In In re: TODD J. MCNALLY, Debtor. MICHAEL CARNS, Appellant, v. TODD J. MCNALLY, Appellee., No. 17-1367, 2018 WL 2974411 (10th Cir. June 13, 2018) the 10th Circuit affirmed a bankruptcy finding of sufficient notice to a creditor who had brought a §523(a)(3)(B) action asserting it was not noticed of the bankruptcy, and that the debt should have been nondischargeable.  The Debtor had sent the notice to the address of the creditor's attorney, who had taken Debtor's deposition 4 years earlier rather than to the creditor's address as shown on a judgment against the creditor.  The bankruptcy case was discharged without objection, but the creditor sought to reopen the case and deny the discharge and dischargeability of his debt after a collection agency notified him that the debtor had filed bankruptcy.  The bankruptcy court denied the creditors request for a non-dischargeability judgment finding that there was no evidence that the address of the attorney was incorrect or that mail was returned from the attorney.   After affirmance by the B.A.P., the creditor appealed to the 10th Circuit.      The 10th Circuit quoted the relevant staute: "[a] Chapter 7 debtor cannot discharge a fraud debt that is “neither listed nor scheduled ... in time to permit ... [a creditor’s] timely filing of a proof of claim and timely request for a determination of dischargeability of such debt ... unless [the] creditor had notice or actual knowledge of the case in time for such timely filing and request.” 11 U.S.C. § 523(a)(3)(B)."  Id. at 2.    In bankruptcy,  “[n]otice requires that a debtor use reasonable diligence under the circumstances to inform a creditor of the bankruptcy petition, but a bankrupt is not required to exhaust every possible avenue of information in ascertaining a creditor’s address." 1  Notice to a creditor's attorney may be imputed to the creditor. 2  The 10th Circuit followed this reasoning, noting no evidence that the attorneys representation had ceased, nor any intervening event that should have caused the debtor to question the use of the attorney's address to notify the creditor.  Finding that the factual conclusions by the bankruptcy court as to notice were not clearly erroneous, it affirmed the lower court's findings.   The creditor also sought to revoke the discharge on the basis that the debtor did not disclose his interest in two books he wrote, a currency trading account, and a former business, as well as a couple of transfers.  The 10th Circuit initially agreed with the bankruptcy court's determination that the creditor failed to exercise due diligence in seeking to deny the discharge before the discharge was entered.  It also found that the creditor failed to challenge the lower court's finding of no material intent to defraud, instead only challenging the finding of materiality.   Even as to materiality, the court agreed with the bankruptcy court.  Materiality requires a showing that the relevant information was something that creditors and the trustee reasonably would have regarded as significant in identifying the assets of the estate that could be liquidated and used to satisfy claims.  As no such showing was made, the bankruptcy court's finding was not clearly erroneous.1 In re Herman, 737 F.3d 449, 453 (7th Cir. 2013)↩2 Id. at 454.↩Michael Barnett www.hillsboroughbankruptcy.com

By John Aidan ByrneNew York City’s struggling yellow cabbies are facing the auction block. A record 139 taxi medallions will be offered for sale in bankruptcy auction this month — the latest sign that a deluge of ride-sharing apps like Uber are squeezing cabbies out of business and deeper into debt, as well as pinching the incomes of for-hire drivers, according to analysts. The medallions will be auctioned for a fraction of their original value — some likely having cost their owners as much as $1 million or more apiece. A minimum of 20 will be sold, the auctioneers say. The collection is part of the 13,587 licensed medallions required to operate New York City’s fleet of iconic yellow cabs. Back in 2013, a medallion fetched a whopping $1.3 million.Today, prices have plunged to between $160,000 to $250,000 each, as a wave of ride-sharing vehicles floods the market. Last year, 46 medallions were reportedly sold at an auction in Queens for an average price of $186,000, snatched up by Connecticut-based MGPE, a hedge fund presumably seeking yield on a distressed asset. For-hire vehicles on New York’s congested streets have surged from 50,000 in 2011, when Uber entered the New York market, to about 130,000 today. Not surprisingly, earnings for yellow cabbies have fallen off the cliff — full-time average annual earnings, before taxes, are down from $45,000 as recently as 2013, to as low as $29,000 today, according to some estimates. Uber drivers, who number about 60,000 on New York’s streets at any given time, are also taking a hit from increasing competition. Their estimated average annual earnings, pre-tax, today hover between $30,000 and $34,000. Many individual for-hire drivers earn less than an hourly worker at McDonald’s. “Uber has worked hard to grow the transportation pie, ensuring that all New Yorkers can get a ride in minutes, particularly in neighborhoods outside of Manhattan that have been long ignored by yellow taxis and underserved by public transit,” said Uber in a statement. “The majority of our trips are happening in the Bronx, Staten Island, Queens and Brooklyn.”© 2018 NYP Holdings, Inc. All Rights Reserved.

