The following is for the exclusive use of attorneys. This firm does not make any representations as to the accuracy or current status of any case cited herein.
In re Costas, 06-16520, 555 F.3d 790 (2009) (BAP 9th Cir. 2008) Costas inherited $34,800, but refused to accept it and, on November 7, 2002, executed a disclaimer under Arizona law to relinquish her claims to the Trust property.
December 3, 2002, Costas filed a Chapter 7. Maureen Gaughan, trustee, sought to avoid Costas’ disclaimer of the Trust property under 11 U.S.C. § 548 as a fraudulent conveyance within a two year pre-petition. The question in this case is whether an Arizona disclaimer qualifies as a “transfer … of an interest of the debtor in property.” BAP decided “not a transfer”Arizona’s relation-back rule says that a disclaimant neither transfers nor possesses an interest in disclaimed property and thus creditors cannot reach the disclaimed interest. We hold that a disclaimer, properly executed under Arizona law, is not a “transfer … of an interest of the debtor in property” for purposes of § 548.
The following is for the exclusive use of attorneys. This firm does not make any representations as to the accuracy or current status of any case cited herein.
Typically unsecured liens do not exist after bankruptcy because the liens did not attach to anything before bankruptcy. The judgments are void per 11 USC 524(a)(1). A void judgment cannot create a post-petition lien. Therefore the judgments do not attach as liens to property acquired post-petition.
It is true that pre-petition liens on nonexempt property survive bankruptcy, but that requires that the liens have attached pre-petition to property owned pre-petition.
524 (a) A discharge in a case under this title—
(1) voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor with respect to any debt discharged under section 727, 944, 1141, 1228, or 1328 of this title, whether or not discharge of such debt is waived;
In re Charnock, 318 B.R. 720 (BAP 9th Cir, 2004) has the legislative history of 522(f)(2) and says that the debtor may avoid a judgment lien recorded before a consensual lien regardless of state law, because Congress wanted to favor consensual liens regardless of the priority of recording.
By Joel Spivack of Law Office of Joel R. Spivack, a New Jersey and Pennsylvania bankruptcy attorney
In many cases, filing for bankruptcy is your best financial option. However, that doesn’t mean your head, heart and wallet are in sync. Bankruptcy can be difficult to accept emotionally. When you’re facing bankruptcy, it is normal to be overwhelmed by feelings of loss and frustration. There are a few steps you can take to help relieve the emotional stress that accompanies your financial situation.
It can be very difficult not to focus on the negative aspects of declaring bankruptcy. You may be losing a business you’ve put an enormous amount of time and money into building or a home you’ve raised your family in. At the very least, you are admitting that, whether it was your fault or not, you ended up under water. The best way to tear your mind away from these negative feelings is to stay focused. Make a detailed calendar that includes the steps you need to take toward having your debts discharged, and focus on the process.
The process of filing for bankruptcy is complex and often frustrating. However, take some solace in knowing the Automatic Stay granted by filing for bankruptcy protection will get the harassing debt collectors off your back. Know that when your filing process is complete, you will have a clean slate and be back on the road to good financial health.
The most important thing you can do to avoid an unnecessarily painful emotional experience with bankruptcy is to surround yourself with people who want to help. This means being open with family members, and accepting their support.
In addition, choosing an experienced bankruptcy lawyer who has been through this before with other families can really be helpful legally and emotionally. No matter how you feel about bankruptcy, your attorney has seen the benefits of getting through the process. It’s good to have a knowledgeable advisor on your team.
Here is a great blog from Matt Berkus, another bankruptcy attorney, in response to the statement we all heard “I have a simple bankruptcy”.
Invariably, two-thirds of prospects will preface a consultation with “I have a simple bankruptcy.” The transparent motive behind the comment is the belief that a simple bankruptcy case should be inexpensive. Let’s state two facts. First, 99.5% of prospective clients are not bankruptcy attorneys and have never filed bankruptcy; so they have no clue what goes into a bankruptcy and the time it takes. Second, simple bankruptcies are actually rare. Simple bankruptcies are the exception, not the rule.
A bankruptcy’s cost is based on the anticipated time to be spent on the case. As bankruptcy attorneys we understand that we are working with people in financial distress. So, our margins are razor thin and subject to fierce competition. Anything, at all, that adds time to a case, even if it is 12 minutes, increases the cost of a case. Let’s put the issue to rest. Here is what a simple bankruptcy looks like. If you have anything more than what is stated here, you don’t have a simple bankruptcy.
