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Folks in Chapter 13 are on a payment plan based on their income and their expenses. A Chapter 13 plan can pay unsecured creditors anywhere from 0% to 100% of the debt after secured creditors and priority creditors are paid. The percentage paid is dependent entirely on the individual debtor’s income, expenses, secured debt, priority [...]
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The bankruptcy means test does not apply to individual debtors with primarily non-consumer debt such as business debts. Sounds simple enough, but there is lots of room for argument over the application of this rule.
What is non-consumer debt? The bankruptcy code defines consumer debt as debt incurred for personal, family, household purposes. 11 U.S.C. 101(8). [...]
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The penalty for intentionally failing to be complete with the information on your bankruptcy petition and schedules can be a Federal criminal offense punishable by a sentence of up to 5 years in jail and a fine of up to $250,000.00. Under cetain circumstances, the attorney filing such a petition can also be sanction by [...]
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The income guidelines for bankruptcy eligibility are changing for cases filed October 1, 2008. The census bureau has announced updated median income figures, which are expected to be adopted by the U.S. Trustee for the bankruptcy means test.
If Kansas is typical, the income guidelines increase slightly. For example, the guideline for one Kansas earner goes [...]
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Foreclosures are being stopped because the purported mortgage holder cannot prove it holds rights to the mortgage. Those cases do not remove the mortgage entirely, but only stop the foreclosure. More can be done.
Section 506 (d) of the Bankruptcy Code will permanently void a mortgage if the claim is disallowed. This can be easier than you think. [...]
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Senator Barrack Obama called for bankruptcy law change in his presidential nomination acceptance speech before the Democrat National Convention Thursday night (08/28/08) in Denver.
“That’s the promise we need to keep. That’s the change we need right now . . . let me spell out exactly what that change would mean if I am president,” Obama [...]
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A recent Boston.com article focused on the impact of abandoned and foreclosed homes on towns in Massachusetts. A particularly interesting section of the article related to the Town of Randolph’s attempts to get the owner of an abandoned house to do some basic maintenance of the property, such as disposing of trash and trimming grass.
A [...]
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Withdrawals from retirement accounts do not count as “income” for the bankruptcy means test, according to the Eighth Circuit Bankruptcy Appellate Panel.
At long last, there is again harmony. As I have discussed before, my neighboring courts in the Western District of Missouri had concluded that withdrawals from retirement accounts, like a 401(k) or an [...]
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On July 8, 2008, California passed urgency legislation that extends the time period that tenants have to vacate property recently foreclosed.
Under previous laws, tenants were to be provided a 30 day notice prior to eviction proceedings being filed. Now the law provides that tenants are entitled to 60 days.
Specifically, Code of Civil Procedure section 1161b [...]
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Almost a million bankruptcy cases were filed in the United States in the past year ending June 30, 2008, according to statistics released by the government.
Consumer filings were up 28.4 percent and business filings were up 41.6 percent compared to a year ago.
Chapter 7 casess increased 36.7 percent, Chapter 13 filings are up 16.9 percent.
Chapter [...]
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Bankruptcy law allows the modification of a mobile home loan in Chapter 13, the Eighth Circuit Bankruptcy Appellate Panel ruled this week. The 2005 amendments to bankruptcy law did not add mobile homes to real estate mortgages which are generally protected from modification.
Chapter 13 generally allows a person to modify the repayment owed to [...]
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Listing your house for sale at the same time that you are filing for bankruptcy involves a number of issues, and the answer to the question is a case by case basis. Can you do it? Probably. Should you do it? That needs to be answered by an attorney in your [...]
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There are many posts in these pages and on Mortgage Law Network about the types of foreclosures and the fact that a bankruptcy filing can stop the process. But what happens then? Just because in most states a bankruptcy stops a foreclosure (but see Gene Melchionne’s article on Connecticut foreclosures), it doesn’t end it.
The foreclosure [...]
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Student Loans are generally not dischargeable in bankruptcy, and there is no statue of limitations on their collection. This makes it very difficult to get away from a student loan, and now it appears that the bar has been raised and it is even harder to receive a hardship discharge from a student loan [...]
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Bankruptcy is our issue on this blog. Bankruptcy is on the minds of our clients, and the Bankruptcy debate is now back in full swing with the recent announcement of Senator MBNA a/k/a Senator Joe Biden being selected as Senator Barack Obama’s Vice Presidential choice.
Even if we forget all the comments made by Senator Biden was [...]
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A topic that has been written about on this site on several occasions is the risk a client runs by failing to disclose all of his assets to his attorney when filing a bankruptcy. In articles by Jill Michaux, Chip Parker and Susan Robicsek these risks are discussed, However the risk of being denied a discharge in bankruptcy [...]
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Toby Mac’s Lose My Soul was the inspiration for my article of Don’t let your debt own you! that I wrote earlier today. The article is about gaining your quality of life back and breaking the debt ties that bind and control the very essence of your being.After writing that article I took off to our [...]
