Ep:39 - What Is Bankruptcy | Your Questions Answered with Attorney Tom Zeichman

Have questions about bankruptcy? With so much uncertainty due to the Covid-19 crisis I thought it would make sense to have this interview and appreciate local attorney Tom Zeichman for coming on the show.  It is good to know your options as a homeowner, business owner and individual.

Tom Zeichman is a partner at Beighley, Myrick, Udell & Lynne, P.A. in Boca Raton. Tom focuses his practice on the representation of debtors, creditors, and trustees in the various aspects of bankruptcy and insolvency matters. He is the chair of the bankruptcy and restructuring practice at BMU Law.  Tom is based in Boca Raton with offices in Boca Raton, Broward County, and Miami-Dade County and can be reached at tzeichman@bmulaw.com or 561-549-9036.  Additional information available at https://www.bmulaw.com/team/thomas-zeichman/

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Transcript

spk_0:   0:00
Hey, everyone, it's Michelle. Be with today's hashtag. So both the story spotlight with my friend Tom. Tommy Thomas zajtman. He's an attorney here, a book or tone and going to cook. Look at my notes partner A. Bailey Myrick, Udell and Lynn P. A. Who focuses his practice on representation of debtors, creditors of trustees in a variety of aspects of bankruptcy. So today we're gonna talk about bankruptcy when you need it, why you might need it. I'll let Tom tell us a little bit about his educational background, and we're gonna do like rapid fire questions. And if you have any questions after you watch this or listen on the so bogus stories podcast. No, free to shoot me an email And, of course you can some questions over to Tommy. He will be happy to answer anything for you, and we'll have all this information in the description or the show notes and often running we go. Thanks so much for joining me, my friend.

spk_1:   1:04
Absolutely thank you for having you show

spk_0:   1:07
my pleasure. Welcome to my kitchen, since my Internet is not working so greatly in other parts of my house. So I

spk_1:   1:14
was going to say We're getting an insight into everyone's homes now, with all the rating

spk_0:   1:20
I know and how messy everyone really is, cause then you go If you look behind me, like or in front of me, it's actually not bad, but yeah, I've had to, like, negotiate a lot of space and live stuff around because of the wide angle of these interviews. So anyway, thanks for coming on and just already little quick snippet about yourself. And then we'll get rid into the questions that I have for you.

spk_1:   1:47
Sure, as you and you mentioned, I practice in practice on Boca Raton. Attended FAA. You go al's for my underground. I stay involved on the alumni board and, uh, planning and zoning in Boca Raton. And I attended Nova for law school after practice that, you know, Apple firms in downtown for a Lauderdale here in Boca. Now I have my all but now eagling Myrick and, you know, right where every the bankruptcy department,

spk_0:   2:19
that's amazing. And you just really went over there, correct.

spk_1:   2:25
I did. I started about a week ago, and I know a lot of things were going on, and good friends who are now why partners over there and looked at it. Their practices. They very sharp on litigation and real estate and corporate and didn't have a bankruptcy department. So I decided toe to join my friends and invoca and start ups, the bankruptcy department. And for me, it was a pretty easy move because I was working remotely anyway. So I'm, uh, I'm continuing to work from my home office. I have my at my phone calls coming through. That's one of the We'll get to it a little bit, but that's one of the great things about these voice over Internet phones. You can talk him in and it's like you're at the office. Um, yeah,

spk_0:   3:11
very much so. It's not new for some of us working from home. I've always worked from homos Well, and, um, I think the volume of zoom meetings has ticked up in. And as I just said to someone, in many cases, it's still just a phone call. You don't need to zoom, but that'll wear off in a little bit. Already is getting zoomed out, I think, given another week and people like, Can you just call me? Sure, um, everyone but my mom Shell still? Well, it's new. It's kind of, you know, and it works. It's great. I was on his zoom networking, virtual networking today. Um, as you know, I'm also a full time real state agent and the founder Plastics a Boca. Um, and so I'm on with real estate agents around the country brainstorming, masterminding as well as talking Teoh some my client. So it's It's very interesting how we've adopted very quickly in most cases to having to do this and under very difficult circumstances, you know, and we found each other a long time, So I was like, No, tell me. Come on my show.

