweler filed a Proof of Claim for approximately $414K for watches that the Jeweler delivered to the Debtors but were not returned.
  • The surgeon Debtors claimed that just did not keep good records. 

Court Ruling

  • Trustee filed an adversary proceeding and the matter progressed to the appellant court.
  • The lack of receipts and returns were questionable at best.   The missing watches were neither found nor could be located in any paperwork indicating these watches were returned.
  • The U.S. Court of Appeals agreed with both lower courts and the Chapter 7 Discharge for the surgeons were denied.

I hope these surgeons do a better job documenting their surgeries.

Watches are still missing but the Debtors also have all their debts. Honesty is the best policy when you file a Bankruptcy.


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