Another Fairfax County Family Wastes Thousands with Freedom Debt Relief. I filed a bankruptcy case this week for Alexander and Alina yesterday.   They had been enrolled with Freedom Debt Relief for over five years–the longest enrollment I ever heard of. And according to Freedom Debt Relief, they had only four monthly payments to go […] The post Another Family Wastes Thousands with Freedom Debt Relief by Robert Weed appeared first on Robert Weed.

Depending on your situation, bankruptcy may be the best way to avoid foreclosure and keep your home. Before filing bankruptcy, you should step back and assess your individual situation. Just because something works for someone else does not mean it is the best option for you. Each person’s situation is unique to their specific circumstances. Some things you should consider before filing bankruptcy: The post Is Bankruptcy the Best Way to Avoid Foreclosure and Keep Your Home? appeared first on Tucson Bankruptcy Attorney.

A debtor was liberated from an objection to discharge where the deadline was extended to January 15, 2018, which was Martin Luther King, Jr. Day and the objection was not filed until the next day.    Smart-Fill Management Group, Inc. v. Froiland (In re Froiland), 18-1006 (Bankr. W.D. Tex. 7/6/18).    While most practitioners are familiar with the rule which extends deadlines that fall on a Saturday, Sunday or national holiday, there is an important caveat:  the rule only applies to deadlines stated in days or a longer unit of time.   Where a deadline is set for a date certain, there is no extension.What Happened The Debtor filed bankruptcy on August 7, 2017.   The deadline for objections to discharge was set based on sixty days after the first date set for the first meeting of creditors.   The deadline was extended twice.   The second extended date was set for January 15, 2018.   January 15, 2018 was Martin Luther King, Jr. Day, a federal holiday.    The creditor filed a complaint objecting to discharge on January 16, 2018 and the Debtor moved to dismiss the complaint as being untimely.The Court's RulingJudge H. Christopher Mott noted that Rule 9006(a) once stated that "In computing any period of time prescribed by or allowed by these rules, by the local rules, by order of court, or by any applicable statute, . . . (t)he last day of the period so computed shall be include, unless it is a Saturday, Sunday, or a legal holiday . . . "    In Chapman Investment Associates v. American Healthcare Management (Matter of American Healthcare Management),  900 F.2d 832 (5th Cir. 1990), the Fifth Circuit held that this rule extended a deadline set on a date specific which expired on a Saturday, Sunday or legal holiday.   (Note: I worked on the brief for the losing side arguing that the specific date controlled).    In 2009, Rule 9006(a) was amended to provide: When the period is stated in days or a longer unit of time . . . include the last day of the period, but if the last day is a Saturday, Sunday, or legal holiday, the period continues to run until the end of the next day that is not a Saturday, Sunday, or legal holiday.To make it perfectly clear, the Advisory Committee stated that it was rejecting American Healthcare Management. The time-computation provisions of subdivision (a) apply only when a time period must be computed. They do not apply when a fixed time to act is set. The amendments thus carry forward the approach taken in Violette v. P.A. Days, Inc., 427 F.3d 1015, 1016 (6th Cir. 2005) . . . and reject the contrary holding of In re American Healthcare Management, Inc., 900 F.2d 827, 832 (5th Cir. 1990) . . . . If, for example, the date for filing is “no later than November 1, 2007,” subdivision (a) does not govern. But if a filing is required to be made “within 10 days” or “within 72 hours,” subdivision (a) describes how that deadline is computed. Judge Mott noted that  "An Advisory Committee Note accompanying a federal rule is highly persuasive and afforded substantial weight in interpreting federal rules, even if it is not binding."  Opinion, p. 7.   As a result, Judge Mott found that the complaint was untimely and dismissed it.As I mentioned above, I worked on American Healthcare Management and unsuccessfully argued that the date is the date.   Until I read this opinion, I was not aware that the rule had been amended and had assumed that any deadline falling on a Saturday, Sunday or holiday was automatically extended.   This opinion is a warning that the rules we grew up with do not remain static.  In some cases they can change with serious consequences.    The new rule makes sense in the age of e-filing.  In the old days, the courthouse had to be open to file a document.   In some cases, courts had overnight dropboxes but there was always the risk that the pleading would be file-marked for the next day when the clerk actually received it.  With e-filing, the clerk's office is open for business 24/7.   There is nothing to prevent an enterprising lawyer from filing a document at 11:59 p.m. on Christmas Day.    There are two practice tips to be gleaned from this opinion.   First, in setting specific dates in scheduling orders and the like, make sure not to set a deadline on a Saturday, Sunday or legal holiday.  Second, if a deadline ends up falling on one of these dates and you don't want to work on a weekend or holiday, ask opposing counsel for an extension before the deadline expires.  