spk_1:   4:24
We're on the homeowners Association together. Um, so I I was going to get into a little bit About what? What it's been like to practice law in this new world where we find ourselves range. So some of bankruptcy lawyer and a lot of times things are emergencies. You're either trying to put off a big court date or some big judgments coming around the corner, or there's a foreclosure sale, either an office building or personal residence. So there's some little urgency, so I've I've always had to have some set up at home and ah, secured server so that I could go in and have my access to my files from home because I don't have to file bankruptcy at 11 30 at night. That's just when it happens and I'm on the phone. So a lot of that was kind of set up. But one of the big differences to doing it now is I have a team and I want to be mindful and effective and really think about everybody else's time. So we've all tried to keep our same hours. Yeah, it's while I may be a night person or really early for in the morning person. I tried to maintain that 8 30 to 5 30 time period where I'm able to interact with my team, make sure that they you have what they need in order to move projects and clients forward. And if I know that I'm gonna be out early in the morning and just available for a couple of hours, I'll send emails and early in the day and kind of lineup what the day should look like. So it just being really thoughtful because you're kind of isolated. But there's four or five other people that you ordinarily work with, just thinking about them and what will help them succeed will help drive your day. And that's what I found. It's been helpful for May

spk_0:   6:15
that's awesome and that you're still available. And I like what you just said because emergencies air still happening, whether it's a health emergency financial emergency, you know, like you said, foreclosures, I'm in real estate. I remember so much of that from the 2008 downturn and crash, and we'll get to that in a minute to you because I think that's gonna be important. Um, so one of the questions that has come up in regard to like are the courts still operating? Are they doing everything status quo? Or have they shifted to accommodate when you have to file something or you have to say, do something with the judge?

spk_1:   6:58
Sure, uh, the courts have remained open, but not to the public. So if you think we're thinking about going down to the courthouse to get married, you're gonna have to not have to put that off for a moment. Please get married on the courthouse. There's virtual ways that you could figure out how to do it, but at the courthouse,

spk_0:   7:15
that's that.

spk_1:   7:19
But the courts are operating with things that they find to be essential, or where the parties can agree that it could be handled via telephone or zoom there. Zoom court hearings that are taking points where you may have an important hearing and you need to show documents to the court. Your evidence at this point, you can share your screen and they could see the documents. Or, if you're really on the ball, you mailed hard copies that they were there to ahead of time. And those things are still operating. Some things that aren't happening Evictions, uh, primarily residential ones if at this point there's a moratorium on them so that the Brits that the sheriff ordinarily goes out and serves aren't being issued, so the evictions aren't happening, For instance, um, things there's some amount of delay. It's not as fast as it waas, but courts. I was only hearing the other day where I argued for an hour and 1/2 and we were on the phone and we made it through in the court, made its decision, Um so those are operating. But the big thing for most people that are evictions have have ceased for the moment. Two kind of people pause.

spk_0:   8:36
That's true. And then also, the banks are offering, in many cases for parents, which, um, has a different meaning than what a lot of people think it is. It's not necessarily putting your payments on the back end of your world. And, um and we know this especially because of I think, what we all dealt with before and that, um, if you need some breathing room, most of them will work with you, but they're gonna want, like, a little balloon payment on that. So you wanna talk a little bit about that to you?