  In Internal Revenue Serv. v. Murphy, No. 17-1601, 2018 WL 2730764, (1st Cir. June 7, 2018) two of the three judges on a panel of the First Circuit (including Justice Souter, sitting by designation) affirmed lower court rulings finding that an IRS employee willfully violated the discharge injunction by issuing levies against insurance companies with which the debtor did business.  The debtor had filed a chapter 7 bankruptcy listing $546,161.61 in tax obligations for the years 1993-2003.  The discharge was entered in February 2006.  No objection to discharge or dischargeability was filed.     The IRS took the position that the taxes were nondischargeable under 11 U.S.C. 523(a)(1)(C) asserting debtor had willfully attempted to evade the taxes.  After notifying debtor of it's claim, in February 2009 the IRS issued levies against several insurance companies with which debtor did business.  In August 2009 debtor commenced an adversary proceeding to determine that the taxes through 2001 had been discharged.  The bankruptcy court granted summary judgment to debtor (the IRS having submitted no admissible evidence to the contrary) declaring the taxes to have been discharged.   In February 2011 debtor filed a complaint against the IRS asserting a claim under 26 U.S.C. 7433(e) for civil damages for unauthorized collection actions for the IRS willfully violating the discharge injunction by its earlier actions against the insurance companies.  The bankruptcy court also granted summary judgment for debtor on this claim.  In rejecting the IRS's claim that it reasonable believed the debts were nondischargeable under §523(a)(1)(C), the court found that the earlier ruling collaterally estopped the IRS from asserting that the debt was nondischargeable, whether it knew the debts were discharged, and whether it took actions which violated the discharge injunction.  On appeal the district court reversed, finding that the bankruptcy court should have considered a mental impairment subsequently discovered as to the Assistant U.S. Attorney in the case, but agreed with the bankruptcy court that a creditor's good faith belief as to a right to property was not relevant to a determination of whether a violation was willful.  On remand the parties agreed to $175,000 damages conditioned upon the IRS losing subsequent appeals as to the willfulness issue.  The district court affirmed the decision of the bankruptcy court on remand, and the IRS appealed to the 1st Circuit.  The 1st Circuit first examined the terms of 26 U.S.C. 7433(e).If, in connection with any collection of Federal tax with respect to a taxpayer, any officer or employee of the Internal Revenue Service willfully violates any provision of section 362 (relating to automatic stay) or 524 (relating to effect of discharge) of title 11, United States Code (or any successor provision), ... such taxpayer may petition the bankruptcy court to recover damages against the United States. (emphasis added).The section directly links willfully to §362 on the automatic stay, and §523 on discharges.    The automatic stay is one of the fundamental protections of the bankruptcy law.  §362(h) was enacted to give debtors a private cause of action to an individual injured by a willful violation of the stay.  This set a less stringent standard than the prior caselaw requiring maliciousness or bad faith.  