A cattle and tobacco farmer was denied discharge on summary judgment for failing to explain a reduction in value of cattle of nearly $200,000, equipment of nearly $65,000, and tobacco of nearly $150,000 between a balance sheet  and the schedules when the case was refiled under chapter 13 about four years later.  In re Tingle, 2018 Bankr. LEXIS 3654, Case #17-30531, Adv # 18-3001 (Bankr. E.D. Ky, 21 November 2018).   The Debtors had taken out loans from Farm Credit from 2009-2011 secured by a lien on all equipment and crops.  Farm credit obtained a judgment against Debtors for $305,159.82 on 12 September 2014, and Debtors filed for relief under chapter 13 on 7 October 2014, which was dismissed in 2016.   Debtors ceased farming during the chapter 13 case, and liquidated his remaining farming assets after the case was dismissed.  Farm Credit sought to a nondischargeability determination under §523(a)(2)(A), (2)(B), (4), (6) and to deny discharge under §727(a)(3), (4), (5), and (7).   The court heard the matter on summary judgment, and determined that a trial was required on the §523 counts, finding that evidence would have to be taken on these issues.  However, the court granted summary judgment on §727(a)(3) and (a)(5).  Section 727(a)(3) provides that a court shall grant a discharge unless:the debtor has concealed, destroyed, mutilated, falsified, or failed to [*9]  keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor's financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all of the circumstances of the case ... .11 U.S.C. §723(a)(3).  Section 727(a)(5) provides that a court shall grant a discharge unless "the debtor has failed to explain satisfactorily, before determination of denial of discharge under this paragraph, any loss of assets or deficiency of assets to meet the debtor's liabilities ... ." 11 U.S.C. § 723(a)(5).    §727(a)(3) is intended to insure creditors have enough information to ascertain the debtor's financial condition and track his financial dealings with substantial completeness and accuracy for a reasonable period to the present. 1   §727(a)(5) goes on to impose a strict liability when the debtor cannot explain a material loss of assets. 2  The objecting party has the initial burden of proof under these sections to 1) offer evidence of the general nature of the debtor's business or personal financial position, and the types of transactions about which the recorded information is sought, 2) present evidence identifying the recorded information he alleges has been concealed, destroyed, mutilated, falsified or not kept or preserved by the debtor, and 3) show how the missing information might enable the debtor's actual financial condition or business transactions to be ascertained under the circumstances of the case. 3  Once Farm Credit has shown that the missing records are material to understanding the debtor's financial status, the burden shifts to the Debtors to explain the failure to produce such records.   Under §727(a)(5) the plaintiff must identify assets which the debtor at one time owned and claims, in his schedules, to no longer possess.4  Farm credit satisfied this initial burden by showing the large difference between the assets the Debtors showed on the their December 31 2010 balance sheet and the schedules filed in the chapter 13 case filed 7 October 2014.  This showed the value of equipment being reduced from $204,666 to $139,750, cattle from $198,200 to $0, and tobacco from $148,750 to $0 as of the time of the filing of the chapter 13 case; a net decrease of $411,866.  Then, the schedules filed in the chapter 7 show elimination of the remaining value of the equipment.   Such decreases are material as they exceed the amount of the debt.  Further, the assets present the primary assets used in and created by the farming operations, thus requiring records as to such losses are necessary to understand the business.   The Debtors did not specifically respond to the demand for judgment under §727(a)(3) and (a)(5).  Even so, the court must examine the evidence to determine the facts in the light most in favor of the Debtors.  Their prior testimony explaining for the disappearance of assets is of little help as to §727(a)(3).  It is reasonable to expect someone conducting farming operations to maintain records of sales, yet he is unable to produce documentation regarding cattle or crop sales, or transfers of equipment.  Debtor has a duty to preserve such records for a reasonable period of time.  As to §727(a)(5) testimony may not be enough to meet their burden, but must provide some proof there is a triable issue of fact.   Specifically, Debtors showed an expected sale of $43,500 of equipment in the December 31, 2010 balance sheet.  In the bankruptcy Debtors testified that the equipment was sold prior to the filing of the chapter 13 case, but did not provide the date of the sale, the amount of any proceeds, or link the proceeds of the sale to any payment to Farm Credit.  The debtors did explain the decreased value of the equipment after the chapter 13 case by referencing an auction on 4 April 2016 for $84,088.25, and noting that several pieces of equipment valued at $3,500 fell into disrepair.  The court found that the $9,000 remaining discrepancy was not material.   The Debtor's were unable to explain a $114,000 loss from cattle.  The total cattle loss was $198,200.  Debtor explained that approximately one-third of the cattle died in 2011 and 2012, and that he transferred some cattle to his father in 2012 in exchange for help paying expenses.  They produced checks showing the parents paid $17,250 in expenses.  But this only explains $83,250 of the loss.  Debtors also asserted they sold some cattle to stockyards, and that such proceeds went to Farm Credit, but Debtor failed to provide any record of the sales or link any payments to the proceeds of such sales.  Nor does Debtors tax returns show any proceeds received from livestock sales.  Similarly there was $17,992 in losses in tobacco not explained.  Debtor's testimony that 2011 and 2012 were drought years may account for some of the loss value, but they provided no evidence to account for how much of the loss is attributable to a drought.  As the Debtors have no records to explain a $198,000 loss in collateral on a debt that exceeds $315,00; losses of almost two-thirds of the obligation, the amount involved is material.  Debtor did not link deposits shown in the checking accounts to any sale proceeds.  Their assertion that the loan officer assigned the values used for assets in the balance sheet was unavailing as they did not provide any information to show the true value of those assets.  The debtors did not offer sufficient financial records or other evidence to justify the failure to keep, preserve, or produce records, and failed to sufficiently explain losses.  The court denied discharge under §727(a)(3) and (a)(5).1  Turoczy Bonding Co. v. Strbac (In re Strbac), 235 B.R. 880, 882 (B.A.P. 6th Cir. 1999)). ↩2  Baker v. Reed (In re Reed), 310 B.R. 363, 368 (Bankr. N.D. Ohio 2004).↩3 McDermott v. Neff (In re Neff), Case No. 14-33442, Chapter 7, Adv. Pro. No. 15-3026, 2015 Bankr. LEXIS 4361, at *5 (Bankr. N.D. Ohio Dec. 28, 2015)↩4 See Crocker v. Stiff (In re Stiff), 512 B.R. 893, 900 (Bankr. E.D. Ky. 2014).Michael Barnett506 N. Armenia Ave.Tampa, FL 33609-1703https://hillsboroughbankruptcy.com