By Dan RivoliCity taxi drivers’ patience meter is running out. The New York Taxi Workers Alliance rallied outside City Hall on Tuesday as cabbies said they want new regulations to boost wages and the values of yellow taxi medallions. The driver group has advocated for a cap on for-hire cars and to make the meter fare the minimum rate industry wide and give app drivers 80% of trip fare. The city Taxi & Limousine Commission, meanwhile, proposed a minimum wage standard so app drivers could make $17.22 an hour. But the taxi drivers group opposed that, arguing that price would be a ceiling. Bhairavi Desai, director of the alliance, said the focus should be on City Council regulations. “There’s finally momentum in the City of New York to properly regulate this Wall Street darling,” Desai said, referencing Uber. “We don’t want the Taxi & Limousine Commission to play interference with our momentum.” TLC spokeswoman Rebecca Harshbarger said the agency is working with the City Council and the industry to address drivers' economic challenges. The rally followed the release of an over-$1 million Uber ad highlighting its service in the outer boroughs. “As policymakers contemplate new industry regulations, they must ensure that people who have been ignored by yellow taxi and underserved by mass transit aren’t punished,” Uber spokeswoman Alix Anfang said. Councilman Barry Grodenchik, who has taxi drivers in his Queens district, said there’s a new sense of urgency from Council Speaker Corey Johnson to add new regulations to the industry, in light of six taxi driver suicides. “I want it done sooner, rather than later,” Grodenchik said. “My district can’t wait and I don’t think that there’s dilly-dallying going on. It's a very complicated situation.” “The Council is deeply concerned with the emotional, mental, and financial pain drivers in this industry are currently experiencing and remains committed to finding a legislative solution,” Jacob Tugendrajch, a spokesman for Johnson, said. “The Council continues to work on legislation that would protect drivers, increase fairness and combat congestion.” Inder Parmar, an Uber driver since 2013 who has cousins and neighbors who drive yellow cabs, backs efforts in the City Council to set a standard fare across the industry. “Patience is running out,” Parmar said. “City Council, I have a request to them to act on it as soon as possible. This way, we do not see any other driver committing suicide.”Copyright 2018 New York Daily News.