Prior to enactment of §7433 the great majority of courts held a party commits a willful violation under §362(h) when it knows of the automatic stay and takes an intentional action that violates the stay. The cases and treatises show this was the standard meaning at the time §7433(e) was enacted.    A discharge order under §524(a) generally relieves a debtor of all prepetition debts, and permanently enjoins creditor actions to collect discharged debts.  By 1998 the courts were using §105 to enforce the discharge injunction, and were generally applying the same standard as in §362 to determine whether discharge violations were willful.  While there are fewer cases defining the willfulness standard under §524, the court found that in enacting §7433 Congress intended to apply the same standard for stay violations and discharge injunction violations.  The court also noted that IRS manual presumes the same standard for discharge and stay violations.  Finally, the court rejected the argument that as §7433(e) constitutes a waiver of sovereign immunity, it must be more narrowly construed.  Willful violation had an established meaning at the time of the enactment of the statute.  By 1998 the tax code permitted the IRS allowed the IRS to raise the good faith belief not as a defense to liability, but as a means to limit the recovery to actual damages.  While this decision does not require the IRS to seek a determination as to the dischargeability of a debt, if it's determination is rejected by the court it will face the consequences of its actions.Michael Barnett www.tampabankruptcy.com  

Call it the Uber effect: A record 139 New York City taxi medallions will be up for sale in bankruptcy auction this month as cab drivers continue to struggle to compete with ridesharing apps. According to The New York Post, bidders will be able to snag some of the medallions for a fraction of their original value — some might have cost their owners as much as $1 million or more apiece. Back in 2013, a medallion went for $1.3 million. Today, however, prices have dropped to between $160,000 to $250,000 each due to increasing competition from ridesharing apps such as Uber and Lyft. Last year, 46 medallions were reportedly sold at an auction in Queens for an average price of $186,000, bought by Connecticut-based hedge fund MGPE. This month, a minimum of 20 will be sold. Rideshare vehicles in New York have risen from 50,000 in 2011, when Uber first entered the New York market, to currently about 130,000. As a result, earnings for yellow cabbies have dropped, with full-time average annual earnings, before taxes, down from $45,000 as recently as 2013, to as low as $29,000 today. Earlier this year, a report revealed that Uber and Lyft have become more popular than yellow and green cabs in NYC. Analysis of data from the Taxi and Limousine Commission from blogger Todd Schneider found that in February 2017, ride-hailing services made 65 percent more pickups than taxis did. And the two companies combined now make more pickups per month than taxis did in any month since the data began being analyzed in 2009. “Over the past 4 years, ride-hailing apps have grown from 0 to 15 million trips per month, while taxi usage has only declined by around 5 million trips per month,” wrote Schneider. The data also shows that ridesharing services have been utilized more than taxis in the outer boroughs since the beginning of 2016 — and that gap has dramatically widened in recent months. In fact, Uber and Lyft are ten times more popular than yellow and green taxis combined in the outer boroughs. © 2018 What’s Next Media and Analytics.  All rights reserved.

