Bankruptcy Mastery - Becoming a better bankruptcy lawyer

Tax Changes & Projected Expenses

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

At the risk of borrowing trouble, I'm looking ahead to changes to the tax laws that may adversely impact pending Chapter 13 cases. The 2017 Tax Cuts and Jobs Act ( probably as appropriately named as the Bankruptcy Abuse and Consumer Protection Act) limits the deductibility of state and local taxes, including property taxes. A married couple can deduct only $10,000 of those non-federal taxes in 2018. And unlike the limitation on the deductibility of mortgage interest, which grandfathers interest paid on loans made before 2018, there's no safe harbor on the limitation on state and local taxes. And our clients may not see the impact of this coming. The withholding tables have been adjusted for the impact of the new law, but employers have no way to estimate the changes in employee deductions. And the self employed are probably even less clued-in to the possible increase in their 2018 income taxes. If you practice in a state with high state and local taxes, … [Continue reading...]

Filed Under: Means test Tagged With: 2018

Bankruptcy as Means to Keep the House

By Cathy Moran, Esq. Filed Under: Counseling clients, Real property

There's nothing like a foreclosure to get homeowners to see a bankruptcy lawyer. They are often not sure just how bankruptcy will accomplish this, but they are resolute that keeping the house is the centerpiece of their bankruptcy. A capable lawyer can tell the client how that might be done through bankruptcy; a standout bankruptcy lawyer challenges the premise altogether. Often these … [Continue reading...]

Don’t Skimp On Service When Your Client’s House Is On The Line

By Cathy Moran, Esq. Filed Under: Rule 3002.1

Is the Chapter 13 trustee jeopardizing the benefits to my client of Rule 3002.1 by sloppy service? Unwilling to expend more than a single postage stamp to effect notice? Just going through the motions here? The short answer is: I don't know yet. But the issue stood out when, for reasons that are yet inexplicable, the trustee and my office each filed a Notice of Final Cure … [Continue reading...]

Crushing Tax Change For Injured Consumers

By William Purdy Filed Under: Bankruptcy Practice, Opinionated, Tax

Under the new tax law, most damage awards a consumer recovers stand to go, in large part, to the IRS. So even if you are successful in vindicating your legal rights, the expenses of getting the award aren't deductible from the gross award. The taxing authorities end up getting a large hunk of the total recovery. Welcome to tax "reform". Consumers get shafted It isn't … [Continue reading...]

One Trait Makes A Bankruptcy Lawyer Great

By Cathy Moran, Esq. Filed Under: Counseling clients

One trait makes a bankruptcy lawyers stand out. Bankruptcy forms promote the view that filing a case is just recording what the debtor owns and owes today. If all you focus on is the here and now, you can assemble a bankruptcy petition. But if there is one, uniform failing in average bankruptcy lawyers, it's that they confine their attention to the here and now-what does the client have, … [Continue reading...]

Direct Mortgage Payments: Inside, Under, Or Outside The Plan

By Cathy Moran, Esq. Filed Under: Cases new & significant, Rule 3002.1

Are post petition payments on the debtor's mortgage "under the plan"? Not in the view of one judge. Direct payments on a a residential mortgage loan are not "payments under the plan" for purpose of Bankruptcy Code § 1328(a), Thus Judge Thomas Perkins struck back at the cases that have used failure to maintain mortgage payments during a Chapter 13 case as grounds to find debtors … [Continue reading...]

IRS Trick I’d Never Seen Before

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

The third amended IRS claim in my client's case added entries for an excise tax for 2015 and 2016. Excise tax? New one on me where the debtor was a general contractor. I called the IRS agent on the POC for some hints as to what the tax was all about . I needed to know how to analyze whether it was real and correct. It was enough money to threaten the feasibility of the already precarious … [Continue reading...]

Battle On When Bank Back Tracks On Home Loan Balance

By Cathy Moran, Esq. Filed Under: Rule 3002.1

It's war, after all. Remember the office pool I created following the lender's statement under FRBP 3002.1 that the loan was fully current? We were betting on how long after the Chapter 13 discharge it would take Wells Fargo would screw up the debtor's home loan account. Did anyone out there pick less than 30 days? If so, you win. And we hope Wells Fargo loses, big … [Continue reading...]

Up Against The Wall(design)

By Wayne Silver Filed Under: Bankruptcy Practice, Cases new & significant

Bankruptcy's avoiding powers often turn otherwise unexceptional transfers on their heads. But who expected that an unsuspecting business would have to disgorge nine years of honestly earned payments because the customer paid with a check on his LLC? Welcome to the 9th Circuit's decision in Walldesign. Paid with someone else's money For nearly a decade, Ms. Henry provided design and … [Continue reading...]

Jump Start Your Bankruptcy Research

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

The next best thing to being a fly on the wall in the judge's chambers is having a copy of her cheat-sheet. Or maybe it's better described as the overview and the starting point for the next bankruptcy decision. So, don't forget about Judge Newsom (Retired) & Judge Novack's bankruptcy research binder available on line. It runs for 400 pages from Abandonment to Vexatious … [Continue reading...]

Brace Yourself

By Cathy Moran, Esq. Filed Under: Cases new & significant

The 9th BAP's Brace decision blew over everything we thought we knew about community property, joint tenancy titles, and the characterization of marital property. The storm warning is up. Until the 9th Circuit rules on the pending appeal, bankruptcy lawyers in community property states in the 9th need to reevaluate their advice to to clients about asset protection and single spouse … [Continue reading...]

All Dressed Up & Nowhere To Go

By Cathy Moran, Esq. Filed Under: Rule 3002.1

It's the pits to be stood up by a Rule. Rule 3002.1 is, in my opinion, the best thing that's happened in bankruptcy in years. I'm a goggle-eyed fan. Whether you chalk mortgage servicing problems up to ineptitude or venality, it is indisputable that a mortgage servicer can't audit a loan file and come up with the same number twice. Mortgage problems are the very reason that many Bay Area … [Continue reading...]

Beyond Racism And Self Interest: Why Blacks File And Fail At Chapter 13

By Cathy Moran, Esq. Filed Under: Opinionated

ProPublica's study of the percentage of black debtors who file bankruptcy and fail at Chapter 13 misses the forest for the trees. The report contends that bankruptcy lawyers steer blacks to an inappropriate chapter for the benefit of the lawyers. In Memphis, an entrenched legal culture has made bankruptcy a boon for attorneys while miring clients... in a cycle of futility. The Atlantic From … [Continue reading...]