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The hobby horse I was all set to ride today has to do with the pay stubs that I have to collect from my clients prior to filing any bankruptcy case. I’ll get to that later. I got sidetracked when I did a search to see if any of my colleagues had recently written on [...]
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Although most persons filing bankruptcy will opt to use chapter 13 to stop a mortgage foreclosure, it’s important to remember that filing bankruptcy under any chapter, including chapter 7, stops a foreclosure just as effectively. Chapter 7 not only stops a mortgage foreclosure, but it usually results in the discharge of almost all unsecured debts, without [...]
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A Chapter 7 Discharge and a Chapter 7 Final Decree don’t necessarily come at the same time, although they often do if a case is a no asset Chapter 7 case. When a Chapter 7 bankruptcy case is filed, the debtor is asking to be released from the legal obligation to pay his/her debts - [...]
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The New York Times joins the chorus of bankruptcy attorneys on our blogs in calling for Chapter 13 reform to give relief to homeowners being foreclosed.
Chip Parker, among others, has stated the many virtues of this proposed bankruptcy law reform.
Under current law, consumers cannot modify, or change the terms of, the mortgage secured by [...]
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How does the Trustee get paid in a chapter 7 case? Northern District of Illinois Bankruptcy Court Judge John Squires analyzed that issue in the case of In re Mervyn C. Phillips, Jr., 2008 WL 3319798 (Bankr.N.D.Ill.). There, Judge Squires ruled bankruptcy reform changes taking the trustee position out of 11 U.S.C. 330(a)(3) [professional compensation [...]
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Twenty years ago, Tampa resident Rhonda Toth and her husband won $13 million from the Florida lottery. In August, 2008, Mrs. Toth found herself in jail - sick, broke, and alone. Despite the multimillion dollar windfall, the Toth’s case demonstrates that bad luck and bad decisions can lead anyone into financial ruin.
According to the report [...]
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In September of 2007, I wrote about a great decision from Judge Jerry Funk of the Middle District of Florida that allows for the valuation of cars that were purchased by debtors within 910 days of filing bankruptcy. That decision is in serious jeopardy as a result of a recent appellate decision from the 11th [...]
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Tax articles are again highlighted by Kay Bell in her eclectic 39th Carnival of Taxes. This online magazine contains a collection of tax articles published on the web, including Two Tax Years For The Price Of One, my article on the split year tax election available in certain bankruptcy cases. This edition of the carnival [...]
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The Bankruptcy Means Test provides for a deduction for a car ownership expense, but Courts differ on whether or not the deduction can be taken if a car is fully paid for. Decisions that do not allow this often rely on the “plain meaning” of the language of the means test, however [...]
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The Bankruptcy Means Test provides for a deduction for a car ownership expense, but Courts differ on whether or not the deduction can be taken if a car is fully paid for. Decisions that do not allow this often rely on the “plain meaning” of the language of [...]
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The Southern District of California Bankruptcy Court borders the Central District Bankruptcy Court, yet the Chapter 13 Fees have over a 20% difference. Each district has its own presumed acceptable fees known as RARA fees (Rights and Responsibilities Agreement).
Of course, such a difference in presumed fees has its impact on where cases are filed since [...]
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A controversy exists over when a Chapter 13 plan payment is proposed in bad faith. For above-median income debtors, plan payments are determined by the B22C form (means test). However, when a debtor’s actual, current expenses yield a greater surplus than the means test does, the trustee will often argue that proposing to pay [...]
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Massachusetts Bankruptcy Judge Hillman in the case of In re Young , 2008 WL 3274425 (Bkrtcy.D.Mass.2008) decided the important issue of whether the means test deduction for car ownership could be taken by a debtor with no car loan or lease payment. The trustee and a creditor had taken the position that the car [...]
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Judge Rosenthal, United States Bankruptcy Judge for the District of Massachusetts, recently decided the issue of who owns a joint tax refund in bankruptcy. The Court held that when a debtor and non-debtor spouse file a joint tax return, any tax refund will be presumed to be jointly owned in equal portions by the [...]
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Clients always are asking bankruptcy attorneys to sign off on their reaffirmation agreements so they can keep their car. Most Attorneys do not do this and prefer to make the Debtor go before the Bankruptcy Court for approval since reaffirmation agreements are worse off for the client and usually defeat the entire purpose of [...]
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The 9th Circuit Bankruptcy Appellate Panel decided that the “negative equity” from an over encumbered trade-in was not entitled to payment in full in a Chapter 13 bankruptcy case. As a result, only the part of a car loan actually traceable to the price of the car will be protected from strip down in [...]
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Back in April, I wrote a post on this blog entitled “Am I Responsible for Car Accident Damages in Excess of Insurance Coverage” when I file for bankruptcy. That post primarily concerned Chapter 7 and my conclusion was that in most instances a Chapter 7 discharge will eliminate personal liability for defendants in personal injury [...]
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Chapter 11 bankruptcy can help small businesses, and individuals.
There is a debt limit, a maximum amount that can be owed by an individual debtor to still be able to file Chapter 13 bankruptcy.
This post will discuss some aspects of small business chapter 11 bankruptcies.