The Supreme Court resolves about eighty cases each year, ranging from major constitutional issues to smallish questions of statutory interpretation. The three bankruptcy cases decided this term fall into the latter category, answering narrow statutory questions.Supreme Court Sinks Safe HarborThe first case decided was Merit Management Group, LP v. FTI Consulting. Inc., Case No. 16-784 (2/27/18). This case asked whether a shareholder of a business could be protected from a fraudulent transfer action where the funds passed through a third-party escrow agent which happened to be a bank. Section 546(e) of the Bankruptcy Code exempts from recovery "a transfer made by or to (or for the benefit of) … a financial institution...in connection with a securities contract...." In this case, the funds to purchase the stock flowed from the purchaser through two financial institutions to the stock seller. The statutory issue was whether the payment was protected where it flowed through two financial institutions that were merely intermediaries and did not receive the funds for their own benefit.Writing for a unanimous court, Justice Sotomayor held that the relevant transfer to consider was the one that the Trustee sought to avoid. Since neither the buyer nor the seller was a financial institution, the safe harbor did not apply.   This decision prevents parties from insulating themselves from potential liability for a fraudulent transfer by routing the proceeds through a financial institution which does not have an interest in the transaction.How Do You Review a Non-Statutory Insider?Next, the Supreme Court weighed in on the narrow issue of the proper burden of proof when deciding whether a transferee was a non-statutory insider under 11 U.S.C. § 101(31).  U.S. Bank, N.A. v. Village at Lakeridge, LLC, No. 15-1509 (3/5/18).  In order to achieve a cram-down of a chapter 11 plan, a debtor must obtain the consent of a least one impaired class of creditors without counting votes of insiders. The class that accepted the plan consisted of a claim held by the debtor's sole owner, clearly an insider. One of the directors of the insider creditor  (Bartlett) offered to sell the claim to a retired surgeon (Rabkin) with whom she had a romantic relationship (more on this later). Rabkin agreed to purchase the $2.76 million claim for $5,000.00 and agreed to accept the plan. The list of defined insiders does not include a person in a romantic relationship with a director of an insider. However, the definition of "insider" states that the term "includes" the defined categories, meaning that the list is not exhaustive. U.S. Bank, which objected to the plan, argued that the romantic doctor was a non-statutory insider. The Bankruptcy Court found that the doctor was not an insider because he purchased the claim as a speculative investment after conducting due diligence. The Ninth Circuit affirmed applying a test that looked at (1) the closeness of the relationship and (2) whether the transaction was negotiated at less than arms-length. The Circuit found that the Bankruptcy Court's determination that the transaction was negotiated at arms-length was not clearly erroneous and affirmed.The Supreme Court accepted the case, not on the question of the correct legal test to apply, but whether the Court of Appeals had applied the proper standard of review. Factual determinations must be upheld unless they are clearly erroneous while legal conclusions are reviewed on a de novo basis.Justice Kagan, again writing for a unanimous court, found that it took a three step process to answer the question.    The first step was purely legal, to determine the appropriate legal test to apply.   The second step was purely factual, to determine the “basic” or “historical” facts relevant to the legal test.   The final step was to apply the historical facts to the legal test.   If factual issues predominated, the final step would be reviewed on the clear error standard, while de novo review would apply if legal issues dominated.The Supreme Court denied cert on whether the Ninth Circuit applied the right legal test, which was the more interesting question.   While applying the historic facts to the legal test is a mixed question of law and fact, it ultimately depends on its component parts—the legal test and the facts.   Since the legal test was not at issue, what remained was the Bankruptcy Court’s fact-finding which is reviewed for clear error.   The Ninth Circuit’s clear error review may have been assisted by the following testimony from Bartlett, the party offering the claim for sale:Q:        Okay.  I think the term has been a romantic relationship—you have a romantic relationship?A:        I guess.Q.        Why do you say I guess?A.        Well, no—yes.Justice Kagan observed that “One hopes Rabkin was not listening.”It is not clear why the Supreme Court accepted this case and this question since the answer was rather obvious.   Justice Sotomayor, joined by Justices Kennedy, Thomas and Gorsuch, had the same concern.   Justice Sotomayor said that “if that test is not the right one, our holding regarding the standard of review may be for naught.”  Because the Court did not accept the legal standard question, Justice Sotomayor did not provide an answer either.   However, she did suggest that the lower courts might want to spend some time thinking about what the legal test should be.   Justice Kennedy, in his own concurrence, went further.   