A simple bankruptcy has no more than one source of income. If a husband and wife file a joint bankruptcy, and both work; you don’t have a simple bankruptcy. If you receive social security, and your spouse works, you don’t have a simple case. For every source of income, we need six months of payment documentation that must be reviewed, input and analyzed. In short, the more sources of income, the more time your case takes.
If you are anything other than an employee, unemployed, or retiree whose only income is social security, you don’t have a simple case. The self-employed, business owner, or independent contractors never have a simple bankruptcy case.
To have a simple bankruptcy, all debts must appear on your credit report. There are two reasons why. (a) A credit report gives us an independent source for identifying your creditors. (b) Most bankruptcy preparation software will allows us to direct import the creditors from your credit report. Common creditors that do not appear on a credit report are medical bills and pay day loans. Those debts require us to verify those debts and manually input them (e.g. spend more time).
In a simple bankruptcy, the debtor cannot have special debts. Special debts include back income tax, child support, spousal support, any sort of business related debt, restitution, etc.
Owning real estate compounds the time we spend on the case. It is an additional asset, your home is important to you, and there is usually a mortgage associated with it. So, we must do the due diligence to make sure the home is not at risk, and add that information to the petition.
This factor takes a bit to explain. Exemptions are the laws that allow you to keep your stuff notwithstanding the fact you are filing bankruptcy. Rest assured, in most chapter 7 bankruptcies, the person loses nothing or very little. In real terms, having only non-exempt assets means that you have the typical assets we would expect for a middle class family in debt. These assets are furniture, clothing, television, computer, car, and a 401(k) or IRA.
If you own anything, even something minor, that is non-exempt (e.g. tax refund, a 3rd car or a business), you don’t have a simple bankruptcy case. First, we have to take the extra time to explain the consequences and options for dealing with non-exempt assets. Second, if you have non-exempt assets, your chapter 7 bankruptcy will become an asset chapter 7 case. That means we will be doing significantly more work after the bankruptcy is filed to deal with the trustee, keep you informed, and instruct you on what to do. For Colorado, the big category of non-exempt assets are tax refunds and firearms.
If you are unmarried, you only have one vehicle. If you are married, you have no more than 2 vehicles. If you have car loans, you are current on payments and the equity in the vehicles is break-even. If none of the above is true, you don’t have a simple bankruptcy case.
Even a simple bankruptcy (chapter 7 bankruptcy) takes about 15-20 man-hours. That time estimate assumes the client does what they are supposed to do. Here’s the thing, a typical bankruptcy attorney charges $250.00 per hour. That would mean that a simple chapter 7 bankruptcy, charged by the hour, would cost $3,750.00 to $5,000.00. However, most markets cannot support that fee. So, bankruptcy attorneys charge significantly less than their counterparts in almost any other area of law. When you see advertised bankruptcy fees of $699.00, take it with a grain of salt. Understand you will probably end up paying more (because of “add ons”) and an attorney is “barely” involved in your case.
A simple bankruptcy involves only one source income, debts that appear only on a credit report, no one has real estate, assets are all exempt, and only 1 car per debtor. In addition, the debtor cannot have done anything in the run-up to bankruptcy to create issues. I think you can see, that a simple bankruptcy is actually rare.
In re Rich Bankruptcy Number 10-21536 (District of Utah), Nice discussion about abandonment. Creditor obtained unopposed staylift order to foreclose on debtors residence. Debtor then filed motion to abandon so he could do a short sale, with no money to debtor. Trustee opposed abandonment but did not assert any equity in the property:
The Debtor’s stated purpose for seeking abandonment of the Real Property is to effectuate a short sale of the Real Property prior to a scheduled foreclosure sale. The Court finds that a party in interest’s motivation for seeking abandonment is irrelevant. The only question the Court should properly address under § 554(b) is whether the property is burdensome or of inconsequential value to the estate.
When faced with a § 554(b) motion a Trustee has two options: He may concede that the property is burdensome or of inconsequential value and abandon the property or he may demonstrate to the court that his administration of the property will result in a benefit to the estate and he should be allowed to administer the property. Failure to administer property that is of value and benefit to the estate is not an acceptable option and failure to abandon property that is burdensome is not an acceptable option.