Ruling on an issue of great concern to the debtor's bar, the 9th Circuit reversed the district court's affirmance of the bankruptcy court's summary judgment in favor of a condominium association holding that post-petition assessments were nondischargeable in a chapter 13 case.  The  debtor had stopped making payments to the association in 2009, and the association commenced foreclosure  proceedings and the debtor moved out of the condo.  She filed chapter 13 bankruptcy in March 2011, providing for surrender of the condominium unit.   The association filed an arrearage claim of $18,780.39 noting continuing assessments at $388.46/month.  Prior to confirmation the association cancelled the foreclosure sale as the mortgage lender paid the outstanding assessments.  The unit sat unoccupied until February 26, 2015 when the mortgage lender foreclosed.  The Debtor received a discharge under chapter 13 on 24 July 2015.  In April 2015 the association filed an adversary proceeding to determine the dischargeability of the post-petition assessments accruing between March 2011 (when the case was filed) and February 2015 (when the unit was sold at foreclosure).  The bankruptcy court granted summary judgment to the association, finding that the assessments arose at the time of their assessment and were an incidence of legal ownership of the burdened property.  The district court affirmed.  The 9th Circuit found no circuit court cases on point.  Contrasting views in pre-BAPCPA opinions can be found in Matter of Rosteck, 899 F.2d 694 (7th Cir. 1990) (finding that assessments were an unmatured contingent debt under the code that arose prepetition upon purchase of the property, and therefore dischargeable) and In re Rosenfeld, 23 F.3d 833 (4th Cir. 1994) (finding that the obligation to pay cooperative association assessments ran with the land and arose each month from the debtor's continued post-petition ownership of the property, and therefore nondischargeable).   The 9th Circuit followed the Rosteck rationale, determining that the association obtained two state law remedies under the declaration of condominium: an in rem  lien and right to foreclose, and an in personam right to bring suit against the property owner.  While the in rem rights are not discharged in chapter 13, the pre-petition in personam obligation is.  The 9th Circuit noted the intent of bankruptcy to grant debtors a fresh start, and the broad discharge in chapter 13. 11 U.S.C. §101(12) defines 'debt' as 'liability on a claim'.  §101(5)(A) defines claim as a 'right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.  Such definition is intended to encompass all of a debtor's obligation, no matter has remote or contingent.  Thus, the obligation to pay the assessments is a debt since it creates a right to payment.  The fact that future assessments may be a contingent and unmatured form of the debt does not alter the analysis.  The debtor's in personam obligation to pay assessments arose pre-petition when the unit was purchased.  The obligation remains contingent and unmatured conditioned upon continued ownership of the property, but unmatured contingent debts are still dischargeable under 11 U.S.C. 1328(a).  The exception to discharge for post-petition association assessments, 11 U.S.C. 523(a)(16) is absent from the list of discharge exceptions in §1328(a), and therefore dischargeable in chapter 13 cases.  The court assumes that the exclusion of this section from the exceptions to discharge in chapter 13 was intentional.  Nor is allowing discharge of such assessments a violation of the 5th Amendments 'Taking's clause, since the association retains it's in rem rights against the property.Michael Barnett www.hillsboroughbankruptcy.com

Unfortunately, there’s a widespread myth that filing for Chapter 7 bankruptcy in Pennsylvania will cause you to lose your house, your car, and your other personal belongings. This harmful myth has likely stopped thousands of people from filing – but in most cases, it simply isn’t true. On the contrary, most people who file Chapter […] The post If I File a Chapter 7 Bankruptcy in Pennsylvania, Can I Keep my Home, Car, or Other Personal Items? appeared first on .

