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| Mathew Laskowski is a Senior Paralegal at Porzio, Bromberg & Newman, P.C.’s
Morristown, New Jersey office. He is a member of the firm’s Bankruptcy and
Financial Restructuring team. Prior to joining the Bankruptcy team, he was a
Case Manager on the firm’s Mass Tort team, defending Toxic Tort cases
Nationally. |
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Mathew came to Porzio with an extensive litigation background. This stemmed
from his previous firm’s defense of Medical Malpractice cases, Construction
litigation generally and in defending Municipalities. His Municipal Defense
experience exposed him to other areas of the law including Employment Law,
Civil Rights cases and it led to Class Action defense experience early in his
career. |
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Mathew graduated from Marist College with a B.A. in Political Science and a
minor in Business. While at Marist, he also completed the school’s ABA approved
Paralegal Certificate program. |
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| Mathew is a member of National Association of Legal Assistants and he is the
Treasurer and Website Developer of the Legal Assistant’s Association of New
Jersey, a NALA affiliate. Mathew sits on the New Jersey State Bar Association’s
Special Committee on Paralegals; he is also a member of the NJSBA’s Bankruptcy
section. Mathew sits on the Advisory Board to the Union County College (NJ)
Paralegal Program. |
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| Mathew co-authored and won a 2005 Burton Award for the article “Secured
Creditors May Not Be As Secure As They Think,” that appeared in the New Jersey
Law Journal and involves PACA Trusts. He has also lectured on the use of
Courtroom Technology, Large Scale Document Reviews/Productions, Case Management
and on the use of the World Wide Web as a research tool. |
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MATHEW E.LASKOWSKI - FACTS & FINDINGS
NALA AUGUST 2005
New Code Impact |
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Professionals who practice in the areas of bankruptcy and creditors rights have
been bracing for “sweeping reforms” of the Bankruptcy Code for years. |
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Federal legislators made such reforms a priority early in their sessions until
amendment after amendment would weigh down the bill until it fell by the
wayside. This time, the Republican-backed initiative was kept free of
amendments,which helped it move swiftly through Congress. Now, the bill,
formally known as the Bankruptcy Abuse Prevention and Consumer Protection Act
of 2005 (S. 256, H. 685) has been approved by Congress and was signed by
President Bush on April 20, 2005 (herein the “New Code”). The majority of the
provisions will become effective in mid-October 2005. Although this complex
bill will affect many provisions of the Bankruptcy Code, the consumer
bankruptcy sections were modified to the greatest extent, and were the subject
of the most debate. Many large institutional creditors (i.e., banks and credit
card companies) have complained of alleged abuses of the bankruptcy system
while debtors and their advocates have cried “foul” against lenders for
overextending credit and contributing to their insolvency. |
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Following are some key areas that will affect consumers under the New Code. |
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Consumer Bankruptcy |
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In 2004, Chapter 7 bankruptcy petitions accounted for slightly more than 70
percent of all consumer filings (“Non- Business Bankruptcy Filings by Chapter,
1990-2004, per Quarter” http://www.abiworld. org, 28 April 2005). Chapter 7 of
the Bankruptcy Code is generally relied upon as the most effective way to wipe
out unsecured debt and, in many instances, provides unsecured creditors with
little or no return on their claims. Those who file their petitions under
Chapter 13 primarily do so in an effort to preserve assets (usually a home)
that would otherwise be liquidated for the benefit of creditors. Chapter 13
debtors, who make up nearly 30 percent of the remaining consumer filings, enter
into a repayment plan lasting from 36 to 60 months where unsecured creditors
are paid an equal percentage of their respective claims based on the debtor’s
disposable income. Thus, generally speaking, creditors receive a greater return
on their claims, and debtors pay more to their creditors in Chapter 13 cases
than in Chapter 7 cases. |
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BANKRUPTCY REFORM ACT OF 2005 |
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The Sweeping Changes are Here by Mathew D. Laskowski |
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In an effort to curb the number of Chapter 7 filings, the New Code purports to
adopt two “means tests” to determine if a debtor may file a petition under
Chapter 7. Furthermore, pursuant to section 707(b) of the New Code, the court
on its own motion or by motion of the trustee may move to dismiss or convert
the Chapter 7 proceeding should the debtor’s income exceed the state median
income (the “Median Family Income”). The assumption behind section 707(b) is
that if a debtor has income in excess of the state median, the debtor’s Chapter
7 filing is an abuse of the bankruptcy system. Such a debtor may convert the
case to one under either Chapter 11 or Chapter 13, with a repayment plan that
provides a greater distribution to unsecured creditors. |
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First Means Test The first means test is calculated using a complex formula.
