What New Bankruptcy Lawyers Need To Know: Beyond The Code

Taxes & Timing: Calculating Outcomes for Bankruptcy Debtors

Bankruptcy lawyers regularly evaluate the dischargeability of taxes when deciding when to file a client's bankruptcy case. At base, the 3 year rule, the 2 year rule, and the 240 day rule routinely drive timing of a bankruptcy. But as we approach the end of the tax year, a client’s current year tax situation becomes another moving part in the “when do we file” analysis, unrelated to tax … [Continue reading...]

All Bankruptcy Roads Pass Through Chapter 5

By Cathy Moran, Esq. Filed Under: Before filing, Start Here

Regardless of the ultimate destination, all bankruptcy roads run through Chapter 5. A few bankruptcy cases are derailed there. Because Chapter 5 provisions tell you what comes into the bankruptcy estate, what can be exempted, and what can be changed using Chapter 5. Sometimes the results tell you that bankruptcy is not the right choice for your client, at least at this time. In my … [Continue reading...]

Do You Know These Exceptions To Discharge Not In The Bankruptcy Code?

By Cathy Moran, Esq. Filed Under: Discharge Dischargeability

Not all exceptions to discharge in bankruptcy are found in the Bankruptcy Code. Inconvenient, but true. The first two non-Code exceptions to discharge that I encountered in practice were HEAL loans, dischargeable only if denying the discharge would be "unconscionable." (42 U.S.C. sec. 292f(g)); and a scholarship to attend a U.S. Military Academy. Turns out that my 2011 version of … [Continue reading...]

Sole Proprietorship In Chapter 7 In Trustee’s Cross Hairs

By Cathy Moran, Esq. Filed Under: Business bankruptcy

Why would a bankruptcy trustee shut down a sole proprietorship business with no value? That question comes up again and again from newish bankruptcy lawyers who can't imagine that a trustee would demand the closing of the debtor's proprietorship business. After all, goes the argument, the debtor needs to make a living and the business has no non-exempt value. The trustee's … [Continue reading...]

One Trait Makes A Bankruptcy Lawyer Great

By Cathy Moran, Esq. Filed Under: Counseling clients, lawyer skills

One trait makes a bankruptcy attorney stand out. Bankruptcy forms promote the view that filing a case is just recording what the debtor owns and owes today. If all you focus on is the here and now, you can assemble a bankruptcy petition. But if there is one, uniform failing in average bankruptcy lawyers, it's that they confine their attention to the here and now-what does the … [Continue reading...]

Rescuing A Troubled Chapter 13: The Unseen Threat

By Cathy Moran, Esq. Filed Under: Chapter 13

We all get sucked in, at some time, to trying to rescue a Chapter 13 bankruptcy case gone bad. Dismiss and refile is often an appealing strategy. But, make sure that you don't let a bad situation get worse. Get your arms around Bankruptcy Code §109(g). When only a do-over will do, don't wait around. No payments for months The debtor came to me for help when the trustee moved for … [Continue reading...]

What Bankruptcy Counsel Forgot

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

How do you forget capital gains taxes? More easily than you would think, apparently. When I see the same blunder twice in two months and the price tag to the client approaches $100,000, it's time to write about it. It surfaced in two Chapter 11 cases for individuals where I have subbed upon conversion to Chapter 7. My first reaction was to write this as a "see, you shouldn't take … [Continue reading...]

Crushing Tax Change For Injured Consumers

By William Purdy Filed Under: Bankruptcy Practice, Opinionated, Tax

The "Tax Cut Act" actually increased the tax on consumer recoveries. Under the new tax law, most damage awards a consumer recovers stand to go, in large part, to the IRS. So even if you are successful in vindicating your legal rights, the expenses of getting the award aren't deductible from the gross award. The taxing authorities end up getting a large hunk of the total … [Continue reading...]

Delay Division of Community Property At Peril of Bankruptcy

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

Put off the division of community property in a marital dissolution at your peril. Hesitate and you risk all of the community property being swept up in a bankruptcy by the other spouse. And you'll have little control where community property assets fall. Community property is all in The threat begins with the bankruptcy law provision that all the community property becomes … [Continue reading...]

700 Words Yield $21K

By Cathy Moran, Esq. Filed Under: Attorneys fees

Have I got a story for you. A rousing tale of schedules, hearings, frustrations, and ultimately fortunes, traceable to a good story in the fee application. Maybe that's a bit overblown, but I'm telling this story with a purpose. Good stories lead to fair compensation for bankruptcy attorneys. Fee applications aren't hard Filing fee applications is central to sustaining an above-average … [Continue reading...]

Parker: Sweet Decision On Stay Violations

By Cathy Moran, Esq. Filed Under: Chapter 13

I don't know just what makes Parker such a treat for me, but it delivers multiple thrills to my bankruptcy lawyer heart. It's a stay violation case with a BIG sanctions award. It's a clearly, simply written opinion that lays out the circuit law on multiple issues. It hits hard at HOA hubris. It analyzes when a claim arises. It looks at surrender and vesting, mysteries near and dear … [Continue reading...]

List It Or Lose It: When Actual Knowledge Isn’t Enough

By Cathy Moran, Esq. Filed Under: Bankruptcy Practice

To actually effect abandonment of unadministered assets in a bankruptcy case, the asset in question must appear on Schedule A/B. That's the hard teaching of Stevens v. Whitmore from the 9th Circuit BAP. A passing reference to an asset in the SOFA isn't sufficient. Neither was the fact the trustee explicitly knew about the claim then subject to litigation. If the claim wasn't scheduled … [Continue reading...]

Why Your Bankruptcy Client Doesn’t Understand You (And How To Fix the Problem)

By Cathy Moran, Esq. Filed Under: lawyer skills, Start Here

Bankruptcy terminology, so familiar to lawyers, stymies clients. Even common English words seem to flumox our clients. We are a pair, divided by our common language. Even without legal jargon, we talk past each other. Words at war How do we misunderstand each other? Let me count the ways: If you've seen more than three clients, you've experienced the fact that, between … [Continue reading...]

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