President Donald Trump has selected D.C. Circuit Judge Brett Kavanaugh to be his second Supreme Court nominee.    A post describing his bankruptcy opinions would be very short.  I could find only one opinion authored by Judge Kavanaugh arising out of bankruptcy court and that case dealt with equitable subrogation under the laws of the District of Columbia.   Smith v. First American Title Ins. Co. (In re Stevenson), 789 F.3d 197 (D.C. Cir. 2015). This is not surprising given the D.C. Circuit's footprint.   The D.C. Circuit has one bankruptcy court with one bankruptcy judge.  By contrast, the Fifth Circuit has nine districts staffed by 26 judges.   The Slim Experience of Judge Kavanaugh with Bankruptcy and the FDCPA Judge Kavanaugh also was on the panel which decided several unremarkable decisions on cases originating in bankruptcy court.    In Capitol Hill Group v. Pillsbury, Winthrop, Shaw, Pittman, LLC, 569 F.3d 485 (D.C. Cir. 2009), Judge Kavanaugh was on a panel that held that malpractice claims against a firm that represented a chapter 11 debtor were subject to "arising in" jurisdiction and that the bankruptcy court's order granting the firm's fee application was res judicata.    He was also on panels that decided two cases against the Pension Benefit Guaranty Corporation which arose from bankruptcy filings.    United Steel Workers v. Pension Benefit Guaranty Corp., 707 F.3d 319 (D.C. Cir.  2013); Davis v. Pension Guaranty Benefit Corp., 571 F.3d 1288 (D.C. Cir. 2009).There is also another case where Judge Kavanaugh could have been exposed to some arguments about how bankruptcy courts are structured.   Ali Hamza Ahmad Suliman Al Bahlul v. United States, 840 F.3d 757 (D.C. Cir. 2016)(en banc) was a case brought by a member of al Qaeda who sought to challenge his conviction for conspiracy by a military tribunal.   One of Al Bahlul's arguments was that he was entitled to be tried by an Article III tribunal.   Judge Kavanaugh's concurrence relied on the long history of using military commissions to try enemy war criminals.   However, Judge Millett's concurrence concluded that structural Article III challenges could be forfeited by failure to raise them below.  In making this argument, he discussed the Supreme Court's opinion in Wellness International Network, Ltd. v. Sharif, 135 S.Ct. 1932 (2015).   You can see that I am reaching where the most exciting discussion of bankruptcy that I can find is a concurrence by another judge in a case that did not itself involve bankruptcy.Judge Kavanaugh also appears to have very little experience with the Fair Debt Collection Practices Act.    He was on the panel that decided Jones v. Dufek, 830 F.3d 523 (D.C. Cir. 2016).   This case held that a collection letter sent by a law firm did not misrepresent that an attorney was meaningfully involved where it contained a prominent disclaimer stating that the attorney was acting as a debt collector and did not threaten legal action.   (My partner Manny Newburger argued this case).Judge Kavanaugh and the CFPB One area where Judge Kavanaugh does have a lot of experience is the Consumer Financial Protection Bureau.   He authored an opinion holding that the CFPB was unconstitutional because it was headed by a single director who could only be removed for cause.    PHH Corp. v. Consumer Financial Protection Bureau, 839 F.3d 1 (D.C. Cir. 2016).   However, that opinion was reversed by the en banc D.C. Circuit leaving Judge Kavanaugh in dissent.    PHH Corp. v. Consumer Financial Protection Bureau, 881 F.3d 75 (D.C. Cir. 2018)(en banc).  He also dissented from an opinion which held that a company could not obtain a preliminary injunction to block a civil investigative demand by the CFPB.   Doe Co. v. Cordray, 849 F.3d 1129 (D.C. Cir. 2017).   Judge Kavanaugh would have ruled that "the Company as a regulated entity has standing to raise its free-standing constitutional claim (that the structure of the CFPB is unconstitutional) and the claim is ripe."    He wrote two other opinions dealing with standing to challenge the CFPB, one for the majority and one in dissent.    In State National Bank of Big Spring v. Lew, 795 F.3d 48 (D.C. Cir. 2015), he wrote that a Texas bank regulated by the CFPB had standing to challenge the constitutionality of the CFPB's structure as well as the recess appointment of its director.   However, he found that a bank did not have standing to argue that a competitor's designation as "too big to fail" gave it a competitive advantage.   In Morgan Drexen, Inc. v. Consumer Financial Protection Bureau, 785 F.3d 684 (D.C. Cir. 2015), he dissented from an opinion that found that an attorney who contracted with a debt settlement company did not have standing to challenge the bureau's structure.  He wrote: The Bureau is therefore regulating a business that Pisinksi engages in.  That is enough for standing.   We have a tendency to make standing law more complicated than it needs to be.   