The Trustee has had since November of 2011 to administer the Real Property which is an asset of this estate. There is no evidence in the docket that the Trustee has attempted to market the Real Property by employing the services of a real estate professional or appraiser, nor does the Trustee allege in his objection that he is attempting to sell, or intends to sell the Real Property sometime in the future.6 Importantly, the Trustee does not allege that there is equity or even the possibility of equity in the Real Property. Accordingly, the Court finds that the Real Property is burdensome to the estate and is of inconsequential value to the estate and the Debtor’s motion to abandon the Real Property shall be granted.
What is involved with the typical consumer bankruptcy?”
A typical consumer bankruptcy filing consists of 40 to 100 pages of paperwork; depending on your situation. It involves many state laws and federal laws, both bankruptcy and non-bankruptcy. There are bankruptcy classes required for consumers; tax returns and payroll information which must be file with the court. Failure to do any of these things will mean the automatic dismissal of your bankruptcy. A business bankruptcy has mounds of paperwork, strict deadlines and procedures, which if not followed will lead to the bankruptcy being dismissed.
“If you are going to file bankruptcy, do it right the first time. Hire an experienced bankruptcy attorney. It is not expensive, and in the long run you will save money, protect your property, as well as your sanity. There is no substitute for quality and experience.” Diane L. Drain
There is little consistency between the laws of various jurisdictions. Sometimes the state laws or procedural rules within one state differ dramatically from their neighboring state. Many of the bankruptcy laws vary from state to state and, sometimes, from debtor to debtor. What may seem perfectly reasonable for one debtor may cause another to lose his or her car or bank account. For example, in one state a person can file a bankruptcy and live in a million dollar house while in another state that person could risk their second TV set. If the forms are not filled out correctly, or if you have failed to properly protect your assets, it may be too late to correct the problems once the documents are filed with the court. The documents are examined by officials of the court and your creditors – some of whom are representing interests that do not coincide with yours and would like nothing better but to take away assets because you did not protect them properly.
Once you retain Ms. Drain then all your creditors are required by federal law to stop calling you, but instead they are to call Ms. Drain. Ms. Drain and her staff will guide you through the required classes, documents and information gather process. Ms. Drain meets personally with every client for at least 3-4 hours before any bankruptcy is filed. Ms. Drain is always available to answer any questions you may have.
There may be issues that must be taken care of before a bankruptcy can be filed, if it can. All those issues will be clarified and paths designed to deal with each. If a bankruptcy is not appropriate, then Ms. Drain will assist you with other alternatives. Once both you and Ms. Drain have decided the best time for filing your bankruptcy, then our office will take care of filing the documents with the Bankruptcy Court. You will receive a copy of all documents sent or received by our office. At the time of the filing your documents will be assigned a case number That number is important. You can give that number to any creditors that call. Technically, from the date of filing all creditors, including the IRS, are prohibited from contacting you. They are restricted to working directly with your attorney. Also, at the time your documents are filed a bankruptcy Trustee will be appointed. That Trustee’s job is to make sure that your documents are complete and review your list of assets for items that are not protected by law. All of this will be explained during your meetings with Ms. Drain. A creditor’s meeting will be scheduled and you will receive notice from the Bankruptcy Court and this office as to that date, time and location. It is absolutely imperative that you attend that meeting.
Self-help in the legal world is not always smart. You may have tried to take care of your financial situation in ways that the law prohibits. A year after a payment or transfer a court can set aside the payment or transfer and require that the asset or money be paid to your creditors. Lack of understanding of the law is not an excuse that the court will accept. For instances, your mother helps support your family while you are unemployed. Good news – you are back to work and get a large tax refund. You use the refund to pay your mother back. A few months later your new company goes out of business. You finally decide that bankruptcy is the only way to save your marriage and your home; so you file. A couple of months later you receive a copy of a complaint that has been served on your mother – she is being sued for all of the money you paid her. Yet, had you used the money to pay other expenses (see your lawyer for a list) then you would receive the coveted bankruptcy discharge, get your fresh start and your mother would never have been sued and forced to refinance her home in order to pay the creditors the money you paid to her. Plus, you can pay your mother back after your bankruptcy is discharged.
The same problem would arise if you sold, transferred or gave away property before filing a bankruptcy, or being sued by a creditor. I am not making any of this up – the legal issues are called preferential treatment and fraudulent conveyances.
If you are reading this article some of you may be thinking that I am trying to scare you in order to increase my business. Not so, I am happy to refer you to very good bankruptcy attorneys. In fact, I refer out a good number of folks who call my office. Why? Because another attorney is better equipped to address their specific issues. My fear is that you not understand the full breadth of the issues in bankruptcy and take that path without proper guidance.