What New Bankruptcy Lawyers Need To Know: Beyond The Code

Are 401(k) Contributions Disposable Income Or Not?

By Cathy Moran, Esq. Filed Under: Means test

For a system that is supposed to rehabilitate personal finances and set debtors back on their feet, Chapter 13 nationwide is schizophrenic about on- going retirement savings. We're divided about whether post petition contributions to retirement accounts preclude confirmation of a Chapter 13 plan. Are 401(k) Contributions Disposable Income Or Not? Too many courts, in my opinion, come down … [Continue reading...]

Bankruptcy Law Trumps State Protection For Judgment Lien

By Cathy Moran, Esq. Filed Under: Exemptions

State law insulated a recorded judgment lien from future increases in the homestead exemption. However, bankruptcy law trumps that limitation, says the 9th Circuit in Barclay v. Boskoski. [T]he Bankruptcy Code requires courts to determine the amount of the exemption to whichthe debtor would have been entitled in the absence of the lien at issue The issue was literally a half-million … [Continue reading...]

Finding the Flaws in IRS Tax Liens

By Cathy Moran, Esq. Filed Under: Tax

Tax liens in bankruptcy sometimes don't stand up to close scrutiny, to the delight and profit of bankruptcy debtors. I was reminded of two such instances by the excellent presenters at the NACBA 2021 Workshop. Lien perfection follows state law The secret tax lien attaches to all of a taxpayer's property of any kind, wherever located. However, a tax lien is perfected against other creditors … [Continue reading...]

Marital Adjustment: Everything But The Kitchen Sink

By Cathy Moran, Esq. Filed Under: Means test

Not every expenditure that benefits the debtor's household or his family is a household expense. And, if it's not a household expense, it doesn't get added to CMI in a single spouse bankruptcy filing. That's how the marital adjustment should work. But it's not so simple. Household expense is not an expansive definition During a NACBA presentation on challenges where only one … [Continue reading...]

Brace & Beyond: Joint Tenancy & Transmutation

By Cathy Moran, Esq. Filed Under: Real property, Strictly California

For Californians, the CA Supreme Court's decision in Brace upended our understanding of joint tenancy and community property. For decades, we "knew" that a property couldn't be both joint tenancy and community property . Siberell. And for those of us in the 9th Circuit, we "knew" that when married folks acquired property with title taken as joint tenants, the property was characterized as the … [Continue reading...]

Is Your Law Practice Evolving To Incorporate New Technology

By Jay Fleischman Filed Under: business of law

When the world was forced to adjust to new routines in March 2020 due to the global pandemic, I was instantly struck by how little my professional life changed. I'd worked remotely for over a decade, and my systems and procedures didn't change. Sadly, the same couldn't be said for many of my fellow consumer bankruptcy lawyers. I watched many of them struggle with remote videoconferencing … [Continue reading...]

Siegel, Claim Preclusion & Me

By Cathy Moran, Esq. Filed Under: lawyer skills

I've been having nightmares about the 9th's Circuit's decision in Siegel for 20 years. Broad strokes, Siegel (143 F.3d 525 (9th Cir. 1998) holds that a filed claim in a no asset bankruptcy case to which no one objects is entitled to preclusive effect in subsequent litigation by reason of Bankruptcy Code §502. In Siegel, the debtor filed a no-asset Chapter 7; nonetheless, his lender filed … [Continue reading...]

How To Bankruptcy-Proof A Divorce Settlement

By Cathy Moran, Esq. Filed Under: Family Law in Bankruptcy

Chapter 13 bankruptcy can discharge non support obligations associated with a divorce that are non-dischargeable in Chapter 7. That's worth repeating: any marital settlement agreement or court judgment that calls for payment or indemnity by one spouse to the other in the future is potentially vulnerable to a subsequent bankruptcy filing by the obligor-spouse. While obligations deemed to be … [Continue reading...]

The Complex World Of Interspousal Claims In Bankruptcy

By Cathy Moran, Esq. Filed Under: Family Law in Bankruptcy

Traps and grey areas abound when one spouse files bankruptcy during or after a divorce. Inattention by the non-filing spouse can result in the bankruptcy discharge of spousal claims that might actually be nondischargeable. One of those traps involves the differing treatment in bankruptcy of debts to a former spouse incurred in the course of a divorce (Bankruptcy Code §523(a)15)) and debts for … [Continue reading...]

Lien Avoidance In Bankruptcy: The Questions You Need To Answer

By Cathy Moran, Esq. Filed Under: Exemptions

Black letter law says liens pass through bankruptcy unchanged. But the better statement adds a single word: unless. Liens survive bankruptcy intact unless....unless you take some action to void them. One tool to void liens lives in §522(f). Its location in Chapter 5 tells you that it's available to any individual debtor who is entitled to claim exemptions. The more you know about the … [Continue reading...]

Lenders Can’t Hide From Misapplication of Mortgage Payments

By Cathy Moran, Esq. Filed Under: Rule 3002.1

Who knew 20 years ago how apparently hard it is to account for money paid to you? Even if accounting for money was your business? Today's raft of mortgage accounting issues were not ones I foresaw when I became a bankruptcy lawyer. Yet every day we encounter cases where the foreclosure notice follows the "all current" filing at the close of a Chapter 13 case. The addition of Section … [Continue reading...]

Between the 1st and the 15th: Is Mortgage Current?

By Cathy Moran, Esq. Filed Under: Real property

The no man's land between the mortgage due date and late payment is a persistent trouble spot for Chapter 13 practitioners: Are there arrears when the case is filed during the grace period and the payment made before it was late? In Borre, Judge Ronald Sargis of ED CA said no. He held that the payment was not in default until the expiration of the grace period, and where the debtor made … [Continue reading...]

Your Duty of Loyalty And Married Clients

By Cathy Moran, Esq. Filed Under: Counseling clients, Family Law in Bankruptcy

Are your loyalties divided When a married couple books a bankruptcy consultation, you have an immediate problem: There be dragons, as early map makers helpfully provided. Because, as a lawyer friend of mine says: Anytime there are two people sitting across from you, you have a conflict of interest. That pithy expression has stuck with me and made me continually aware … [Continue reading...]

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