When a regulated party such as Pisinksi challenges the legality of the regulating agency or of a regulation issued by that agency, "there is ordinarily little question that the party has standing" as the Supreme Court has indicated. The Dissents of Judge Kavanaugh One important qualification for a Supreme Court justice is the ability to dissent.   A dissent allows a losing justice to unleash his fire and fury on the majority while positioning himself to fight another day.   I found 26 dissents by Judge Kavanaugh.   Many of them were more interesting than his majority opinions.His most consequential dissent was in Heller v. District of Columbia, 670 F.3d 1244 (D.C. Cir. 2011). In an opinion written by future Supreme Court justice Ruth Bader Ginsberg, the D.C. Circuit ruled that the Second Amendment did not establish an individual right to keep and bear arms. Judge Kavanaugh dissented and said that it did.   The Supreme Court agreed with Judge Kavanaugh.In United States Telecom Association v. FCC, 855 F.3d 381 (D.C. Cir. 2017), Judge Kavanaugh took on net neutrality.   A panel of the D.C. Circuit found that the FCC had authority to craft the Open Internet Order known as net neutrality.   Judge Kavanaugh dissented from the decision to deny en banc review.  He argued that Congress had not granted the FCC the power to enact the rule and that it violated the First Amendment.   He wrote:The FCC's 2015 net neutrality rule is one of the most consequential regulations ever issued by any executive or independent agency in the history of the United States.   the rule transforms the internet by imposing common-carrier obligations on internet service providers and there by prohibiting internet service providers from exercising control over the content they transmit to consumers.  The rule will affect every internet service provider, and every internet consumer.  The economic and political significance of the rule is vast.The net neutrality rule is unlawful and must be vacated, however, for two alternative and independent reasons.  Of some interest to Austinites is his dissent in FTC v. Whole Foods Market,  548 F.3d 1028 (D.C. Cir. 2008).(Whole Foods is based in Austin).   The FTC sought an injunction to block a merger between Whole Foods and Wild Oats.  The District Court denied the injunction and the majority reversed.  Judge Kavanaugh would have affirmed the denial of the injunction (meaning that the merger could go forward) because he felt that the relevant market was all supermarkets (of which Whole Foods had a small market share) as opposed to "organic supermarkets" (in which it was a behemoth).  Whole Foods later agreed to divest some Wild Oats locations and then was itself acquired by Amazon.Judge Kavanaugh also objected to OSHA's attempt to cite Sea World for having a dangerous workplace in connection with its killer whales.  In pointing out that many occupations are full of danger, he wrote:Many sports events and entertainment shows can be extremely dangerous for the participants.  Football.  Ice hockey.  Downhill skiing.  Air Shows.  The circus.  Horse racing.  Tiger taming.  Standing in the batter's box against a 95 mile per hour fastball.  Bull riding at the rodeo.  Skydiving into the stadium before a football game.  Daredevil motorcycle jumps.  Stock car racing.  Cheerleading vaults.  Boxing.  The balance beam.  The ironman triathalon.  Animal trainer shows.  Movie stunts.  The list goes on.But the participants in those activities want to take part, sometimes even to make a career of it, despite and occasionally because of the known risk of serious injury. . . . The broad question implicated by this case is this:  When should we as a society paternalistically decide that the participants in these sports and entertainment activities must be protected from themselves--that the risk of significant physical injury is simply too great even for eager and willing participants?     SeaWorld of Florida, LLC v. Perez, 748 F.3d 1202, 1216-17 (D.C. Cir. 2014)(Kavanaugh, Dissenting).This is perhaps his most lyrical dissent and it is also the one where he breaks from a formal writing style and abandons complete sentences for emphasis. In Fogo de Chao (Holdings), Inc. v. United States Department of Homeland Security, 769 F.3d 1127 (D.C. Cir. 2014), he dissented from a decision which found that Brazilian chefs had "specialized knowledge" which would entitle them to L1-B visas to work in a Brazilian steakhouse.  He faulted the majority for refusing to accord deference to agency findings.   