  The District Court for the Middle District of Florida affirmed the bankruptcy court's finding that a chapter 7 debtor's 2001 tax liability was nondischargeable under 11 U.S.C. 523(a)(1)(C) in Feshbach v. Dep't of Treasury, IRS, 2018 U.S. Dist. LEXIS 193945, Case #8:17-CV-02671-T-02 (M.D. FL, 14 November 2018).   Debtor had filed chapter 7 bankruptcy in June 2011.  While normally taxes that old can be discharged, there is an exception for 'a tax . . . with respect to which the debtor . . . willfully attempted in any manner to evade or defeat such tax.'  §523(a)(1)(C).    Mr. Feshbach was a financial manager and private investor.  He was liable for $1,950,827 in income taxes for the year 1999.  In 2001 he liquidated other securities to pay this tax, but this triggered income recognition taxes in the amount of $3,247,839.   Debtors then made a series of offers in compromise, some of which were denied as the government felt the offers were too low as they were living beyond their means.  Debtors entered into an installment agreement to pay this, and paid a total of $1.2 million through January 2008 after which they defaulted in the agreement.  The court noted that during the period they made these installment payments, 2005-2008, Debtors reported income of $10,459,762, and a total of $13,056,518 in the nine years prior to filing.    From 2001 through the first quarter of 2010 Debtors spent more than $8.5 million on personal and household expenses and charitable contributions; including $721,809 in personal travel, $503,607 on clothing, $370,856 on groceries, $124,226 on entertainment, and over $233,000 on a rented house in Aspen.     To prevail under §523(a)(1)(C) The government must prove by a preponderance of the evidence that 'the debtor engaged in (1) evasive conduct with (2) a mental state consistent with willfulness.'1  More specifically, rather than simply showing nonpayment of taxes, the government must prove that the debtor engaged in affirmative acts to avoid payment or collection of taxes, either through commission or culpable omission.  Excessive spending may qualify as the only affirmative act supporting such evasion of taxes.  A showing of a modest lifestyle would be a defense against such an action. 2    The bankruptcy and the appellate courts both rejected Debtor's argument that their opulent lifestyle was necessary to attract high worth investors for Mr. Feshbach's financial advisory business.  They also found that it was irrelevant that the Debtors were unable to pay off the entirety of the debt; but rather whether they prioritized paying some of their taxes over non-essential expenditures.  As to willfulness, the creditor must show the attempt to avoid tax liability was done voluntarily, consciously, or knowingly and intentionally. 3  There is no requirement to show fraudulent intent.  Discretionary spending on a lavish lifestyle can evidence willful intent.  As noted by one court: "[b]y prioritizing the maintenance of her comfortable lifestyle and repeatedly failing to pay her income taxes," the debtor "knowingly and deliberately ignored her tax obligations."4   While some circuits require a showing that the government must show that the conduct was for the purpose of evading the tax, there is no such requirement in the 11th Circuit.  Finally, the courts concluded that §523(a)(1)(C) does not allow for a partial discharge.  The section itself is unambiguous and absolute.  Once the determination is made that the nondischargeability provision is satisfied, the court cannot go further in determining which portion of the debt can be discharged.  Congress did not use a limiting phrase such as 'to the extent' or impose additional hardship inquiry such as with student loans. 1 In re Mitchell, 633 F.3d 1319, 1327 (11th Cir. 2011)↩2 In re Kight, 460 B.R. 555 (Bankr. M.D. Fla. 2011)↩3 In re Mitchell, 633 F.3d at 1327↩4  Price-Davis v. United States, 549 B.R. 537, 545 (S.D. Fla. 2015)↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703https://hillsboroughbankruptcy.com