spk_1:   9:12
Sure. So there have been a variety of programs that banks are doing a lot of times. What banks are willing to do depends on your particular loan. Do you have an FAA J? Do you have ah, traditional loan? Who's that Ultimate back stop is the government are investors if it's the F H A loans, and they are kind of have that availability to put it at the end, where they're pushing the payments and interested again, other ones that they may give you a three month pause. But then they will want you to catch up entirely after that three month period. Now it's possible you can negotiate some additional wiggle room and say a You knew I was in trouble. What makes if I couldn't pay you current over those three months? What makes you think I can do it at the end of the third months? A bowling payment? So there it is about reaching out. Having those conversations. I realize you're not just skipping payments that you don't have to make up. They won't come do. It's about negotiating. What would be the best deal on how they will computer, do you get? Retain the property and before

spk_0:   10:21
and if in all possible, um, communicate, communicate, communicate with your lender If you're in trouble, communicate with, um, find out what programs they have. They've been through this before. We know that this is nothing new for them. The don't stick your head in the sand because in many cases there are ways do not go into foreclosure. Do not have to short sell. Um, but that brings me around Teoh Bankruptcy trend. What do people personally, you know, toe, hire someone for bankruptcy. Could that push something like that off? And what would be the reason someone might want to consider bankruptcy now personally, And also there possibly a small business that is obviously in trouble?

spk_1:   11:13
Sure. Um so I would say for both the business and a small person, there's a lot a small business, and

spk_0:   11:21
that would be me. I'm fine. One.

spk_1:   11:23
There you go. I'm not completely Tallet 59 in both cases, with what they want to do is evaluate your financials, your financial situation. A lot of times we're living our lives. We don't think too much about the whole picture or the crunch is that we're having. It's kind of repair monthly's and we move on. You just wake up in Europe. But now is a good time to think about What is that overall that out there, if our things just is it a pause blip moment for me? Or is this some major change that has occurred from this? Right now, we're seeing a lot of furloughs and layoffs, things like that. But people, some of those people will be picked back up in a couple months. Other ones there. They're unsure, um, which you'll want to consider. You know, it's part of your bankruptcy pictures. That amount of that. If things are going to improve for you, um, and your you're gonna be able to kept become current again on your bills or if this is going to continue snowball to be a problem, and then also, what can you protect? There's exemptions for individuals, people on. Everyone thinks that is your homestead. Um, your mortgage. They can still foreclose against you. But if you have an backs and other credit cards and things like that, they can't go against your house. So kind of evaluating what you can protect your retirement funds and things like that are considerations. And for businesses, it really is determining it. Is this a momentary issue? Or have things so structurally changed that your customers are going to come back because they themselves are out of business and you may have to pivot here and there's there's creative things to do. It is eventually talk with your lenders. Now's a good time to develop a plan to talk to all your creditors because someone we're gonna want a dollar more than $0 which is what they could look at down down the road.

spk_0:   13:26
That seems to gaze. Yeah, I'm very bloody. I've actually had some reach out to me and say, Listen, being very proactive, this is what we're going to dio and this is, you know, tell us what your situation, which I think it's brilliant. I think from a PR standpoint, I think it's fantastic. Um, you know, minimum payments. If you can't just make those minimum payments, don't skip, don't give them a reason to cancel you or, you know, whatever. Um, as far as, um, second homes, you know, we live in South Florida. People have vacation homes, second homes. Um, how does that come into play? Because they're not homesteaded?

spk_1:   14:08
Sure. Uh, if you're if you're married and it's in Florida, it in you load it with your spouse, then it could be the tenants by the entirety exemption, which can protect it. It's your creditors, or only one spouse is, let's say, only one on Lee. The husband of the wife is on the credit cards, and then you start to get credit card judgments against you. Well, if you against one of you, if you only up. If you both own that second piece of property, you can claim that exempt its tenants by the entirety, and it can't be touched. Uh, so it's it's something to think about, you know, is your kind of structuring who's incurring debt in his name? Maybe it's a strategy to divide it up. Um, and one thing to think about is we're all at home a lot together. Uh, probably considered being nice to each other because you may need toe claim that exemption.