He also agreed with the agency that "one's country of origin, or cultural background, does not constitute specialized knowledge under this immigration statute for purposes of being a chef or otherwise working in an ethnic bar or restaurant in the United States."   Fortunately, the majority allowed the Brazilian chefs into the country and diners were able to eat expensive meals prepared by authentic culinary artists.In Lorenzo v. SEC, 872 F.3d 578 (D.C. Cir. 2017), Judge Kavanaugh thought that the SEC had gone too far in punishing an employee of a registered broker-dealer for forwarding false statements prepared by his boss.   The employee was the director of investment banking at the firm.  However, Judge Kavanaugh's dissent made it sound as though he was a mere clerical employee:Suppose you work for a securities firm.  Your boss drafts an email message and tells you to send the email on his behalf to two clients.  You promptly send the emails to the two clients without thinking too much about the contents of the emails.  You note in the emails that you are sending the message "at the request" of your boss.  It turns out, however, that the message from your boss to the clients is false and defrauds the clients out of a total of $15,000.  Your boss is then sanctioned by the Securities and Exchange Commission (as is appropriate) for the improper conduct.What about you?  For sending along those emails at the direct behest of your boss, are you too on the hook for the securities law violation of willfully making a false statement or willfully engaging in a scheme to defraud? Finally, Judge Kavanaugh dissented from an opinion allowing a former Congressional employee to sue her employer for racial discrimination and retaliation.   Howard v. Office of the Chief Administrative Office of the United States House of Representatives, 720 F.3d 939 (D.C. Cir. 2013).  LaTaunya Howard wanted to sue the Office of the Chief Administrative Officer of the United States House of Representatives for racial discrimination and retaliation under the Congressional Accountability Act.   The District Court dismissed the suit for lack of jurisdiction based on the Speech and Debate Clause of the Constitution which provides that "for any Speech or Debate in any House, shall not be questioned in any other Place."   The majority concluded that the Speech or Debate clause did not provide immunity to legislators if the case could proceed without inquiring into legislative acts or the motivation for legislative acts.   Judge Kavanaugh disagreed.   He wrote:Once we conclude (as we must here) that the employer's asserted reason for the decision involves legislative activity protected by the Speech or Debate Clause, I believe (unlike the majority opinion) that the case must come to an end.  I do not see how a plaintiff employee such as Howard can attempt to prove either that she in fact adequately performed her legislative duties or that her performance of legislative activities was not the actual reason for the employment action without forcing the employer to produce evidence that she did not perform her legislative activities and that her poor performance of legislative activities was the actual reason for the employment action.  In the case, the stated reason for demoting and firing the employee had to do with her communications regarding the legislative branch's budget and her refusal to perform budget analysis for Congressional committees.   To my unschooled eye, it seems to me that Judge Kavanaugh took a Constitutional protection of Speech or Debate and expanded it to any activity related to the legislature.What Does This All Say About Judge Kavanaugh?While I haven't done a deep dive into his jurisprudence it certainly seems to me that there are some patterns.   When it comes to economic regulation or consumer protection, Judge Kavanaugh wants to keep federal agencies in their place.   Whether it is questioning the structure of the CFPB or the authority of the FCC to promulgate net neutrality rules, Judge Kavanaugh insists on crystal clear constitutional and statutory authority. He also takes what he considers to be a commonsense approach in restricting the actions of the SEC, the FTC and OSHA.  However, when a decision involves national security, such as the military commission case or the immigration case, he is much more deferential to the government.   What does this mean for bankruptcy?   Would he view bankruptcy courts as engaging in economic regulation and seek to strictly limit their powers?   Would he be skeptical of rules promulgated by the United States Trustee?   Based on the record presented, I can raise the questions but I don't have clear answers.    

