What New Bankruptcy Lawyers Need To Know: Beyond The Code

Bankruptcy Schedules Call For Payoff Balance

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

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 the principal balance. Gone, somehow, are the arrears and … [Continue reading...]

Bankruptcy’s 3 Year Rule for Taxes

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

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 return was last due without penalty. If the client got an … [Continue reading...]

Learn the Bankruptcy Lingo: Pots & Percentages

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice, Chapter 13

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 a Chapter 13 case is expressed … [Continue reading...]

Bankruptcy Exemption Mistakes Feed Trustee Coffers

By Cathy Moran, Esq. Filed Under: Exemptions

Bankruptcy lawyers who mess up claims of exemptions were the other target of the trustee's attorney I spoke with earlier this week. He rubbed his hands over attorneys who hadn't collected enough information to understand the asset or who simply didn't know that the homestead exemption didn't apply to property other than the debtor's residence. It's not surprising that exemptions are a … [Continue reading...]

New Bankruptcy Lawyers Targeted by Trustee

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Chapter 7 trustees plan to sue debtor's lawyers for undisclosed assets, I was told yesterday. In the course of discussing the flood of rookie bankruptcy lawyers into local court rooms, this veteran trustee's counsel was licking his chops at the opportunity to make creditors whole at the expense of the debtor's attorney. The stories of bad advice and dishonest behavior that accompanied that … [Continue reading...]

Bankruptcy Contested Matters: Won by Showing Up

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Sometimes bankruptcy litigation is won by simple persistence. As Woody Allen says "80% of success is showing up". Two instances this week where being ready and willing to have a hearing on a disputed issue resulted in victory before the hearing. In my case, I had a marginal set of facts in a non dischargeability action against my client. The law on the subject was ugly but I cooked up the … [Continue reading...]

Bankruptcy Exemptions: 10 Ways to Deal with Excess Cash

By Cathy Moran, Esq. Filed Under: Exemptions, Start Here

Bankruptcy lawyers occasionally are confronted with the client with more cash, or other marketable assets, worth more than the available exemptions to protect them. And state exemption systems often protect the darndest things, like a mule and a plow. A milk cow. The family bible. Those aren't the things most of us are striving to protect. So if your client has cash or cash … [Continue reading...]

Bankruptcy’s Means Test Doesn’t Apply to All

By Cathy Moran, Esq. Filed Under: Means test

New bankruptcy lawyers sometimes forget in the flurry over getting the means test right that it only applies when the debts are primarily consumer. Primarily means over half in dollar amount. The code defines consumer debts in §101(8) as debt incurred for a personal, family or household purpose. You may be surprised by the kinds of debt that are not consumer debt: TaxesBusiness … [Continue reading...]

Assets in Bankruptcy Pose Valuation Issues

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

A bankruptcy lawyer seems to often have the unpleasant task of telling a debtor that their possessions have little value. I don't know whether it's a defense mechanism or just ingrained thinking, but I have clients tell me all the time that their assets have values far beyond what seems likely in the current market. Tools of the trade are a frequent example: the mechanic tells me his tools … [Continue reading...]

Bankruptcy Procedure Question? Ask a Clerk

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

The bankruptcy judge ordered me to get the signature of an absent party on the written version of the order just made from the bench. So, what to do when that party was unwilling to sign? When the judge signed the order anyway, opposing counsel complemented me on knowing how to deal with the problem. He's practiced law even longer than I have and he said he wouldn't have known how to … [Continue reading...]

Develop a Bankruptcy Filing Checklist

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

As bankruptcy lawyers, we don't usually face the life and death situations that doctors do, but we do take our client's financial lives in our hands. For their sakes, and ours, we want to get it right. Which is why I found Atul Gawande's book The Checklist Manifesto compelling. The premise of the book is that no matter how expert you may be, well-designed check lists can improve … [Continue reading...]

Discharging Taxes in Bankruptcy: This Year’s Trap

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Income taxes are dischargeable in bankruptcy if they meet the three year rule; the two year rule; and the 240 day rule. When you count back for the three year rule (the date on which the return was last due without penalty is more than three years prior to the date the bankruptcy is filed), remember that in 2007, tax returns were due on the 16th of April. In 2007, April 15th was a Sunday, so … [Continue reading...]

Alternative to Bankruptcy: Do Nothing

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

Bankruptcy lawyers sometimes forget: not everyone worried about debt actually needs to file bankruptcy. The anxiety that brings someone to your office may not be grounded in a real understanding of the rights of their creditors. I recently saw a woman drawing disability pay and looking at very substantial retirement income. It seemed unlikely that she would work again. Her income, under … [Continue reading...]

« Previous Page