Bankruptcy Mastery - Becoming a better bankruptcy lawyer

Tax Traps 1095 Days Out

By Cathy Moran, Esq. Leave a Comment Filed Under: Tax

When it comes time to discharge 2019 taxes in bankruptcy, the IRS has laid a trap. The trap snaps shut three years (or 1095 days) from now. At that point, the familiar three year rule for tax dischargeability won't be so simple. Between Covid, wildfires, and hurricanes, the IRS has unilaterally extended tax filing deadlines. Instead of tax returns becoming due in April, the deadline for everyone was extended for everyone til July. Where I live, the October due-date-with-extension was moved out to December because of wildfires. Other localities got extensions by reason of hurricanes. Three years from now, when those taxes are on the brink of dischargeability, you need to know with certainty, when were 2019 tax returns "last due without penalty" for your debtor. Tax discharge rules We all know the three rules for tax dischargeability in bankruptcy: the 3 year rulethe 2 year rulethe 240 day rule We also know that tax returns are due on April 15th....or … [Continue reading...]

Filed Under: Tax

New California Homestead in Action

By Cathy Moran, Esq. Filed Under: Exemptions, Strictly California

The California homestead just changed, for the better, but it raised questions about how the single change affected the rest of the law. The newly enacted version of California Code of Civil Procedure 704.730 replaces the previous homestead system that pegged the amount of the available homestead to family relationships, including marriage, to age, or to health. All of that was eliminated in … [Continue reading...]

Brace & Beyond: Joint Tenancy & Transmutation

By Cathy Moran, Esq. Filed Under: Real property

For Californians, the CA Supreme Court's decision in Brace this summer upended our understanding of joint tenancy and community property. For decades, we "knew" that a property couldn't be both joint tenancy and community property . Siberell. And for those of us in the 9th Circuit, we "knew" that when married folks acquired property with title taken as joint tenants, the property was … [Continue reading...]

Reasons Not To Prefer Business Bankruptcy

By Cathy Moran, Esq. Filed Under: Business bankruptcy

Preferences and the trustee's ability to recover them have to be one of the hardest concepts to convey to bankruptcy clients. Clients gag at the thought that paying a genuine debt before a bankruptcy filing can expose the innocent recipient to suit. I was reminded of a further preference wrinkle in a corporate insolvency situation this week when exploring bankruptcy possibilities for a long … [Continue reading...]

Tax Audit Aftermath-Did You Tell The State?

By Cathy Moran, Esq. Filed Under: Tax

One of the bedrock requirements of the discharge of taxes in in bankruptcy is the requirement to have filed a return. No return, no discharge of that year's taxes. But it gets more nuanced: in California, when the feds audit the debtor and change any of the elemental figures in a filed return return, the taxpayer has an obligation to report the change to the Franchise Tax Board. If an … [Continue reading...]

Sole Proprietorships In Chapter 7 In Trustee’s Cross Hairs

By Cathy Moran, Esq. Filed Under: Business bankruptcy

Why would a Chapter 7 trustee shut down a proprietorship business with no value? That question comes up again and again from newish bankruptcy lawyers who can't imagine that a trustee would demand the closing of the debtor's business. After all, goes the argument, the debtor needs to make a living and the business has no non-exempt value. The trustee's insistance on closing the … [Continue reading...]

Assessing the Ailing Business Post Pandemic

By Cathy Moran, Esq. Filed Under: Business bankruptcy

Long after the human patients recover from the coronavirus, small businesses will still be ailing. And long nights will be spent deciding whether to try to stay in business. As bankruptcy lawyers, we're going to see people in pain trying to assess what to do next. Business owners may see the exit heading through the bankruptcy courts, but that may be neither necessary nor wise. Here's my list … [Continue reading...]

Objection: Hearsay

By Wayne Silver Filed Under: lawyer skills

There you are, client on the witness stand, jury in the box, story being told on direct exactly the way you prepared her, things going just swimmingly. And then opposing counsel stands and utters those two lovely words…”Objection, hearsay.” Huh? That’s ridiculous, you confidently think to yourself, just as you hear the trial judge say, sustained!. Diving into Evidence Code … [Continue reading...]

Taxing Questions in Bankruptcy’s New Subchapter V

By Steven Walker Filed Under: Bankruptcy Practice, Tax

With the enactment of the Small Business Reorganization Act, Chapter 11 is expected to become more accessible and economic for business debtors with debts below the limits. For bankruptcy lawyers taking their first venture into Chapter 11, knowledge of the tax issues in reorganizations becomes critical. So, I'm happy to have attorney Steven Walker of San Jose, California, guide us through the … [Continue reading...]

Analyzing The Troubled Chapter 13: 20,000 Questions Under The Surface Of The Case

By Cathy Moran, Esq. Filed Under: Chapter 13

After the pandemic, when the economy lurches back into motion, bankruptcy lawyers will confront a clutch of troubled Chapter 13 cases. In the face of disruption, distress, and the unknown, we'll be called on to guide clients forward, in one direction or another. Let's review the questions we'll need to answer in order to provide the sharpest analysis for clients. We'll need our arms … [Continue reading...]

Coronavirus & The Law

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice, Breaking

In the face of pandemic and economic stasis, information is both vital and fleeting. I'm going to collect here links to sources of information useful to consumer lawyers as I find them. As always, check the dates on the linked resources, as I fully expect change, and more change as we work our way through this crisis. General legal resources ABA Covid-19 articles and resources- no … [Continue reading...]

Mortgage Matters In Times Of COVID-19

By Bob Schuman Filed Under: Bankruptcy Practice

Is it 2008 again? For us in the mortgage industry, we woke up this week feeling as if during the night, we were transported back to 2008 when the mortgage industry basically collapsed. Then, Fannie Mae, Freddie Mac, and the FHA were the exceptions. As of March 25, 2020, like everything else, the world of mortgage lending has been once again been turned on its head. Here we are again, … [Continue reading...]

Charting The Course of A Case

By Cathy Moran, Esq. Filed Under: Before filing, Start Here

Planning the bankruptcy often determines whether the case succeeds or fails. To obtain good results for a bankruptcy client, sometimes you have to serve up unpleasant news and force the client to swallow that bitter pill. Hum a chorus of You Can't Always Get What You Want. Of course, you can't really force them to do anything, but you should reconsider taking on a client who shrugs off your … [Continue reading...]