  In In re: Tyrone A. Conard & Joyce L. Conard, Debtors. Tyrone A. Conard & Joyce L. Conard, Plaintiffs, v. Internal Revenue Serv., Defendant., No. 14-10093-KHK, 2018 WL 3339607, (Bankr. E.D. Va. July 6, 2018) the chapter 7 debtors filed an adversary proceeding to determine that tax liabilities for joint tax returns owed for 2003 through 2009 were discharged as to Mrs. Conard.  The court had granted summary judgment to the IRS as to Mr. Conard's liability.  Mr. Conard was the director for the Virginia/Maryland/D.C. region for American Income Life Insurance Company.  The debtors maintained a strict division of responsibility for family finances, with Mrs. Conard responsible solely for managing household expenses.  When additional funds were needed for the household, she asked her spouse for money, which was either supplied or payment on bills was delayed.   While worked at his firm for several years, she had no role in tracking the finances of the business, acting solely as a receptionist.  She ceased employment in 2006.  Prior to Mr. Conard opening the business, Mrs. Conard was responsible for gathering materials and hiring a professional to insure all tax returns were filed.  When Mr. Conard went into business for himself, he undertook all responsibility for their taxes and his spouse was not capable of handling the more complicated business transactions.  Mrs. Conard solely gathered  statements regarding household expenses for such returns.      Mrs. Conard was aware returns were not being filed on time, but as she was signing requests for extensions.  She did not read the returns when filed, and did not know how long extensions could last.  She also was aware of problems with the IRS, but was assured by her spouse that he was seeking professional help to resolve the issues.  She was not aware of the amount owed, and believed his assertion that they were on a payment plan.  She received the 30 or so notices sent by the IRS between 2004 and 2009 but gave them to her spouse without reading them, again taking her spouse at his word that he was handing the taxes.   The IRS asserted a liability of $337,513.87 for 2004-2009 (excluding interest and penalties).   None of the returns were filed on time, and no estimated tax payments were made, with only $4,932 total paid on the liability as of the date the bankruptcy was filed.  The IRS complained of discretionary, non-essential purchases during the period including an $86,281 Mercendex SL500, a $49,590 2012 BMW 640i, a $50,613 Buick Lacross owned simultaneously with the BMW, a Harley motorcylke purchased in 2008 or 09 for $4,000, $48,000 in tuition for their son, membership in a bot club, $4,210 expenditures at Saks Fifth Avenue, Whole life policies with a $7,932.67 cash surrender value, weekly golf trips,  a vacation to the Bahamas (partially paid by American Income), two large screen televisions for $3,130, and $6,900 of new furniture for the home.  Under section 523(a)(1)(C) of the Bankruptcy Code, a discharge in bankruptcy “does not discharge an individual debtor from any debt for a tax or customs duty with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax.” 11 U.S.C. § 523(a)(1)(C).   This encompasses both a conduct requirement (that debtor sought to evade or defeat the tax liability) and a mental state requirement (that such conduct was done willfully).  The IRS is required to prove by a preponderance of the evidence that Mrs. Conard knew taxes were due and not paid, and that she chose not to pay them.   Mrs. Conard admitted knowing that the taxes were not filed on time for the years in question, and admitted that they made the expenditures described above during and after the years the taxes were incurred.  Therefore the IRS has satisfied the conduct requirement of §523(a)(1)(C).     In order to satisfy the mental state requirement, the IRS must prove that the debtor (1) had a duty to file income tax returns; (2) knew that they had such a duty; and (3) voluntarily and intentionally violated that duty. 1  Lavish spending coupled with knowledge of tax debts is an indicated that the debtor acted willfully in evasion of tax liabilities.  Payment of discretionary expenses instead of paying tax debts known to be old amounts to the voluntary and intentional violation of the debtor's duty to pay taxes.  However, Mrs. Conard presented credible testimony that she believed her husband's assertions that he was paying the taxes.  Her testimony established both that she had no control over her husband's expenditures, and that she did not know the the taxes were not being paid.  Finding that the IRS presented no evidence to show Mrs. Conard intended not to meet her tax obligations, the court found that the IRS failed to meet it's burden of proof on the mental state requirement, and that the taxes were discharged as to Mrs. Conard.  1 United States v Clayton, 468 B.R. 763, 771 (M.D.N.C. 2012) quoting United Sate v. Fretz (In re Fretz), 244 F.3d 1223, 11330 (11) Cir. 2001)↩Michael Barnett www.hillsboroughbankruptcy.com