First, the debtor’s income must be determined. Pursuant to section 101(10A) of
the New Code, the debtor’s income is determined by calculating the total of the
debtor’s latest six months of income (prior to the filing date) from all
sources (not including Social Security payments). The total is then divided by
six to determine the average monthly income. Health expenses, disability
insurance and healthcare savings accounts are deducted from the debtor’s
average income. Additional expenses that may be deducted include actual expense
for the care and support of elderly or disabled household members, and certain
expenses associated with elementary and secondary school up to $1,500 per
dependant child under 18 years of age. This final number is known as the
debtor’s “Adjusted Income.” |
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Once the adjusted income is calculated, it may be compared to the median family
income, which is defined in sections 101(39A) and 707(b)(2)(A)(ii)-(iv), and
calculated by reviewing the “Median Family Income by State and Persons in the
Household” generated by the U.S. Census Bureau (1999). That number must be
adjusted up to the time of filing based on the Consumer Price Index. The
resulting number should be reduced based upon the “IRS Standards for Allowable
Living Expenses by Number of Persons in Household,” then further reduced
pursuant to the “IRS House and Utilities Allowable Living Expenses by State and
County,” and the “Allowable Living Expenses for Transportation by Region.” The
allowable expenses can be adjusted over the federal level if the debtor can
prove their actual costs exceed the IRS allowances. The resulting “Median
Family Income” is then compared to the debtor’s adjusted income. If the
adjusted income is less than the median family income, the debtor will be
allowed to file a petition under Chapter 7—provided certain additional
requirements, some of which are set forth below, are met. Conversely, if the
adjusted income exceeds the median family income, the debtor may not file a
petition under Chapter 7, but may file a petition under Chapter 11 or 13. |
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Second Means Test |
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Those whose adjusted income is more than the median family income may still be
eligible to file a Chapter 7 petition if they meet the requirements set forth
in an additional means test determined pursuant to section 707(b)(2). Under
this calculation, the debtor’s monthly expenses are subtracted from the
debtor’s current monthly income to determine an “Adjusted Monthly Income”
(AMI). The AMI is then multiplied by 60. If the result is less than 25 percent
of the debtor’s general unsecured claims, or $6,000 (whichever is greater), a
debtor may file a Chapter 7 petition. If it is greater than 25 percent or
$6,000, the debtor may file Chapter 11 or 13 petitions. |
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Credit Counseling |
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The New Code also requires mandatory credit counseling (see section 111) for
all individual debtors seeking bankruptcy protection. Pursuant to section
109(h)(1), counseling must occur within 180 days prior to the filing of a
petition under any section of the New Code. The counselor must be associated
with an approved nonprofit budget and credit counseling agency as defined by
section 111(c) (2), and must develop a management plan to accompany the
bankruptcy petition. There are certain exceptions for emergencies, or, if in
the trustee’s opinion, the agency could not provide proper counseling for the
debtor’s situation. These emergency exceptions do not exempt the debtor from
counseling. Under section 109(h)(3)(a), the emergent debtor must complete the
counseling within 30 days of the bankruptcy filing, subject to a potential
court-approved additional 15 day extension to complete the counseling. Failure
to complete counseling can result in dismissal of the petition. |
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Debtors who are incapacitated, disabled or on active military duty in a war
zone are exempt from the counseling requirement. In addition to credit
counseling, debtors, under section 1328(g), will now be required to complete a
course in personal financial management from a |
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Reprinted with permission of the National Association of Legal Assistants and
Mathew D. Laskowski. The article originally appeared in the August 2005 issue
of Facts & Findings, the quarterly magazine for legal assistants. The
article is reprinted here in its entirety. For further information, contact
NALA at www.nala.org or phone (918) 587-6828. |
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CAREER GOALS |
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• To continue to push the advancement of the paralegal profession by
encouraging my co-workers and other paralegals I am in contact with to take
part in their profession, including involvement in paralegal organizations,
being published or to speak at events and seminars. |
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• To continue to write and be published in professional journals. |
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• To speak at events and/or seminars about paralegals generally and the use of
paralegals. |
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• To continue to teach other paralegals about how they can improve
aspects of the skill sets. |
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• I hope to expand my own horizons and continue to learn more about
the areas of the law I currently work in and down to the road to learn new
areas of the law entirely, including Corporate. |
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