He said, “The Court’s holding should not be read as indicating that the non-statutory insider test as formulated by the Court of Appeals is the proper or complete standard to use in determining insider status.”   He also suggested that the Bankruptcy Judge may have erred in concluding that the transaction was made on an arms-length basis since the claim was not shopped to other parties.Thus, what we have is a rather unnecessary explication of how to decide mixed questions of law and fact combined with a statement by four Justices encouraging the lower courts to look for a different standard than the one articulated by the Ninth Circuit.    As a result, this opinion is more interesting for what it didn’t decide than for what it did.Supreme Court Says Get It in Writing            Finally, in Lamar, Archer & Cofrin v. Appling, No. 16-1215 (6/4/18), the Court decided whether a false statement about a single asset constituted a statement of financial condition which must be in writing to form the basis for a non-dischargeable debt.  11 U.S.C. §523(a)(2)(B) carves out an exception from the general rule that debts arising from fraud are non-dischargeable.  It provides that a statement “regarding the debtor’s or an insider’s financial condition” must be in writing in order to give rise to a non-dischargeable debt.                The case involved a client who got behind on paying his lawyers.   When the lawyers threatened to withdraw, he told them that he was expecting to receive a tax refund of approximately $100,000 and would use those funds to bring the lawyers current and pay future fees.   The trusting lawyers accepted his promise and soldiered on.   However, it turned out that the tax refund was closer to $60,000 and the client spent the money on business expenses.            When the debtor filed bankruptcy, the unhappy law firm sued to prevent the debt from being discharged, claiming that the client made a false representation to gain their continued services.   The Bankruptcy Court ruled that a statement regarding a single asset, in this case, the tax refund, was not a statement regarding financial condition, and found the debt to be non-dischargeable.   The Eleventh Circuit disagreed.            Justice Sotomayor, writing once more for a unanimous court, found that a statement regarding a single asset qualified as regarding the debtor’s financial condition.   Relying on grammar, she found that the term “regarding” in the statute broadened the clause such that it referred to both the object, statements of financial condition, and items related to the object.   She also relied on the fact that cases interpreting similar language under the Bankruptcy Act had arrived at the same result.   Since Congress did not change the verbiage, it must have intended to adopt the prior jurisprudence.                The lesson here is that a verbal statement about a debtor’s assets is not worth the paper it isn’t written on.   If a creditor wants to rely on a statement about a debtor’s assets, it should get it in writing.   In the case of the law firm, a simple email asking the debtor to confirm that he was expecting to receive a $100,000 tax refund (as opposed to the paltry $60,000 refund), if acknowledged by the client would have sufficed.  

When faced with significant debt, one kind of response that people give is to deny the situation. They might not look closely at the numbers. They might leave their bills or other correspondence unopened and shoved to the side. Their spending habits might continue unchanged. Denial serves a temporary benefit, providing stress relief. But the debts still accumulate, bringing you closer to the time when you might have to face serious consequences, such as frozen bank accounts, garnished wages, and legal action. Furthermore, without a clear idea about the situation or your options, you might opt for debt solutions that put you in deeper trouble. Assessing your debt with open eyes A recent article from U.S. News & World Report offers some tips for paying  off more than $100,000 in debt. Even if your debt hasn’t reached this amount, the advice they offer in the article is still useful. One of the themes that emerges in the article is to assess your situation in a clear-eyed way. For example, the first step they advise you to take is to make a detailed, thorough account of all the debts you owe, and to whom. Include information such as interest rates and due dates. You then have to take a close look at your monthly budget and see what expenses you can cut. You have to also assess your spending habits. For example, if you make irresponsible use of credit cards, admit to the problem. Don’t deny it or try to downplay it. Similarly, make a frank assessment of every solution you’re considering. For example, if a creditor or a debt settlement company offers you terms that seem favorable, question it; look at the fine print and do background reading to help ensure you won’t get cheated (the article warns against debt settlement companies in particular). If you live in Ohio, don’t hesitate to contact an experienced Piqua, Ohio bankruptcy attorney. One of the benefits of working with an attorney is that you’ll receive advice on what to do and get a clear analysis of your financial and legal situation. The post Piqua, Ohio Bankruptcy Attorney Urges You To Assess Your Debt with Eyes Wide Open appeared first on Chris Wesner Law Office.