The June 2018 New York City Taxi & Limousine Commission (TLC) sales results have been released to the public. And as is our practice, provided below are James Shenwick’s comments about those sales results.1. The volume of transfers rose from May. In June, there were 41 taxi medallion sales.2. 36 of the 41 sales were foreclosure sales, which means that the medallion owner defaulted on the bank loan and the banks were foreclosing to obtain possession of the medallion. We disregard these transfers in our analysis of the data, because we believe that they are outliers and not indicative of the true value of the medallion, which is a sale between a buyer and a seller under no pressure to sell (fair market value).  Another transfer was due to a partnership split, which also does not reflect fair market value and which we have also excluded from our analysis.3. However the large volume of foreclosure sales (approximately 88%) is in our opinion evidence of the continued weakness in the taxi medallion market. 4. The four regular sales ranged from a low of $172,000 (one medallion), another at $175,000, another at $180,000 and a high of $200,000.5.  Accordingly, the median value of a medallion in June was $177,500.Please continue to read our blog to see what happens to medallion pricing in the future. Any individuals or businesses with questions about taxi medallion valuations or workouts should contact Jim Shenwick at (212) 541-6224 or via email at jshenwick@gmail.com.

An individual who incurred excessive debt due to a failed business and divorce came to us for a consultation.  He was concerned not only with the amount of debt he had, but also about how that debt would impact his credit rating and ability to borrow money in the future.   We asked him to prepare the following information for the initial consultation: (1) the amount of money he owed creditors, including any pending lawsuits; (2) the property or assets that he owned; and (3) an after tax monthly budget, starting with the amount of money he made each month after taxes less his ordinary and necessary living and work expenses.His initial consultation took about an hour, and we discussed how he should deal with the debt from the failed business and divorce. His choices were either workouts with creditors or a Chapter 7 bankruptcy filing.  After reviewing the information supplied by the client, we agreed that workouts with creditors was a better way to proceed then a Chapter 7 bankruptcy filing. He made a list of all his creditors, and after reviewing his budget, determined how much of his monthly cash flow he could dedicate to paying his creditors. He contacted each of his creditors, and with advice from James Shenwick, he was able to enter into workouts with all of them.These workouts generally involve either a single payment of a discounted lump sum to the creditor or payments of money over time against the monies due to the creditor (installment payments). The timeline for these payments to creditors ranged from six months to 18 months.Another factor that must be considered in doing workouts with creditors (also known as out-of-court settlements) is the issue of  “relief of indebtedness income” under § 108 of the Internal Revenue Code(IRC).  Section 108 of the IRC provides that if an individual borrows money and does not fully repay a creditor, then he or she is enriched by the amount of debt not repaid to the creditor, which is considered taxable income. In round numbers, the IRC provides that if an individual borrows $100,000 and repays $50,000, then he or she must report $50,000 of income to the IRS and pay tax on that income. Generally, institutional creditors like credit card companies will report this relief of indebtedness income to the IRS via a 1099-R.This client’s story continues with more good news! After repaying his creditors, he was concerned about his credit score (FICO score) and his ability to borrow money in the future to buy real estate or to lease or buy a car.  He obtained a credit report from Credit Karma, and upon review, we noticed several errors. Using a federal and state law known as The Fair Credit Reporting Act, he retained us to contact those creditors and the credit reporting agencies to correct the errors. It took some time and effort, but in approximately three months we were able to correct those errors, and the good news is that he reported to us that he applied for and obtained a new credit card, which showed that he was now creditworthy!  He was very excited about this news and thrilled to have reduced his debt and maintained his ability to obtain credit. Individuals with similar issues should contact Jim Shenwick at (212) 541-6224 or jshenwick@gmail.comfor a consultation regarding their options for dealing with debt. Jim