The rookie bankruptcy lawyer reported her client had borrowed from his 401(k) and proposed to pay down some taxes before filing. Two questions popped to my mind: Are the taxes which the client was worried about priority taxes? If so, would the absence of those taxes alter the results of the means test analysis? Debtors […]
Bankruptcy Checklist: Social Security Numbers
Do you check the client’s proffered Social Security number against the number on their tax return? I’d never thought to do so til my partner returned from a 341 meeting with this story. She was sitting waiting for our client’s turn at a first meeting of creditors when the trustee asked a debtor about […]
Bankruptcy Notice: Scream or Die
Add to your bankruptcy phrase book: ” notice on a scream or die basis.” This means that the notice sent to creditors requires an objection by a dissenting party or the described action will be approved. Contrast this with notice of a proposed action that will be considered at an actual hearing. Thus, the message […]
Bankruptcy Abuse & Schedule J
The debtor passed the means test but lost a motion to dismiss for abuse of the bankruptcy system. Schedule J, the debtor’s projected future expenses, showed a monthly excess of $500. Dollars to doughnuts, the debtor’s bankruptcy lawyer followed the form and the budget provided by the client. Dismissal resulted. What happened here? Two […]
Bankruptcy Schedules Call For Payoff Balance
Bankruptcy debtors hear something different when their lawyer asks, “What do you owe on your mortgage”. It’s as though they speak a different language, Client, while we speak Bankruptcy. As bankruptcy lawyers, we need to be bilingual. It shouldn’t be a trick question, but all too often the answer a bankruptcy lawyer gets back is […]
Bankruptcy’s 3 Year Rule for Taxes
Taxes are dischargeable in bankruptcy once they meet the 3 year rule. Don’t get swept away on April 16th and file a bankruptcy designed to discharge taxes without knowing whether the client got an extension to file for the year on the bubble. The three year rule, found in §507(a)(8), starts counting from the day the […]
Learn the Bankruptcy Lingo: Pots & Percentages
While we’re learning to “walk the walk”, we might as well learn to “talk the (bankruptcy) talk”. Each profession has its shorthand for concepts that are encountered repeatedly. For bankruptcy lawyers, that includes the distinction between Chapter 13 “percentage plans” vs. “pot plans“. These terms are alternative ways that the dividend to unsecured creditors in […]
