Personal Bankruptcy Information

Intention bankruptcy

Bankruptcy Information — Wed, 10 Mar 2010 02:50:15 +0000

Intention does not matter under the bankruptcy code. Under many
states’ laws a transfer to a relative for less than fair value creates
a rebuttable presumption of fraud. There is no such rebutting under
548, where the transfer for less than fair value while insolvent is
avoidable regardless of intent. The point is the transferee got [...]

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Please do not lose in the failure of the tax refund

Bankruptcy Information — Tue, 02 Mar 2010 02:59:48 +0000

It is tax time again, and it bears repeating that tax refunds can be taken in bankruptcy if you aren’t careful. Many people mistakenly think that if they haven’t filed the tax return before filing, it isn’t something that needs to be put into the bankruptcy petition. Both Chapter 7 bankruptcy and Chapter 13 bankruptcy filers [...]

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How does the collection for businesses

Bankruptcy Information — Sat, 27 Feb 2010 02:40:32 +0000

Here is how the business works. The agency gets a list of debtors and
amounts electronically from the creditor. Often / usually, with small
consumer collections, they get no backup proof of the debt. Depending on the
agency, it either goes into an automatic mailing process (which sends out
letters until the collection goal for that batch is reached) or to a call
center (where an automatic dialer works the account at different times on
different days).

All of this is governed by the FDCPA, but most of the players walk a very
fine line and cross over the line regularly. How to deal with them:

1. There is an FTC site on the debtors rights – read it.
2. Do not talk to collectors, nothing ever happens to information you
provide them that absolves you, they just keep calling because they are all
on minimum wage plus commission.
3. Put everything in writing, starting with a demand to see the proof of
the debt. You can send this letter as your friends attorney and
direct that all communication with your client stop immediately and all
further communications will be with you alone in writing.
4. Send a very strong letter to the original creditor. Before doing so, review the
Federal Credit Reporting Act. There is liability to a debtor that falsely or
negligently reports someone to the agencies.
5. Pull the once per year free credit reports from each
of the three agencies and see if she has been reported. If not, include a
warning to the collector to not report her to the agencies because she is
challenging the debt.
6. If she has been reported, have her send letters to each of the three
main reporting agencies (actually best if these come from your friend due to
privacy act issues) reporting her challenge to the debt.
7. All of this will just give her time to resolve the problem with the
original creditor. As you know, many of these schools are one step short of fraud,
over-charging for their classes and having very poor placement rates. Have
her investigate this school and see if they have a bad rep. She can then
fight them more than one issue. If the school is reputable, and she admits
she owes the money, the school can move her to collection unless she gets
some deferred payment plan in writing.

Most of the agencies have special handling of consumer small balance debt
where a lawyer sends a letter. They just stop collecting on it. Consumer
collection is a batch process: the agency gets a large batch of small
balance debts (say 10,000 accounts with an average balance of $100). They
collect against that batch until they reach some internal goal set based on
the age of the accounts and the creditor’s past history. That target usually
is under 20%. So when an attorney gets involve, they just stop collecting on
that one and focus on the remainder. The creditor, however, never forgets
and will put the amount due out again and again for collection.

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The case presented in the chapter 13

Bankruptcy Information — Sat, 20 Feb 2010 02:43:30 +0000

I am representing a Plaintiff in an action to collect on a breached
promissory note. This past Monday, I received D’s Answer and I began
drafting my motion for SJ. Today, D’s counsel filed a “Suggestion of
Bankruptcy,” stating that D had filed for voluntary Chapter 13 in bankruptcy court
last week. Enter appearance in bankruptcy. File proof of claim in bankruptcy. Your
issues may be exclusively dealt with in the bankruptcy. On the other hand,
if debtor does not complete Chapter 13, you may be able to proceed in state
court. Do nothing in state court unless the bankruptcy is dismissed or you
file and win a motion to lift stay.

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Fraudulent transfer in bankruptcy

Bankruptcy Information — Thu, 18 Feb 2010 20:11:32 +0000

11 USC 548(a)(1)(B).

It is 90 days for voidable preference transfers (11 USC 547), but 2
years from petition date for voiding fraudulent transfers under Sec. 548.

It would be fraudulent if the transfer was for less than reasonably
equivalent value *and* aunt was insolvent at time of transfer or
became insolvent because of the transfer. For most people, we can
assume insolvency at transfer.

So you would be fighting with the bankruptcy Trustee over the FMV at transfer.
Assessment will hurt you, the $189k non-sale will help a bit. Trustee
will probably want the difference, $29k, you would argue it didn't
sell and the related party sale for the 160k debt assumption saved
transactional costs (that you calculate - 6% + local closing fees), to
whittle down the 29k to something agreeable to your client.

At the end of the day, client will probably have to pay something to
keep the house, or give back the house and get an creditor
interest/lien in the house based on the additional proved up
investment (sweat equity and otherwise) in the property.
If the mortgage is only 160k, and the house is worth at minimum 189k (and possibly even more given the assessment), then the house was not sold for fair market value and can be considered a fraudulent transfer. That is probably what the attorney is talking about. It's not a preference, but it might be a fraudulent conveyance. Still, I'd
argue that the transfer was made for "reasonably equivalent value." It
doesn't have to be perfectly equivalent, only reasonably so. In this case,
the Aunt was relieved of the obligation to pay $160k, and the Nephew
incurred a debt of $160k in order to get the house. He has essentially paid
$160k for a house that couldn't even sell for $189k. IMO, there's a maximum
of $29k on the table there, and I agree with Lewis on this that there
wouldn't be much left when all was said and done anyway.

