What New Bankruptcy Lawyers Need To Know: Beyond The Code

Re-examining The Means Test Cost of Home Ownership

By Cathy Moran, Esq. Filed Under: Means test

The real non mortgage expenses of home ownership are nothing like the means test allowances provided. Bankruptcy lawyers need to rise to the challenge of aligning the means test with today's economic and legal realities. The success of bankruptcy cases may turn on it. What the means test allows The means test provision for non-rent/mortgage costs appears at Line 8 on the B122A-2. It calls … [Continue reading...]

Interspousal Claims Defy The Chapter 7 Discharge

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

Even when the contentions against a debtor-spouse sound in fraud, breach of fiduciary duty, or intentional tort, the claims of the debtor's spouse survive a Chapter 7 discharge. Despite the fact that those sorts of claims against anyone other than a spouse would require a timely filed adversary proceeding to escape discharge. So held the 9th Cir. BAP in Cohen, 656 B.R. 798 (B.A.P. 9th Cir. … [Continue reading...]

Sneak Attack On Consumer Rights

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Tax code changes effective in 2018 inflicted a crippling blow to consumers who must sue to enforce their rights. And few have yet noticed. The tax deduction for miscellaneous itemized deductions under IRC Section 212 is gone. So now, consumers who prevail under statutes that award attorneys fees to the successful plaintiff are denied a deduction for the legal expense of winning that … [Continue reading...]

When Laws Collide, You Need The Right Word

By Cathy Moran, Esq. 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 … [Continue reading...]

Why listening is a bankruptcy lawyer’s superpower

By Cathy Moran, Esq. Filed Under: lawyer skills

The initial meeting with a prospective bankruptcy client is the most important work I do as a bankruptcy lawyer. It's also the hardest. The results of that meeting lay the groundwork for the entirety of the case. The challenge is establishing rapport with an utter stranger, who's in distress, and persuading them to spill all of their financial secrets and perceived failings. Well-done, the … [Continue reading...]

Chapter 13 NoLook Fees: Fair vs. Affordable

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

I've long campaigned for compensation of bankruptcy practitioners that recognizes the practitioner's skill set and the complexities of this practice. Without real-world compensation, bankruptcy can't compete for legal talent. Alongside that campaign, I've expressed my concern about what Bill Rochelle calls the overlegalization of consumer bankruptcy. I see that in the increasing, and needless … [Continue reading...]

Debt Buyers Pay A Lot Post-Taggart

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

You know it won’t go well for the creditor in a discharge violation case when the opinion opens by characterizing the debtor as a single mother and registered nurse who discovers her $20K bank balance is now negative. And sure enough, the debt buyer trying to collect a two-decade-old credit card debt ended up $64,000 poorer at the end of the day, including $21,500 in punitive sanctions. The … [Continue reading...]

Sua Sponte Monetary Sanctions Against Counsel

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

The 9th CIr. BAP erected a high bar for the imposition of monetary sanctions against counsel in its recent decision in Franz. Despite some ugly facts and imperfect lawyering, the BAP overturned $5000 in sanctions against a Chapter 13 debtor's lawyer, finding counsel's conduct did not rise to a level akin to contempt of court. And interestingly, at the heart of the BAP's decision was the very … [Continue reading...]

What Goes Into The Liquidation Analysis

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice, Start Here

The liquidation analysis is central to every form of consumer bankruptcy. Yet too many attorneys think the formula is Assets minus Secured Debts minus Exemptions = Distributable estate Not by a long shot. So let's walk through the elements of a comprehensive liquidation analysis. You need it if you're assessing the vulnerability of assets to the trustee in a Chapter 7. It's one of … [Continue reading...]

Getting Started In Bankruptcy Law

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Everyone new to bankruptcy needs a guide to this specialized legal realm. Just as you can't tell the players without a scorecard, it's hard to make heads or tails of bankruptcy law when it's new to you. Jon Hayes has what you need to tell priorities from the absolute priority rule. Exemptions from exclusions. Denial of discharge from non dischargeability. His book is A Summary of … [Continue reading...]

When The Marital Community Doesn’t Get A Bankruptcy Discharge

By Cathy Moran, Esq. Filed Under: Community property, Discharge Dischargeability

Community property works differently in bankruptcy, especially when it comes to debts of a non-filing spouse. I probably don't have to tell you that. On the issue of assets and debts, community property is pretty straightforward. All of the community property comes into the estate upon the commencement of a bankruptcy case, even when only one spouse files. §541(a)(2). Every creditor with … [Continue reading...]

The Weak Link In The Means Test

By Cathy Moran, Esq. Filed Under: Means test

The bankruptcy means test, designed to keep people out of bankruptcy, has a fatal weakness. Like so much recently, it's health care. Health care, in the future, to be paid before creditors get any money. It works because, in a logic that only Congress could employ, the means test deducts future expenses from past income. And, since we don't know what the future brings, … [Continue reading...]

The Long Reach of R. 3002.1

By Cathy Moran, Esq. Filed Under: Rule 3002.1

What are the consequences of a secured lender's failure to comply with R. 3002.1 in a prior case when the debtor files again? Significant, it seems. The issue came before the SD Texas bankruptcy court in Alvarez, No. 22-33889 (Bankr. S.D. Tex. Aug. 9, 2023) when the debtor objected to the mortgage claim of the non-institutional lenders which included some $12,000 in attorneys fees from the … [Continue reading...]

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