There is a very common misconception that filing a bankruptcy case will create a lifetime ban on obtaining new credit. It’s a question that gets asked all the time, and rightfully so. While the relief of bankruptcy may resolve many issues one is dealing with, such as pending law suits, foreclosure, or bank freezes, it […] The post Can I Still Get a Credit Card After Bankruptcy in Pennsylvania? appeared first on .

Each year, the Social Security Administration (SSA) updates its rules for receiving Social Security benefits. This includes the benefits for retirees claiming Social Security, but also for disabled Americans receiving benefits for their conditions. The Pennsylvania and New Jersey disability lawyers at Young Marr & Associates explain some of the changes you may see coming […] The post What Are the Changes to Social Security Disability Benefits for 2019? appeared first on .

Three months later, Mike’s After Bankruptcy Credit Score is 681 Last Friday, Mike sent me this screenshot, showing his after bankruptcy credit score is 681.    A 681 credit score is, barely, considered a “good” score by Experian and CreditKarma.  Mike had filed bankruptcy with me in April and it was approved and done in September.  […] The post Three months later, Mike’s After Bankruptcy Credit Score is 681 by Robert Weed appeared first on Robert Weed.

Filing bankruptcy is a huge decision. And, there are a lot of smaller, yet extremely important choices to be made regarding the process. Should you file bankruptcy? What type of bankruptcy should you file? When should you file bankruptcy? The post Benefits and Disadvantages of Filing Chapter 7 Bankruptcy appeared first on Tucson Bankruptcy Attorney.