Social Security Disability (SSD) is available through the Social Security Administration (SSA).  Similar to the benefits you can receive at retirement, SSD is available to help people with serious injuries continue to receive monthly payments to help support themselves and their families.  The SSA looks at a series of factors when deciding how you receive benefits, how much you receive, and whether you qualify as disabled.  The Pennsylvania and New Jersey disability lawyers at Young, Marr, and Associates explain these factors and how Social Security uses them to determine your disability benefits. Factors for Social Security Disability Programs The Social Security Administration has two different programs that fit under the umbrella of “disability.”  The first program is Social Security Disability Insurance (SSDI).  This is the primary program that people use when receiving disability and is usually the program people are referring to when they say “disability.”  Alternatively, Supplemental Security Income (SSI) is also available as a need-based program. SSDI is based on your prior work history.  If you have enough years of “work credits” from paying FICA taxes, you should be able to qualify for SSDI benefits.  Stay-at-home spouses who may not have a history of working can qualify through their spouse’s work record, and many disabled children can also qualify using their parents’ record.  Even if the working spouse or parent is deceased or you were recently divorced, Social Security may still give you benefits based on their work history. Talk to an attorney about whether you have sufficient work credits to qualify for disability.  If you don’t, you may still be able to get benefits through the other disability program or through private disability insurance. Factors for Calculating Disability Benefit Amounts When receiving SSDI, your disability benefits are calculated based on your previous income.  There is a complicated calculation involving multiple percentages, but it is important to get a glimpse of how the SSA calculates your benefits. First, they will calculate an “indexed” wage called the “average indexed monthly earnings” (AIME).  This means they will compare your wages from various years to the national wage index to account for the differences across various years to find your average monthly income.  Next, they will take a certain percentage of your wage and set that as your base benefit amount, called the “primary insurance amounts” (PIA).  Lastly, they will adjust this depending on the age at which you claim disability.  They may also cap you at the highest maximum benefit, which is $2,788 per month in 2018. Lastly, your benefits may be reduced if you receive other benefits for your disability.  One common “offset” that reduces your disability benefits comes from receiving state workers’ comp. benefits alongside disability.  Talk to an attorney about receiving other benefits that might lower your disability payments. Factors to Qualify for Disability The last set of factors that are vital in your disability claim are factors for qualifying as “disabled.”  The Social Security Administration considers you disabled if you suffer from a condition that prevents you from working.  The condition must also be long-term and significantly “severe.” To determine whether or not you are able to work, the SSA looks at whether you can earn enough money to support yourself by whether you can perform “substantial gainful activity” (SGA).  “[S]ignificant physical or mental activities” make the activity “substantial,” while “gainful” refers to your ability to make money with those activities.  In 2018, non-blind individuals are considered “gainfully” employed if they can make more than $1,180 per month, and blind individuals have a higher threshold of $1,970.  If your disability prevents you from making this much money, you might qualify as disabled. Your disability must also be a long-term issue to receive disability payments.  The SSA includes the length of the disability as part of its definition and requires that the disability you face is either expected to last for a year or more or end in your death.  Shorter disabilities may not qualify, but you should still talk to a disability attorney about your options. The severity of your disorder is also a vital factor.  The SSA has a list of conditions that they typically consider to be severe enough to qualify for disability.  However, this list is not the deciding factor.  Instead, your condition must be a severe instance of one of these conditions.  The factors that make a condition “severe” are usually included in the SSA’s definition of the disorder to help clarify what Social Security looks for in a disability.  If your condition is not on the list, you may still be able to get disability if your condition is as severe as another condition on the list. PA and NJ Disability Lawyers Offering Free Consultations on Social Security Cases If you or a loved one is unable to work because of a severe disability, consider discussing filing for disability with the help of one of our experienced disability attorneys.  The PA and NJ Social Security Disability lawyers at Young, Marr, and Associates represent disabled individuals and their families and work to get their disability applications approved, their denials reversed, and their benefits maximized.  For a free consultation, call our law offices today at (215) 515-2954 if you’re in PA or (609) 557-3081 if you’re in NJ. The post What Are the Factors Social Security Uses in Determining Disability? appeared first on .

