Bankruptcy Mastery

Becoming a better bankruptcy lawyer

Think Beyond The Means Test

By Filed Under: Bankruptcy Practice, Before filing, lawyer skills

It started as a means test question:  could emergency medical expenses be deemed non consumer debt.  It ended up as a step back to get the bigger picture. Well seasoned bankruptcy counsel brought the fact pattern to a list serve of colleagues.  The prospective debtors'  income in a small consulting corporation is declining,  his health crisis raises not only income … [Continue reading...]

Bankruptcy Cases And Making Change Happen

By Filed Under: Bankruptcy Practice

The axiom that the only thing constant is change certainly applies in the practice of bankruptcy law.  Our client' s life changes and we're looking to dismiss a case or convert a case to another chapter. The code deals with this.  Section 348 addresses the effect of conversion;  349 follows with the effect of dismissal.  These sections provide the "what happens" when a case converts or is … [Continue reading...]

Know the Rules of Debt, Divorce & Discharge

By Filed Under: Bankruptcy Practice, Family Law in Bankruptcy

Today let's combine the themes of  my last two posts here and talk about the obligation of a spouse to indemnify the other spouse in a divorce from the debts assigned to the spouse. The indemnity obligation is not one most lay people see as a "debt".  It doesn't involve paying money to the ex, no statement is sent,  the ex probably doesn't call if the payment is late.   If you hand the client … [Continue reading...]

Are You Playing Chapter 7 With A Full Deck Of Cards?

By Filed Under: Before filing

If unscheduled assets are discovered by the trustee, can you dismiss a Chapter 7 case? The question came from the audience of my presentation to bankruptcy lawyers on techniques for the  initial interview with the client.  It boiled down to:  what are the consequences for not doing a skillful job of  extracting the whole story from the client. Getting out of Chapter 7 The consequences, in … [Continue reading...]

Bankruptcy & Divorce: Property Settlements

By Filed Under: Before filing, Start Here

One change brought by BAPCPA made the choice of chapter in bankruptcy much clearer:  the amendment of §523(a)(15).   Read with §523(a)(5), now all debts to a spouse, former spouse or a child, incurred in connection with a divorce or separation are non dischargeable in Chapter 7. There's no longer a balancing-of-the-hardships test for discharge of non support obligations between spouses. The … [Continue reading...]

Beware The Trustee Carrying Tax Losses

By Filed Under: Bankruptcy Practice

A tax loss carryforward in the hands of a bankruptcy trustee can have results as distressing as crayons in the hands of an unsupervised toddler.  Identify the debtor's tax attributes before you do your liquidation analysis. Whether you are selecting a chapter for a client, working exemption issues, or calculating what a Chapter 13 plan has to pay, you are analyzing whether there is non exempt … [Continue reading...]

Bankruptcy’s Short Tax Year: Gem Hidden In Plain Sight

By Filed Under: Bankruptcy Practice, Tax

Double your tax returns, double your fun? Well, maybe taxes aren't fun, but they are inevitable. Mastering the gem of the short tax year can mark you as a bankruptcy lawyer who really knows his stuff. The option of selecting a short tax year in bankruptcy is too little understood and too seldom used.  This must stop, I say<g>. Short tax year explained Probably stripped of … [Continue reading...]

Looking To Be Sued?

By Filed Under: Bankruptcy Practice

Making a special appearance for a colleague has the potential to embroil you in a malpractice suit. Sorry to be the bearer of bad news but making a "special appearance" for another attorney creates an attorney client relationship between you and the debtor.  This is the rule in California anyway, found in Streit v. Covington & Crewe, 82 Cal. App. 4th 441 (2000).  Check the law of your state … [Continue reading...]

More Tax Refund Tweaks to Thwart Trustees

By Filed Under: Bankruptcy Practice

Checking the client's prior tax return and grilling the client allowed my partner to find and exempt  a $20,000 tax refund likely to arrive post petition, despite the fact the client never mentioned it. The client hadn't listed the expected tax refund  in his  questionnaire, but admitted,  when asked, that he usually got a substantial tax refund. ( I guess so, when the refund exceeded $20K.)   If … [Continue reading...]

What You Need To Know About Converted Cases

By Filed Under: Bankruptcy Practice

"No, Mr. Trustee, you can't have my client's tax refund."  Honestly, those have to be some of the most satisfying words I've utterly lately. How'd I get away with it?  Just guess.  I read the code! Actually, my co panelists on two  recent presentations on vesting and conversion educated me.  Jill Michaux and Doug Jacobs read the bankruptcy code  and shared.  As we started puzzling out the … [Continue reading...]

Getting The Fundamentals

By Filed Under: Bankruptcy Practice

It's a romantic notion that we can dive into the deep end of the pool and swim like an Olympian.  The reality, however, is remarkably different. It's human nature to believe that we're uniquely qualified by our law degree to tackle even the most difficult of situations even in the absence of training or experience. There's nothing wrong with that in matters such as cooking or building model … [Continue reading...]

When It’s Good To Be Abandoned

By Filed Under: Bankruptcy Practice

Quick: what's § 554? It's the section that allows any party to move for an order compelling the trustee to abandon property.  It's exceedingly useful and underutlized. Today I'm interested in subsection (b), which reads: (b) On request of a party in interest and after notice and a hearing, the court may order the trustee to abandon any property of the estate that is burdensome to the … [Continue reading...]

7 Rules For The 341 Balancing Act

By Filed Under: Bankruptcy Practice

What do you do when a hostile creditor shows up at a 341 meeting, and the proceeding threatens to spin out of control?  You balance the purpose of the 341 meeting, disclosure, against your client's composure and the record being created.  Com'on,  you didn't think it would be simple, did you? What goes into that balancing act?  Here's my list. The Code requires an appearance at the first … [Continue reading...]