spk_0:   15:08
There you go. I don't disagree with that one. Try and you try to be nice. You know, um,

spk_1:   15:16
patience is key. Now

spk_0:   15:18
say that. Yeah, really. As, um, certain obviously businesses we know are gonna have a very, very hard time coming back. Um, I think about a lot of the restaurant. So, you know, we're all supporting with take out and pick up and everything, um, timing wise. When should someone or in business reach out to someone like your Saul? Uh, just so that they understand their options. Because I think the thing that holds so many people back is that steer of they're not gonna like what you have to say. But at the end of the day, I think knowledge is power and knowing. Here are my auctions owned, by the way, and this is also a second part of this question. Um, se file bankruptcy and you start getting back on your feet again. Maybe you get a side hustle. Psychic, Whatever. Can you stop that bankruptcy?

spk_1:   16:21
Sure. Um, okay, so with I think it's better sooner rather than later to Eli's start having the conversation and have your options when he said, some people don't necessarily want to hear what's out there because there is this kind of fear of the unknown. Uh, but the other part of it is some people don't want to see. You seem going in and out of Bankruptcy Lawyers office Now. My firm is a lot of things you could be coming in for any number of reasons, But, uh, But I'll tell you this. I've represented a lot of people around town. You have no idea that I did, because unless they come up to me, I will smile and be nice. But I'm not going to go over and say, you know Hiatt then or something like that because it's their business. We hit. I helped him out and and we move forward and and that's great. Um, so it's sooner rather than later, for a variety of reasons. One. I think a lot of your creditors are willing to make deals now that they ordinarily wouldn't because they're not getting pay pile out of people. Uh, she's take factories, not paying the rent. A lot of people are not paying their rent. Um, and you may, when you're evaluating whether to go, if you're gonna come back tonight, you may be able to get a great deal on a least now for a commercial office building because people were kind of evaluating how much space saving. All right, going forward. So I think it's sooner rather than later. If you file well, let's say you're an individual. You're kind of, and you can dismiss the case if you file a certain chapter. But the hit your credit will have already occurred, and at that point it probably makes sense to go forward and discharged those debts. One thing to keep in mind is you can only discharge. That's every seven years, and no, we're not so far out from the great recession, but a lot of people will. Probably It's a matter people will have to go through another time, Um, so that timing is important. At least you can kind of set up the way your options and maybe better position yourself to not have problems going through bankruptcy case.

spk_0:   18:40
What, um, what ducts are not allowed in a bankruptcy? I know there's different types of bankruptcies.

spk_1:   18:49
True. So let's say suit types of debts that aren't generally wiped out generally, not student loans. However, there is a very big and helpful decision at a New York. Uh, that did allow a gentleman toe wipe out several hundreds of thousands of dollars worth of student debt, and it lasts in what was a very strict standard. Um, this undue hardship, like absent absent of severe disability, occurs at your inability to pay, and you previously made payments. It was almost impossible. But now ah, a New York judge is given a legal framework that a lot of people are challenging student. That's certain taxes won't be, uh, discharge. Let's say you don't you're an employer and you don't pay the employer side of the payroll tax that will follow you. Um, and but But, you know, broadly, you could discharge most of your debts. Uh, if you defraud somebody out of money, you can't discharge that one. But they would have to come in and challenge you on it. And some people don't challenge you. Not that I'm encouraging people to do that, but, uh, you can discharge a wide variety of debts. And like I said, I expect a lot more people to challenge the suit blown, which is a substantial figure for most people.

spk_0:   20:13
Yeah, that's it. Really As, um so the last thing I want to ask you about in regards this one of the types of bankruptcies available, and then I have something a little lighter t ask you.

spk_1:   20:28
So you have the give the chapter seven. It's, um, generally for individuals, but also businesses. It's the liquidation one. You come in and say, Hey, this is what I have Please distributed to my creditors last what I get to keep with my exemptions and you move on pretty quickly. Ah, Chapter 13. You pay your disposable income. Uh, the amount above what you mean to live under Florida law, and you pay that to your creditors a disposable amount for 3 to 5 years, depending on your income level. And then Chapter 11 is for I merely we think of G. M A gig companies that filed for Chapter 11 bankruptcy. I merely did since is that what you could do is you could restructure your debt and extend out that payments and tinker with interest rates and do other things by confirming a plan. I've also represented high net worth individuals who qualify for Chapter 11 and those introductory chapters is Chapter nine, which is municipal in city bankruptcies. But in Boca Raton, we've been very thoughtful and of our reserves and everything else. So I don't see that other other other cities have not played. No.

