Eric Foster asks five questions about business, debt and bankruptcy
Eric Foster is a business attorney and debtor rights attorney at Old Saybrook, who has practiced law for over 28 years. Foster previously worked at the Federal Reserve Bank of New York, where he focused on regulating banks’ lending activities. Now, Foster advises small business owners and defends debtors, helping them negotiate loans or file for bankruptcy.
In a conversation with CT Examiner, Foster shared his take on the state of consumer rights in Connecticut.
In the aftermath of the pandemic, what is the state of bankruptcies in Connecticut?
During COVID, there was actually a slowdown in bankruptcies as people got paycheck help. We expect there will be a potentially significant recovery in bankruptcies now.
People don’t realize you can have a substantial income while still qualifying for the best kind of bankruptcy – Chapter 7. A family with two children can earn $ 120,000 a year and a court can still rule them as eligible for full discharge . consumer debt, which does not include student loans, tax obligations or personal injury. In most cases, people can keep all of their assets and money. It is vastly underutilized.
Why do you think more people are not taking advantage of bankruptcy?
Maybe it’s because of shame and maybe a lack of education. People are also hesitant because they think it will ruin their credit score for the rest of their life, which is not true. It will usually come back to where it was within 24-48 months if you haven’t missed any payments, but people are afraid of it. They are willing to spend tens of thousands of dollars to pay off their creditors just to protect their 50 point credit score.
What are some of the resources people in Connecticut should know more about when it comes to asset protection?
Connecticut has passed legislation creating a unique homeowner protection regime – only three or four other states have anything similar.
Due to the 2008 financial crisis, Connecticut adopted a mandatory mediation program for banks and other mortgage lenders before proceeding with the foreclosure process. Suppose the homeowner cannot make mortgage payments and the lender is fed up and sues for foreclosure. In most states, you can be away from home in 120 days.
But in Connecticut, you have a period where you sit down with a judge-appointed mediator – not a judge – and your lender. They all sit together in a room, without speaking to a judge on a platform, to review and assess loss mitigation options. This gives the homeowner time to see if he can qualify for a modification, take out a second mortgage with the help of Connecticut’s Emergency Mortgage Assistance Program, or sell the house to a third party and downsize.
What advice do you most often give to small business owners?
Small business owners don’t always know how to plan for succession when they are the sole owner of a business, and they don’t understand the crisis created when the sole owner of a small business suddenly dies and their spouse. has no experience. manage the business.
When that key person is gone, a business worth $ 500,000 can be worth $ 70,000.
Why does the value of the company depreciate so dramatically?
The biggest asset of a business is the owner, because without them the business could end up in the ground.
The best person to sell your business to, as a small business owner, is often an employee because they are the most likely candidate to run the business successfully because they know the business well. They can hire the previous owner as a remote, part-time employee for a few years to ease the transition to a new owner and preserve relationships with existing customers, while also providing the previous owner with an ongoing additional flow. retirement income. .