What New Bankruptcy Lawyers Need To Know: Beyond The Code

But She’s Not a Creditor!

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

An unliquidated tort cause of action is just as much a "claim" for bankruptcy purposes as a credit card bill. Not all creditors send monthly bills I reminded my rookie lawyer friend. My friend's fact pattern was a bit more complex than the more common unresolved auto accident: an exspouse was complaining that a title company mix-up left the property the ex got in the property … [Continue reading...]

Newbie Summer Reading: Johnson v. Home State Bank

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

After a Chapter 7 discharge, is there anything left of a mortgage to reorganize in Chapter 13? That's the question that the Supreme Court resolved in Johnson v. Home State Bank, the next on our summer reading list for new bankruptcy lawyers. Believe it or not, it was 12 years after adoption of the 1978 Code before we got an answer as to what a "claim" was. Johnson mortgaged the farm, fell … [Continue reading...]

Lien on Phantom Property Upsets Debt Totals

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Merely having a lien doesn't make a lender a secured creditor for Chapter 13 eligibility purposes. The draft bankruptcy schedules I was reviewing for a rookie bankruptcy lawyer listed a mortgage loan but the plan didn't mention the proposed treatment of the loan. Turns out, according to this link, it was because the house that secured the loan had gone to the ex wife in the pending divorce. Cue … [Continue reading...]

Clients to avoid: those with bankruptcy-adverse spouses

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Do you scope out the world view of your prospect's non filing spouse? I didn't and I'm sorry. The client was full of guilt about the financial situation and kept insisting at our first meeting that "no one should be hurt but him" as a result of the financial predicament leading to bankruptcy. That situation included back taxes on a joint return. Now the non filing wife is spitting mad … [Continue reading...]

A Bankruptcy Exemption Planning Basic

By Cathy Moran, Esq. Filed Under: Exemptions

The most elemental exemption planning tool is to save exempt assets while consuming non exempt assets. It doesn't require last minute transfers or fundamental alterations in the way assets are held. It simply requires attention to which pocket the debtor pays bills from. Clients who receive Social Security, disability, or other forms of income that is exempt by reason of its source can use … [Continue reading...]

Who Needs To Learn More Bankruptcy Law?

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Since the Fundamentals of Bankruptcy course came out, I've talked with a number of new bankruptcy attorneys who report that they are waiting for later offerings, since they've already filed a number of petitions and feel they have that aspect of the practice down pat. One lawyer reported that he had filed 10 cases, so was missing nothing on this subject. While that could be true, somehow I … [Continue reading...]

Bankruptcy Lawyers Needn’t Predict The Future

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Do you feel exposed when bankruptcy clients ask about how filing will impact their ability to get credit post bankruptcy? One of the nice things about having practiced bankruptcy law as long as I have is the ability to draw on the outcomes of many prior cases. For years, I've had a patter about credit after bankruptcy, and, in general, life after bankruptcy. Clients imagine that filing … [Continue reading...]

Client Horror Story Contains An Asset Of The Bankruptcy Estate

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Do you recognize your client's tale of woe with prior professionals or not-so-professionals as signs of an incipient asset? A new bankruptcy lawyer was telling me about his client's dealings with a loan modification lawyer he called a fraudster. That relationship resulted in a near foreclosure on the client's home while the prior lawyer was saying "don't worry". My friend filed a 13 that was … [Continue reading...]

Having “The Talk” With Bankruptcy Clients

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Are you prepared to boldly go where no outsider has gone before and challenge the client about keeping the house? It seems as taboo a subject as the mechanics of sex, but we as bankruptcy lawyers should be saying openly that maybe keeping the house is not the right route. We like to deliver for our clients just what they tell us they want. But more and more, I think an effective … [Continue reading...]

What, Me Worry?

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Do you think I worry about these issues too much? the rookie bankruptcy lawyer asked me. The issue was exemption planning and the question was whether instituting an IRA and funding it for the current year before filing was a transfer, and if so, would it be objectionable to a Chapter 7 trustee. We went several rounds of email question and answer before she became comfortable with my view that … [Continue reading...]

Newbie Summer Reading: Dewsnup

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Ever wonder why we can't strip off unsecured consensual liens in Chapter 7? Meet Mrs. Dewsnup who filed Chapter 7 and sought to reduce the claim of a junior secured lender on a piece of Utah farmland to the value of the portion of the land available to secure the mortgage. Mrs. Dewsnup went 0-4, losing at every stop from bankruptcy court to Supreme Court. At issue were two provisions of … [Continue reading...]

Bankruptcy Estate & The Realtor’s Open Escrow

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

How can bankruptcy trustee's demand the debtor's real estate commission from escrows open when the bankruptcy case is filed? Twice this month, I've watched debtors and their counsel surprised by the turnover demand of Chapter 7 trustees for the proceeds of a real estate transaction pending when the case commencement, but closing weeks after the filing of the case. As we see here ,what the … [Continue reading...]

When Delaying The Discharge May Benefit The Debtor

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Ever read, much less used, FRBP 4004(c)(2)? Have to say I'd done neither until Judge Christopher Klein mentioned it at a bankruptcy seminar earlier this year. He told the group that he had learned about it from a pro per who cited it to him in a dispute in a Chapter 7. So what's this obscure rule? Subsection(c)(2) allows the debtor to move to delay entry of the discharge in his case. The … [Continue reading...]

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