spk_0:   21:48
I, um, had a, uh, transaction in December, and a homeowners association had filed bankruptcy. Okay. And so that was very I think, honestly, that was a first. I've been doing real estate down here since 2000 and three, and that that was the first, uh, had already been done. There were almost through the payment structure from all the homeowners, but yeah, very interesting. I won't say what community, but nice little community in West Boca. But it was kind of like one. So you know these things?

spk_1:   22:24
I may have been involved. In that case, I won't

spk_0:   22:27
bring up ways. Yeah, we'll talk about that.

spk_1:   22:33
And that's Yeah, well, we'll see. I think a lot of a choice. They're things that people stop paying 1st 1 of the first things you are going to it's the dentist. But then after that, it's Ah, no, a truism. Agency is their maintenance face, but you know, is a Choi's have foreclosure powers. Also, people may re evaluate what they prioritize.

spk_0:   23:01
Well, actually, that's a good point because one new things back when we were dealing with so much before, um, that was a big take away for May. Which Waas don't try not to screw around with your maintenance fees because they can foreclose as well not just a lender and well and things, and they will do it fast. Yeah, so that's a really good point. So I appreciate all this information. I think it's gonna be very helpful not just for our hashtag so Boca followers and listeners, but people in general who are unfamiliar with bankruptcy and may have to make that phone call. What is the best way to reach you?

spk_1:   23:49
Shirt said the best way to reach me is and I don't call myself nearly enough.

spk_0:   23:55
I No, my number. So there you go to

spk_1:   23:59
the office at 5615499036 My email wishes T zajtman c I c h m am at b m u law dot com There you

spk_0:   24:14
go. So one of the things that you know we are opportunities, I think, and when things air normal. But we're out in about a different restaurants and things like that. Um, what's one of your I asked this, actually, on my grill state podcast. Um, if you could break bread with someone, anyone to be no dead or alive, who would that be? And where would you break bread up? Look

spk_1:   24:44
00 man. So I'm going to go a lot. But he's Ah, he's a Renaissance man because he's been successful in politics, athletics and movies and entertainment. So I would go with Arnold Schwarzenegger.

spk_0:   25:00
No, I and I don't

spk_1:   25:04
know. I don't know. Pizza counts his bread, but I goto tomatoes and, uh

spk_0:   25:09
There you go. I love that. You know, Arnold has a very entertaining tic Tac channel are like, the way he's a hilarious on there. And I watched Maria Shriver on Instagram doing these really cool, thoughtful interviews and I flip over to chick talk it. There's Arnold there. They have missing. Apparently, they have many horses, so he's always doing stuff with these damn many first. It's very fun. Um, I love that. So that And what kind of pizza?

spk_1:   25:40
I would stay classic with pepperoni

spk_0:   25:44
pepperoni. I like a white pizza myself. Okay, Yeah, yeah, but we love Tomasz issue so well, I so appreciate you coming up a And, um, you know, I think this is great information for anyone who has questions. Concerns was a little nervous. Is it shirt? They should or not? And whether your business or whether you're an individual and you have these questions, reach outs to Tom. He's awesome, Resource. He's someone I completely, you know, feel comfortable toe have on the show because he's always got your good, timely information that, um, and the way you present it is. Okay, you know, you would make someone feel very comfortable having these questions, and I first? Yeah, very much so. So I appreciate you coming on today. Hey, guys, make sure you subscribe, too. So both it s Rios. Birth got foam. Um, we drop a podcast show once week. It's I always videotape them now. And so they end up on Facebook and social media, follow us at so Boca on instagram and YouTube. And thanks for, uh, you know, uh, joining us for the show today. And thanks again, Tom. Thank you, Old.