  The bankruptcy court in In re Muhammad, No. 17-11935-7, 2018 WL 2473826 (Bankr. W.D. Wis. June 1, 2018) was faced with an assertion of discharge violation when the state department of children and families intercepted a $3,400 tax refund toward an overpayment of $5,520 in a foodshare program.  The state asserted that the overpayment constituted a nondischargeable domestic support obligation.   Under section 523(a)(5), a debt “for a domestic support obligation” is nondischargeable. The Code defines “domestic support obligation” as a debt that is: (A) owed to or recoverable by—...    (ii) a governmental unit;(B) in the nature of ... support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child’s parent, without regard to whether such debt is expressly so designated;(C) established ... before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of—... (iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit, andD) not assigned to a nongovernmental entity.  The disputed issue is whether the obligation was in the nature of support.  One line of cases holds that such overpayments are in the nature of support if they the debt provided support for the debtor’s spouse and children, was owed to a governmental unit, and had been determined owing by a governmental unit.1   A Second line of cases reached took a contrary position, finding that since the debt was owed to the government, it did not benefit herself or her children; therefore could not have been 'support' as contemplated by the statute.2    The court took a middle approach, agreeing with Rivera v. Orange Cnty. Prob. Dep’t, 832 F.3d 1103 (9th Cir. 2016).  Here, the 9th Circuit finding that a claim by the probation department for the costs of supporting a minor was not a domestic support obligation since the probation department was not part of the family support infrastructure.  Collier supports this interpretation An interpretation more faithful to the purpose of the domestic support obligation definition would require (1) that the debt have a nexus to failure to meet the debtor’s familial support obligations and (2) that the determination by a governmental unit be one made by a governmental unit that carries out the functions of determining family support.  3    Under the Ratliff line of cases, virtually any  overpayment could be termed a domestic support obligation, whereas the Halbert line could encourage dishonesty and mishandling government resources.  It also renders §101(14A)(A) meaningless as it relates to debts 'owed to or recoverable by government units.'   By requiring some relationship to the government support infrastructure it limits the debts covered to those related to a government agency involved in the welfare of families.     The court found a separate issue with the claim in this case.  The overpayment was based on support for the debtor and her grandchild.   §101(14A) is limited to debts owed to or recoverable by a spouse, former spouse, or child of the debtor.  Looking at the plain meaning, 'child of the debtor' does not include grandchildren.  Therefore the Court ruled that the obligation was not a domestic support obligation.  The court ordered refund of the intercepted tax refund, and held the debt dischargeable; but denied fees and costs since the debtor represented herself.1 Wis. Dep’t of Workforce Dev. v. Ratliff, . 390 B.R. 607, 616 (E.D. Wis. 2008).↩2 Halbert v. Dimas (In re Halbert), 576 B.R. 586, 598 (Bankr. N.D. Ill. 2017).↩ 3 2 Collier on Bankruptcy ¶ 101.14A.↩Michael Barnett www.tampabankruptcy.com

When debtors file Chapter 13, all disposable income is paid into the plan and used by the trustee to offset plan expenses. Only regular income, not considered disposable, is the income used to establish and make plan payments and pay reasonable expenses, such as: housing, food, and transportation. Tax refunds are considered disposable income and, typically, must be paid into the plan. The post How Does Bankruptcy Affect Your Tax Refund? appeared first on Tucson Bankruptcy Attorney.