I frequently tell the operators of small businesses who call, that the [...]
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Everyone knows that you file bankruptcy to get a discharge of your debts. But what is it? A bankruptcy discharge is a permanent court order pursuant to statute stopping creditors from collecting or attempting to collect a debt as a personal liability from a debtor. Not every debt is discharged, nor does [...]
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Incorporating a small business can save that business when the owners need the protection of filing bankruptcy. A separate entity is created, and is isolated from a bankruptcy filing by the owners. Thus, the only thing that becomes property of the bankruptcy estate is the stock in the corporation owned by the debtors.
My friend and [...]
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In my last blog, I discussed how the Ninth Circuit has now eliminated minimum plan lengths in Chapter 13 cases, as well as eliminated payments to unsecured creditors from disposable income. This blog will focus further on the “means test” used to get to that result and the artificial income and expenses created using that test.
If your chapter [...]
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The Dissent in the Ninth Circuit Kagenveama case said it the best: “So long as the debtor can calculate no “disposable income” at the time his creditor plan is confirmed, he can rest easy. The debtor can propose as short a time period as he wants: a day, a week or a month………So long as he [...]
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The Dissent in the Ninth Circuit Kagenveama case said it the best: “So long as the debtor can calculate no “disposable income” at the time his creditor plan is confirmed, he can rest easy. The debtor can propose as short a time period as he wants: a day, a week or a month………So long as [...]
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In my last blog, I discussed how the Ninth Circuit has now eliminated minimum plan lengths in Chapter 13 cases, as well as eliminated payments to unsecured creditors from disposable income. This blog will focus further on the “means test” used to get to that result and the artificial income and expenses created using [...]
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In my last blog, I discussed how the Ninth Circuit has now eliminated minimum plan lengths in Chapter 13 cases, as well as eliminated payments to unsecured creditors from disposable income. This blog will focus further on the “means test” used to get to that result and the artificial income and expenses created using that test.
If your [...]
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When the Bankruptcy Laws changed in October, 2005, little did Congress know that they actually made Chapter 13 repayment plans quicker, cheaper, and easier in many cases. At least this has now been determined the law of the land in the Ninth Circuit (Alaska, Arizona, California, Hawaii, Idaho, Montana, Oregon, Nevada, Washington, Guam, and Northern [...]
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The “bankruptcy bargain” is simple: in exchange for full financial disclosure on the part of the debtor , the debtor gets the discharge of debts. I felt like a Greek chorus the other day interviewing a client whose first reaction to any issue that presented a problem was to hide it.
“It’s not [...]
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Ascendia Brands filed for Chapter 11 Bankruptcy protection today, August 5, 2008. Ascendia which is a Delaware Corporation manufacturing such brands as Mr. Bubbles and Baby Magic had to seek the protection of the Bankruptcy Court. The company is blaming the economy for the down turn of profits. Along with the filing of the Chapter [...]
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When you file for bankruptcy you must appear at a meeting of creditors. This meeting is held so that creditors and other parties who have an interest in the case can question the debtor regarding the debts and assets of the estate. It also provides them with the chance to learn about the debtor’s [...]
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Bankruptcy trustees file objections. It’s part of the job description. Failing to respond is a good way to lose, even if you ought to win.
This harsh lesson comes from the Eighth Circuit Bankruptcy Appellate Panel today, in Johnny Walton v. Sosne. In this case, the debtor is set to lose a [...]
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As a consumer bankruptcy attorney, most days are pretty exciting in the Bankruptcy Courts, and somedays bankruptcy issues can seem repetitious and boring. The other day an issue arose concerning a line of questioning that arose during a meeting of creditors. Meetings of Creditors are usually pretty mundane; however, this one almost turned [...]
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In most bankruptcy cases, the trustee is a lawyer, and the debtor almost always has a lawyer who represents him or her. There is an expectation that the trustee/lawyer will not contact the debtor directly; rather, the trustee/lawyer will work through the debtor’s lawyer, and will refrain from direct contact with the [...]
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Do you need to reaffirm your mortgage in a bankruptcy? It probably depends on State law. In Connecticut, for example, you don’t. See Gene Melcione’s post and the more technical discussion by Jay Fleischman.
Generally, when you don’t reaffirm the mortgage, the secured creditor is left to State remedies. That can mean foreclosure if your payments [...]
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If you are currently in a Chapter 13 Bankruptcy and you owe back federal taxes you need to double check your case immediately. If you are lucky enough to have received your stimulus payment in hand then do not worry.
But if you are still waiting for that check or if you have received notification [...]
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Cathy Moran wrote an excellent article describing why the the Means Test makes little sense and I saw from reading her article that she is just as frustrated as I am with this pointless test. As a bankruptcy lawyer, it is my job to help my clients get as fair a treatment [...]
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This third article follows Cancel That Mortgage! and Cancel That Mortgage: The Grounds. We’ve seen that a mortgage can be cancelled but the unpaid principal of the loan, the total amount borrowed less all payments including closing costs, must be returned (tendered) to the lender.
Bankruptcy courts split on whether this obligation to return the money [...]