Wednesday, May 23, 2012

Bankruptcy: Can My Taxes Be Discharged?


Can Taxes owed to state or federal entities be discharged in bankruptcy? Well that depends. The bankruptcy code outlines what taxes may be discharged. For a brief overview, there are six requirements (you must meet all six requirements):
  1. THREE YEAR RULE: The three year rule: for the tax year in question, the most recent due date for filing the return is more than three years old;
  2. TWO YEAR RULE: A tax return has been filed at least two years preceding the filing date of the bankruptcy;
  3. TWO HUNDRED AND FORTY DAY RULE: The tax claim was assessed at least more than 240 days preceding the filing date of the bankruptcy;
  4. TAX IS ASSESSABLE BUT NOT YET ASSESSED;
  5. NON-FRAUDULENT RETURN; and
  6. NO WILLFUL TAX EVASION.
Obviously, the above is only a preliminary test to see if you need to look further to see is a tax due to a state or federal entity may be discharged. If you think taxes you owe might be dischargeable, you should seek the advise of a bankruptcy attorney.

Monday, May 21, 2012

Scams: Memorial Day


Sunday, May 20, 2012

Eleventh Circuit Rules On Allowing Lien Stripping in Chapter 7

UPDATE: Since the posting of this blog, the Supreme Court has reversed the Eleventh Circuit: 

See http://jacksonville-bankruptcy-grange.blogspot.com/2015/06/second-mortgage-in-chapter-7-bank-of.html


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Lien Stripping in a Chapter 7 case?  The 11th Circuit Court of Appeals says it is OK, which is a minority decision.

The 11th Circuit Court of Appeals recently interpreted a Supreme Court ruling differently than most other courts in other jurisdictions. If you have been studying bankruptcy, then you know the courts require a discharge in a Chapter 13 as a prerequisite to stripping off of a lien to real property. So, what does this mean. Essentially, if you have a second mortgage that is completely unsecured (the balance of the 1st mortgage is more than the value of the property, so the second mortgage is unsecured), the only way to get rid of the second mortgage is to obtain an order from the court allowing a strip off of the lien upon receiving a discharge in a Chapter 13.
 
Most courts around the country have interpreted the Supreme Court ruling as disallowing the strip off of a lien when it disallowed the cram down of a lien in a Chapter 7. Well, the 11th Circuit (the Middle District of Florida is in the 11th Circuit) court of appeals has just ruled a mortgage can be stripped off in a Chapter 7 bankruptcy. (In Re: Lorraine McNeal). The court said, for the most part, the Supreme Court has never ruled on a strip off of a lien, just a cram down, and as such, they are free to interpret this part of the bankruptcy code.

So, will the local bankruptcy courts follow the 11th Circuit? We do not know. This case just came down. You see, even though the 11th Circuit ruled, this is actually a persuasive ruling the local bankruptcy court should consider. Of course, all cases have to be decided by the Court on a case by case basis.

Monday, May 7, 2012

Bankruptcy Consultation: What To Expect; What To Bring


So you set up an appointment for a bankruptcy consultation. What next?

First of all, relax. People tend to get nervous, or anxious, when needing to speak with an attorney. Remember that any attorney that agrees to represent you will be your advocate. The consultation is so the attorney can understand you particular situation, and advise you as to what your various options are regarding the filing, or not filing, of bankruptcy.

I know what you are thinking, “not filing”? Make sure you ask the attorney if he or she practices under the Fair Debt Collection Practices Act. Yes, there are alternatives to filing bankruptcy.


What to Bring:
      1. 7 months pay advises.
      2. Payoff figures on secured assets (approximate)
      3. Value of secured assets (approximate)
      4. Number of payments left on assets, if less than 60.
      5. Year, Make, Model, and mileage of vehicles.
Generally, my consultations last approximately an hour, with some being a little longer. It is helpful to have the items on the above list. A short discussion of each is as follows:
      1. Pay advises, such as pay stubs, or other document reflecting the gross income and withholding you have had during the past 7 months, for you and your spouse (even if the spouse is not filing). If you and your spouse live in separate households, make sure to let the attorney know, as special rules may apply to your situation.
      2. Payoff figures are needed to determine how much longer you have to pay, and how much, if any, equity you have in the property.
      3. Value. This is need in many situations to, again, determine how much equity is in the property. The equity is important because is helps determine what assets you have from a bankruptcy perspective.
      4. Number of Payments. This is important should you income be more than the median income for a household of you size in the state in which you live, to determine which form of bankruptcy you may be able to file. It may also be useful in advising you what to expect depending on when you file.
      5. Year, Make, Model and mileage. This is useful in determining value and other useful information, such as deductions, when filing. Again, it can help in being able to advise you as to what to expect through the various forms of bankruptcy, or in some cases, what to expect if seeking other forms of debt relief.

