What New Bankruptcy Lawyers Need To Know: Beyond The Code

When Laws Collide, You Need The Right Word

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

As lawyers, words are our stock in trade. If we want to describe, explain, or persuade, we need to use the right word. The difference between the almost right word and the right word is really a large matter - 'tis the difference between the lightning-bug and the lightning. MARK TWAIN I was blown away by the casual simplicity and clarity of Ed Boltz's explanation of the difference between preemption and preclusion in an exchange that just flew by on the NACBA list serve. (You are a member of NACBA, aren't you?) Ed has kindly permitted me to share here his charge to use the right word. The discussion was originally about the 11th Circuit's decision in Crawford v. LVNV, permitting FDCPA remedies for asserting of a stale claim in Crawford's bankruptcy case. Take it away, Ed. Choose your words carefully It is vital to use terminology precisely, especially as different words cause different results to occur: Preemption is when … [Continue reading...]

Siegel, Claim Preclusion & Me

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

I've been having nightmares about the 9th's Circuit's decision in Siegel for 20 years. Broad strokes, Siegel (143 F.3d 525 (9th Cir. 1998) holds that a filed claim in a no asset bankruptcy case to which no one objects is entitled to preclusive effect in subsequent litigation by reason of Bankruptcy Code §502. In Siegel, the debtor filed a no-asset Chapter 7; nonetheless, his lender filed … [Continue reading...]

How To Bankruptcy-Proof A Divorce Settlement

By Cathy Moran, Esq. Filed Under: Family Law in Bankruptcy

Chapter 13 bankruptcy can discharge non support obligations associated with a divorce that are non-dischargeable in Chapter 7. That's worth repeating: any marital settlement agreement or court judgment that calls for payment or indemnity by one spouse to the other in the future is potentially vulnerable to a subsequent bankruptcy filing by the obligor-spouse. While obligations deemed to be … [Continue reading...]

The Complex World Of Interspousal Claims In Bankruptcy

By Cathy Moran, Esq. Filed Under: Family Law in Bankruptcy

Traps and grey areas abound when one spouse files bankruptcy during or after a divorce. Inattention by the non-filing spouse can result in the bankruptcy discharge of spousal claims that might actually be nondischargeable. One of those traps involves the differing treatment in bankruptcy of debts to a former spouse incurred in the course of a divorce (Bankruptcy Code §523(a)15)) and debts for … [Continue reading...]

Lien Avoidance In Bankruptcy: The Questions You Need To Answer

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Black letter law says liens pass through bankruptcy unchanged. But the better statement adds a single word: unless. Liens survive bankruptcy intact unless....unless you take some action to void them. One tool to void liens lives in §522(f). Its location in Chapter 5 tells you that it's available to any individual debtor who is entitled to claim exemptions. The more you know about the … [Continue reading...]

Lenders Can’t Hide From Misapplication of Mortgage Payments

By Cathy Moran, Esq. Filed Under: Rule 3002.1

Who knew 20 years ago how apparently hard it is to account for money paid to you? Even if accounting for money was your business? Today's raft of mortgage accounting issues were not ones I foresaw when I became a bankruptcy lawyer. Yet every day we encounter cases where the foreclosure notice follows the "all current" filing at the close of a Chapter 13 case. The addition of Section … [Continue reading...]

Between the 1st and the 15th: Is Mortgage Current?

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

The no man's land between the mortgage due date and late payment is a persistent trouble spot for Chapter 13 practitioners: Are there arrears when the case is filed during the grace period and the payment made before it was late? In Borre, Judge Ronald Sargis of ED CA said no. He held that the payment was not in default until the expiration of the grace period, and where the debtor made … [Continue reading...]

Finding the Flaws in IRS Tax Liens

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

Tax liens in bankruptcy sometimes don't stand up to close scrutiny, to the delight and profit of bankruptcy debtors. I was reminded of two such instances by the excellent presenters at the NACBA 2021 Workshop. Lien perfection follows state law The secret tax lien attaches to all of a taxpayer's property of any kind, wherever located. However, a tax lien is perfected against other creditors … [Continue reading...]

Your Duty of Loyalty And Married Clients

By Cathy Moran, Esq. Filed Under: Counseling clients, Family Law in Bankruptcy

Are your loyalties divided When a married couple books a bankruptcy consultation, you have an immediate problem: There be dragons, as early map makers helpfully provided. Because, as a lawyer friend of mine says: Anytime there are two people sitting across from you, you have a conflict of interest. That pithy expression has stuck with me and made me continually aware that … [Continue reading...]

Taxes & Timing: Calculating Outcomes for Bankruptcy Debtors

By Cathy Moran, Esq. Filed Under: Tax

Bankruptcy lawyers regularly evaluate the dischargeability of taxes when deciding when to file a client's bankruptcy case. At base, the 3 year rule, the 2 year rule, and the 240 day rule routinely drive timing of a bankruptcy. But as we approach the end of the tax year, a client’s current year tax situation becomes another moving part in the “when do we file” analysis, unrelated to tax … [Continue reading...]

Is Your Law Practice Evolving To Incorporate New Technology

By Jay Fleischman Filed Under: Bankruptcy Practice

When the world was forced to adjust to new routines in March 2020 due to the global pandemic, I was instantly struck by how little my professional life changed. I'd worked remotely for over a decade, and my systems and procedures didn't change. Sadly, the same couldn't be said for many of my fellow consumer bankruptcy lawyers. I watched many of them struggle with remote videoconferencing … [Continue reading...]

All Bankruptcy Roads Pass Through Chapter 5

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

Regardless of the ultimate destination, all bankruptcy roads lead through Chapter 5. A few bankruptcy cases are derailed there. Because Chapter 5 provisions tell you what comes into the bankruptcy estate, what can be exempted, and what can be changed using Chapter 5. Sometimes the results tell you that bankruptcy is not the right choice for your client, at least at this time. In my … [Continue reading...]

Do You Know These Exceptions To Discharge Not In The Bankruptcy Code?

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Not all exceptions to discharge in bankruptcy are found in the Bankruptcy Code. Inconvenient, but true. The first two non-Code exceptions to discharge that I encountered in practice were HEAL loans, dischargeable only if denying the discharge would be "unconscionable." (42 U.S.C. sec. 292f(g)); and a scholarship to attend a U.S. Military Academy. Turns out that my 2011 version of … [Continue reading...]