Here at Shenwick & Associates, as an adjunct to our bankruptcy and debtor/creditor practices, we also offer credit repair services.  Although the three major credit reporting agencies (Experian, Equifax and TransUnion) (“CR As”) have received positive press recently for implementing the National Consumer Assistance Plan (NCAP) in March (which, among other things, prohibits reporting of medical debts until after a 180-day waiting period and prevents traffic and parking tickets or fines from appearing on credit reports), clients still complain about receiving credit reports that are riddled with errors, particularly after a bankruptcy filing.The first step in the process is to obtain a copy of the credit report from each of the three CR As.   AnnualCreditReport.comallows you to request a free copy of your credit report every 12 months from each CRA.  Credit Karma also provides individuals with free Equifax and TransUnion credit reports. Credit reports need to be carefully reviewed and any erroneous information marked with a clear explanation of what is incorrect.Once we have copies of the credit reports, we can analyze them and prepare letters to the CR As requiring that errors on credit reports be corrected pursuant to federal law and/or New York State law.  CR As are governed by the federal Fair Credit Reporting Act and the New York Fair Credit Reporting Act. These statutes detail the consumers’ rights to dispute information on their credit reports and how long negative information can remain on their reports.Once we mail the CR As a letter disputing the erroneous information, it usually takes about a month for the CRA to investigate the dispute and send the consumer the results of the investigation.  We then advise the client to obtain another credit report and review that credit report for errors. We’ve often found that it takes two or more letters to fully correct erroneous information.  Another option is to add a one hundred word personal statement to your credit report.For more information about our credit repair services, please contact Jim Shenwick.

Here at Shenwick & Associates, our clients are both debtors and creditors. When a person or entity files for bankruptcy protection (such as in the recent Sears bankruptcy), we’re often contacted by creditors who are seeking to protect their claim against the debtor. Usually, this requires the filing of a proof of claim. In this post, we’ll examine some of the basics of filing proofs of claim. 1. In the context of a chapter 7 case, claims and proofs of claims are not usually a factor, since most chapter 7 cases are “no asset cases” (there will be no assets for the chapter 7 trustee to distribute from the debtor’s bankruptcy estate after the debtor’s personal property is exempted). However, if the chapter 7 trustee does find assets in the bankruptcy estate (so creditors can have some recovery on their claims), the chapter 7 trustee will file a notice of assets and request to set claims bar date (which will trigger the bankruptcy court to send a notice to all creditors listed in that bankruptcy case, and proofs of claim must be filed by the “bar date”). 2. In the context of a Chapter 11 case, § 1111(a) of the Bankruptcy Code provides that a proof of claim is deemed “filed” for any claim that appears in the schedules except if it is listed as disputed, contingent or unliquidated. Therefore, to know whether to file a proof of claim, an unsecured creditor must examine the debtor’s bankruptcy schedules to determine how their claim was scheduled, i.e., whether it was listed as disputed, contingent (the claim is dependent on another event) or unliquidated (the claim amount is uncertain). Many creditors will just file a proof of claim when they receive notice of a bankruptcy filing. 3. Therefore, unless a creditor’s attorney or a creditor can obtain the schedules by going to court or through PACER, the better practice is to file a proof of claim as soon as possible. The best practice may be to file a notice of appearance and a proof of claim as soon as an attorney is retained to represent a creditor in a chapter 11 case. If an attorney or a creditor does not file a proof of claim early in a case, then they must file the proof of claim on or before the “bar date.” If the proof of claim is not filed by the “bar date,” then that creditor is barred from receiving a distribution in the case, unless the creditor was listed in the debtor's schedules as not having a claim that’s disputed, contingent or unliquidated.  Creditors should review the instructions for preparing a proof of claim.4. Once the proof of claim is signed, and backup (which will evidence the amount of the claim, such as invoices, a spreadsheet or collateral for the claim if the claim is secured, such as a mortgage) is attached to the proof of claim, the proof of claim should be filed with the bankruptcy court. It can be uploaded to the claims register for the case via ECF (Electronic Case Filing) or sent to the bankruptcy court by Federal Express or another delivery service with a short letter of direction requesting that the clerk file the proof of claim. In cases with many creditors (“megacases”), the bankruptcy court may require that the debtor retain a claims agent to process the proofs of claim instead of the bankruptcy court. Anyone who has questions regarding the filing of proofs of claims or creditors’ rights in bankruptcy cases should contact Jim Shenwick.