If the transfer was fraudulent, there are a couple possible ways around this
depending on whether Aunt is still living in the home, as then you might be
able to have him reconvey to Aunt (provided there was no novation in the
mortgage), have her file bankruptcy, and then claim the homestead exemption,
which is rather generous in MA, at least from what I'm reading (though
probably capped at $125k). The trustee will then likely abandon the
property and she can reconvey to nephew. Check the case law to see if this
is forbidden in your circuit. If she doesn't live there anymore, then it
gets more complicated and there may have to be some money paid to the
Trustee to make him/her go away, or you could fight the trustee on value and
see if the court buys your argument that it isn't worth what the Trustee is
claiming. Realistically, if the trustee sells it, it's likely going to have
to be at an auction or at least some kind of fairly quick sale, so that's
going to work against him/her on value as well.

Automatic stay for multiple chapter 13 filings

Bankruptcy Information — Wed, 10 Feb 2010 15:25:52 +0000

Something that has changed since 1999, is that there is a limit to the effect of the stay with serial filings. If it is the second filing in a year, the stay expires after 30 days, unless the debtor successfully moves to extend the stay (I've seen these be granted, and denied depending on the circumstances). The third time within a year and you have to get the stay imposed. As far as the creditor end of things, even if there is technically no stay, it doesn't hurt to do a motion to confirm the nonexistence of a stay. I am interested in locating foreclosed homes for possible rental or purchase by my family. I know there is a list online that is free and does not require contact with a RE broker, but cannot remember what it is. Of course, it shouldn't be a surprise if the debtor moves to extend or impose the stay in which case the lender just needs to oppose that motion. If they have a legitimate reason to get the stay imposed (ie they will actually make plan payments and get current on the mortgage via the plan), then the motion will likely be granted, if it is likely a stall tactic and it's apparent to the court that it is a stall tactic and no payments are being made etc, the debtor's motion won't be granted (and usually the trustee will object to the motion if that's the case). I think it's a lot harder for a debtor to get a stay imposed than to extend the stay, given that there is less likelihood that it is a good faith filing. Check the local court website. Most have a overview of unlawful detainer procedures the check the box judicial forms. Make sure tenant gets served proper notice.(CCP 1161 et seq). Also, an unlawful detainer is limited to 12 months of back rent. A separate aciton is required for rent over a year. Most likely tenant will not respond to UD complaint and you can get a default judgment for possession.

Bankruptcy effect my credit score?

Bankruptcy Information — Mon, 08 Feb 2010 18:01:11 +0000

It depends on what your credit was like before. Usually bankruptcy
will have a good effect on credit as it cuts off the ongoing problems
associated with slow and non-payment. It provides a fresh start. After
two years the bankrupt debtor should be in a much better position with
the CRAs than before they filed. Bankruptcy is a public record that can stay on your credit report for up to ten years after filing (current policy of the 3 major CRAs is 7 years, just like unpaid bills). Following bankruptcy, it is illegal for a creditor to report anything other than zero balance, discharged in bankruptcy.That said, it is important for the client to realize that a credit
score's only purpose is to put them back in the same trouble they are
in today. "What do you need the credit for?" One in ten has an answer for that. I have no idea how it will effect their personal score because that really depends on what their score is now and plus, there are different companies computing scores, not just FICO anymore plus they change their algorithms at will PLUS what you can get with what score varies on the whim of fate and the economic theories of the creditors. On the other hand, a fresh start will enable the client to start saving money so when the bankruptcy is a few years back and his or her scores will be on the upswing, she or
he will have a decent downpayment for whatever it is she or he needed
that credit for in the first place.

To collect money from you in a contest for collectors of construction – Join the consumer!

Bankruptcy Information — Mon, 08 Feb 2010 03:00:31 +0000

For the last several weeks LTD Financial Services and United Recovery Systems have been running ads in the Houston Chronicle for Collectors. While this is no big surprise what with the economy like it is, it is surprising to see them admit to some of the benefits they offer: “great bonus program, plus full benefits”, “above industry [...]

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If my failure, I army

Bankruptcy Information — Sat, 06 Feb 2010 02:40:28 +0000

Former soldier has a past PX bill now in collection. It’s general unsecured debt. Apart from the right to offset tax refunds, who cares if it’s government debt (it is, by the way – so yes, they can offset tax refunds). Govt debt does no make it priority or non-dischargeable. I have not had it affect their rank to date. I’ve never dealt with this in a bankruptcy setting, but I can tell you, I had a child support case once, where my client had BAH, etc, and there was case law (in Illinois just fyi) that said it was income. It seems unfair considering it goes to pay housing, though at the same time, this particular client was in a chapter 13 bankruptcy (filed through another attorney), and I’m not totally sure if they considered it income for the bankruptcy. I regularly add on to the means test the difference between the IRS allowance and the actual rent payment. The local US Trustees have never said a thing about it. Venue can be based on domicile. Last state lived in may or may not be domicile, it is mainly a question of intent. That said, I believe that it is a good rule of thumb. But supposed service member is from Nebraska, joins the navy, is stationed in Florida, decides that’s paradise, buys a vacant lot that isn’t swamp land with intention of living there. And also does things
such as change drivers license and voter registration to Florida. Military personnel are considered domiciled in their most recent state before joining the military. Check the Soldiers’ and Sailors’ Civil Relief Act.

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Bankruptcy Bank Account

Bankruptcy Information — Mon, 01 Feb 2010 02:50:24 +0000

Debtor is listed as custodian for her children’s UTMA savings account. The bank in which these accounts are held also has a mortgage (2nd) on the debtor’s house. Debtor has already opened a new checking account with another bank in anticipation of a Chap. 7 filing. The accounts are owned by the children. [...]

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