  In Lamar, Archer & Cofrin, LLP v. Appling, No. 16-1215, 2018 WL 2465174 (U.S. June 4, 2018) a unanimous court concluded that the exclusion in §523(a)(2)(A) regarding statements regarding a debtor's financial condition from the fraud non-dischargeability ground applied to an oral statement regarding a single asset of the debtor.  Thus, in order for a statement regarding a single asset to support a nondischargeability count under §523(a)(2), it must be in writing thereby meeting the standard of §523(a)(2)(B).  The case involved a  dispute between a client (Appling) and his law firm (Lamar).  When Appling got behind on his bills to the firm on a business litigation matter, he asserted that he would pay them a $100,000 tax refund which he indicated was sufficient to pay current and future bills.  In exchange for this promise the firm continued to represent Appling.  Instead Appling paid the refund, which was about $60,000, for other bills.  Then Appling again told Lamar that he was still waiting for the refund in order to induce Lamar to complete the representation.   When the bill was never paid, Lamar obtained a judgment against Appling, and Appling filed a chapter 7 bankruptcy.  Lamar filed an adversary proceeding asserting a violation of 11 U.S.C. 523(a)(2)(A) which bars discharge of specified debts arising from “false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's ... financial condition.  Appling sought dismissal as the statement was not in writing.  The bankruptcy court denied the motion to dismiss finding that a statement regarding a single asset is not a statement concerning a debtor's financial condition, and found in favor of Lamar.  The decision was affirmed by the bankruptcy court but reversed by the 11th Circuit finding that a statement about a single asset was a statement regarding a debtor's financial condition.  Finding a split in the circuits, the Supreme Court accepted cert.  The Supreme court first parsed the language of the statute, finding three elements.   A “statement” is “the act or process of stating, reciting, or presenting orally or on paper; something stated as a report or narrative; a single declaration or remark.” Webster's Third New International Dictionary 2229 (1976) (Webster's). As to “financial condition,” the parties agree, as does the United States, that the term means one's overall financial status.   The issue the court focused on was the term 'respecting.'  Lamar asserted that the term is narrowly focused on a debtor's overall financial condition rather than a statement as to a single asset.  The court found, at least in this context, that respecting has the same meaning as 'about', 'concerning', 'with reference to,' and 'as regards.'  The Court found that it has interpreted these terms broadly in it's decisions. Thus, it rejected Lamar's narrow definition, as it would read the term 'respecting' out of the statute.    The Court found that the term 'respecting a debtor's financial condition' requires that a statement have a direct relation to or impact on the debtor's overall financial status.  Since a single asset has an impact on a debtor's financial status, a statement regarding a single asset bears on a debtor's financial status and can affect whether a debtor is solvent or able to pay a debt.  To eliminate the requirement that such statements be in writing would lead to incoherent results, such as conflicting requirements for statements on balance sheets versus a same or more specific oral statement would not.  Historical analysis also supports the conclusion, as the provision traces back to a 1926 amendment requiring publishing a false statement in writing regarding the debtor's financial condition.   The court went on to reject Lamar's further arguments that requiring such statements to be in writing would gut the application of §523(a)(2)(A).  However, the number of decisions finding debts nondischargeable under this subsection show the section is still widely utilized such as in cases involving fraudulent conveyance schemes or misrepresentation of the value of goods, services, or property.  Lamar also argues the ruling ignores the principal of limiting relief to the honest but unfortunate debtor, leaving debtor's free to orally swindle their creditors.  The majority of the court rejected this argument, finding that the requirement is not enacted to protect dishonest debtors, but in reflecting Congressional intent to balance the potential misuse of such statements by debtors and creditors.  Congress had noted consumer finance companies often collected information from loan applications in ways designed to permit the companies to use them to support nondischargeability complaints, such as telling borrowers not to list all assets, or leaving insufficient room to list debts.  To allow creditors to base such actions on purported oral statements would lead to manipulation by creditors frustrating the result sought by Congress.  Creditors can protect themselves by insisting that statements regarding single assets be in writing.Michael Barnett www.hillsboroughbankruptcy.com