By Danielle Furfaro and Gabrielle FonrougeAnother debt-burdened New York City cabbie has committed suicide — the eighth for-hire driver to kill himself in the past year, Taxi and Limousine Commission officials confirmed on Wednesday.Roy Kim, 58, of Bayside, Queens, hanged himself with a belt in his home on Nov. 5, according to the city’s medical examiner’s office. There was no immediate sign of a suicide note. Kim, who had just purchased his taxi medallion last year, was more than $500,000 in debt from the deal and struggling to stay afloat, say friends. “He was in a lot of debt from that,” said fellow driver Young Lee, who made friends with Kim while picking up fares from airports. “For a while he was making money but then it just went slowly down and down and down. All drivers are really struggling.” For-hire drivers have been in a freefall for the past few years, and many blame the epidemic on the unchecked growth of ride-share companies such as Uber and Lyft. The city enacted regulations this summer, but some critics called them too little too late. TLC Commissioner Meera Joshi offered condolences to Kim’s friends and family and promised to look for more ways to help anguished drivers. “This tragedy underscores the importance of finding new ways for government, the industry and lenders to work in unity to address the financial challenges that are weighing so heavily on our licensees,” she said. “Modifying, restructuring and lowering loans would go a long way in providing relief and keeping taxi services available to New Yorkers for years to come.” Taxi driver advocates say the city and TLC need to do more to help. “Owner-drivers have suffered a deep and vicious slide from the middle class into crushing poverty, in a just a few short years,” said NY Taxi Workers Alliance Executive Director Bhairavi Desai. “This crisis can be fixed. The struggle for owner-drivers is reminiscent of the 2008 housing crisis. In that crisis, the industry, government, advocates, and philanthropy came to the table to find solutions. Now, banks and lenders need to work with the city and philanthropy to write off 20 percent of outstanding debts, lower interest rates, and restructure contracts so that no owner-driver has to lose more than 20 percent of their monthly income to the mortgage.” Kim is the fourth cabbie and eighth driver overall to commit suicide since November of last year. In October, Uber driver Fausto Luna jumped in front of an oncoming A train. In June, cash-strapped yellow cabbie Abdul Saleh, 59, hanged himself in his Brooklyn apartment. In May, another yellow cab driver Yu Mein “Kenny” Chow flung himself in the East River off the Upper East Side. In March, Nicanor Ochisor, 65 — another yellow cabbie — hanged himself in his garage in Maspeth, Queens. Corporate black car driver Douglas Schifter, 61, killed himself with a shotgun outside City Hall on Feb. 5. In December, livery hack Danilo Corporan Castillo, 57, wrote a suicide note on the back of a summons he received — and then jumped out the window of his Manhattan apartment. And in November, livery driver Alfredo Perez hanged himself. The news of the suicide comes on the same day that the city council passed a bill introduced by council member Ydanis Rodriguez that will create a commission to look at falling taxi medallion values and come up with ways to help struggling drivers. © 2018 NYP Holdings, Inc. All Rights Reserved.

Many drivers today wonder if they need to be concerned about driving a vehicle after they have had one glass of liquor, wine, or a beer. Most people believe that “one drink” can’t cause them to be subject to a drunk driving charge if they are subject to a traffic stop. Unfortunately, it is not […] The post Most Common Reasons for a DUI Charge in Pennsylvania appeared first on .