Bankruptcy Mastery

Becoming a better bankruptcy lawyer

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...]

Is Good Service A Vanishing Commodity?

By Filed Under: Bankruptcy Practice

The lack of good service in bankruptcy courts drove Judge Weissbrodt (ND CA) to post a practice tip for attorneys on getting good service by mail on corporations and financial institutions.  It's hard to improve on word from on high: FRBP 9014(b) provides that a motion in a contested matter must be served in accordance with the manner of service provided for service of a summons and complaint … [Continue reading...]

Heavy Hitters Recommend

By Filed Under: Bankruptcy Practice

Include the terms of an agreed loan modification in the Chapter 13 plan, John Rao of NCLC suggested at last week's NACBA convention. In light of the Supreme Court's decision in Espinosa and the notorious record keeping practices of the servicers,  inclusion in the plan may cement the benefits of the modification. Where the plan has been confirmed prior to the modification, Rao recommended a … [Continue reading...]

“I Didn’t Know That” Gem From The Convention

By Filed Under: Bankruptcy Practice

A hardship discharge is available to debtors who are not current on their post petition support payments, even though such a delinquency would prevent a regular discharge. I gathered this hitherto unknown bit from Henry Sommer in the panel on Marital Issues in Bankruptcy Saturday at the NACBA convention. BAPCPA added to the prerequisites for a discharge a provision that the debtor must be … [Continue reading...]

When A Form 1099 Is Fiction

By Filed Under: Bankruptcy Practice

The 1099 form is so well recognized and imbued with authority that it is used by scammers  to authenticate their scheme.   But it's really dangerous when genuine 1099's are just plain wrong.  And according to Bill Purdy,  my go-to resource on this issue, 1099's are often wrong. When a non recourse loan is foreclosed, no matter what the spread between the amount of the debt and the fair market … [Continue reading...]

The Means Test: The Clunker Allowance

By Filed Under: Bankruptcy Practice

As if the means test wasn't illogical and opaque enough, consider  the unwritten provision for old cars. Where do you find the unwritten allowance?  It's not in the Bankruptcy Code but in the Internal Revenue Manual at 5.8.20.3. The IRS  allows a delinquent taxpayer with a paid for car more than 6 years old or with more than 75,000 miles to deduct an extra $200 for the expense of operating an … [Continue reading...]

Know The First Rule For Bankruptcy Forms

By Filed Under: Bankruptcy Practice

Now retired Judge Jaroslavsky popped this question on a room full of new bankruptcy lawyers:  what's the first rule for filling out a legal form? An answer from the floor suggested "make sure you have the most recent version", which I thought was pretty good.  But the judge had something else in mind:  know the purpose for which the form asks the question. There, in a nutshell, is … [Continue reading...]

The Means Test: Where The Blind Lead The Sighted

By Filed Under: Bankruptcy Practice

The people who sit in judgment on the adequacy of your b-22 and your means test calculation have never prepared one.  What other endeavor can you name where the arbiters are utterly without experience? This first came up for me when counsel for a Chapter 13 trustee recounted something I'd told him months ago  ( I hope politely) that he'd never had to draft a means test.  It must have resonated … [Continue reading...]

The $1000 Word

By Filed Under: Bankruptcy Practice

Word choice in a fee application cost a Chapter 13 lawyer $1000 yesterday.  We all know about forbidden words; most of us even know some.  Would you have guessed that "prepare" was one of them? I was waiting my turn in court, on a fee app no less, when the fee application of a well established firm came up.  The judge read off a time entry:  "Prepare debtor's budget - 3 hours". "Debtors … [Continue reading...]

Beware The Taxes That Follow Foreclosure

By Filed Under: Bankruptcy Practice

Who cares about stopping the foreclosure, it's stopping the tax that results from foreclosure. It's a brand new perspective for me as I counsel families with homes at risk of foreclosure.  Given mortgage debt that exceeds today's value of the property, a foreclosure will result in a 1099 for the difference between the loan balance and the current market value of the property, as selected by the … [Continue reading...]

The Real Truth About Bankruptcy Lawyers & Clients

By Filed Under: Bankruptcy Practice

We live in two different worlds, the client and the bankruptcy attorney. "Creditors",  for debtors, means those folks who send a monthly bill, and  who call if you are late. "Creditors", for bankruptcy lawyers, means everyone who has a claim of any kind against the client. In his Fundamentals of Bankruptcy Practice for newcomers last night, the new Chief Judge of the Northern … [Continue reading...]

End Run On Chapter 7 Trustee

By Filed Under: Bankruptcy Practice

I found one more reason to file 13 when there MAY be non exempt equity. I tout Chapter 13 as the better choice when there are issues of insider preferences, transfers that might be found constructively fraudulent, or where there are  small amounts of equity in assets. It's better, I think, that the debtor propose a plan and shape the facts to present the debtor-friendly characterization of an … [Continue reading...]

The Price Is Not Right

By Filed Under: Before filing

Value, like beauty, is in the eye of the beholder. The value of  the debtor's  stuff is colored by their ownership.  Get a  truer value by asking the client to imagine buying a replacement, just  like the one he owns now. Clients cling to old or comfortable ideas of what their personal property is worth.  Time after time these days, clients will give  me … [Continue reading...]