While a consultation can still be done without these items, being the documents ask for often helps in facilitating the consultation and enables the client to receive much more accurate information regarding their particular case.

Tuesday, May 1, 2012

Home: Can The Trustee Take It?


As a bankruptcy attorney in Jacksonville, Florida, I practice in several areas of debt relief, including foreclosure defense.  The following blog is created with the intent of provoking discussion, addressing bankruptcy, Trustees, and the debtors wishing to retain their homes, when the mortgage is upside down.
So do you want to be in bankruptcy? Of course not. And if you are also having your house foreclosed on, you certainly don't want that either. So when you go to your local attorney, you are advised as to whether or not you should file bankruptcy, and what chapter you can file. You may also be advised as to whether or not you can keep your house. If you are looking to discharge you debts through bankruptcy, and upside down on your house (that is, your 1st mortgage is higher than the value of the real property), you may find this blog post interesting.

In Florida, there is reportedly a case where a debtor decided not to claim a homestead exemption on Schedule C of his bankruptcy paperwork, thereby allowing the debtor to claim a $4,000 wild card exemption; this is another way of saying the debtor can get though the bankruptcy and keep an extra $4,000 worth of property. The Trustee and the mortgagee came up with the bright idea of paying the Trustee to short sale the house. This would allow the mortgagee to foreclose on the house in a very efficient and timely manner, put some money in the Trustee's pocket, and avoid having to possibly fight a judicial foreclosure.

The problem with this lies with the duties of the Trustee, as the duties outlined in the bankruptcy code do not include the trustee acting as a foreclosure attorney. Another problem lies with the property itself. If there is no equity, is the property a bankruptcy asset. There is a very strong argument that can be made that the property, with no equity, is not an asset of the bankruptcy estate.

UPDATE:  The practice of at least one of the Trustees in the Jacksonville Division is to ask the bank to pay him to short sale the property.  This is possible if 1) the debtor does not claim the property as exempt homestead property, and 2) the bank agrees.  If you are filing the the Jacksonville Division, make sure you get the advise of an attorney before choosing to NOT claim your property as homestead.

A second case in Florida deals with the Trustee deciding to tell a debtor to get out of their house when the house is not claimed as exempt. Under the bankruptcy code, a trustee either has to administer the asset or abandon it. If the debtor simply moved out of the property, the debtor may be subject to fines and penalties for not maintaining the house. These fines and penalties would not be discharged in the bankruptcy because they occurred post petition. Of course, we still have the problem of whether or not the property is even property of the bankruptcy estate to begin with.

A third case deals with the trustee charging the debtor rent to stay in the house. That's right! The problem here is to some extent obvious; that's right, the house may not be a bankruptcy trust asset to begin with. But something you may not have though of is, does the Trustee really want to be a landlord, that is, they would be responsible to maintaining the property. As far as I know, the typical Trustee does not want to deal with landlord type problems; you know, the faucet leaks, the plumbing is stopped up, the grass need mowing, etc. It is also my understanding, in some jurisdictions, a landlord, or in this case perhaps a property manager, would need to be licensed by the state.

Should a Trustee be able to take a house with no equity? To what extent does the bankruptcy code require the trustee to maintain the asset? If you have any thoughts of enlightenment on this issue, please let me know below.

Other notable sites beginning with H:

Harassment by Creditors Southgate, Michigan Bankruptcy Attorney, Christopher McAvoy
Hardship Discharge Philadelphia Bankruptcy Lawyer, Kim Coleman
Hearing Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell
Home is Where the Heart Is San Francisco Bankruptcy Attorney, Jeena Cho
Homeowner's Association Dues Marin County Bankruptcy Attorney, Catherine Eranthe
Homestead Colorado Springs Bankruptcy Lawyer Bob Doig
Honest but Unfortunate Debtor Wisconsin Bankruptcy Lawyer, Bret Nason
Honesty Cleveland Area Bankruptcy Lawyer, Bill Balena
Honesty (and Fraud Avoidance) Philadelphia Suburban Bankruptcy Lawyer, Chris Carr
House Northern California Bankruptcy Lawyer, Cathy Moran
House Los Angeles Bankruptcy Attorney, Mark J. Markus
Household New York Bankruptcy Lawyer, Jay S. Fleischman
Household Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein
Household Size Hilo Bankruptcy Attorney, Stuart T. Ing
How Much Is Your Home Worth? St. Clair Shores Michigan Bankruptcy Attorney Kurt OKeefe
Household Median Income Livonia, Michigan Bankruptcy Lawyer, Peter Behrmann
Hearings Birmingham Bankruptcy Attorney, Elizabeth Johnson
Hijacking Christine A. Wilton, Lakewood, Ca Bankruptcy Lawyer