Difficult Trustees Nobody likes difficult people. Nobody likes to feel that they have been put through the ringer. Nobody wants to feel that they have been harassed, abused, and given an unnecessarily rough ride in the process. Unfortunately, this is a common occurrence in some Will County chapter 7 bankruptcy cases. Let me cite a+ Read More The post Simple Chapter 7 Bankruptcy Filing Can Become Difficult Depending Upon The Trustee appeared first on David M. Siegel.

Bankruptcy Is A Service Business As bankruptcy attorneys, we are in the service business of getting people out of debt. This could come in the form of a chapter 7 bankruptcy or a chapter 13 bankruptcy depending upon the facts of the case. We have the solutions available at our disposal thanks to the bankruptcy+ Read More The post Where Has Salesmanship Gone Among Bankruptcy Attorneys? appeared first on David M. Siegel.

   The 4th Circuit Court of Appeals has ruled that the allowed expenses for the means test is the amount allowed by the National and Local standards, even if the debtor's actual expense is less.  MARJORIE K. LYNCH, Bankr. Adm'r for the E. Dist. of N. Carolina, Appellant, v. GABRIEL LEVAR JACKSON; MONTE NICOLE JACKSON, Debtors – Appellees, & A. SCOTT MCKELLAR, Tr.. NATIONAL ASSOCIATION OF CONSUMER BANKRUPTCY ATTORNEYS, Amicus Supporting Appellees., No. 16-1358, 2017 WL 59011 (4th Cir. Jan. 4, 2017)This appeal involves a chapter 7 filing in North Carolina where the above-median income debtors claimed the full mortgage allowance of $1,548/mo though their actual mortgage expense was only $878/mo, and claimed the full car allowance for 2 cars of $488/mo each despite car payments of $111/mo and $90.50/mo.     The bankruptcy administrator sought to dismiss the case alleging that while the Debtors followed the instructions in the official forms, such forms were incorrect, and the statute was intended to limit debtors to their actual expenses.  The bankrutptcy court denied the motion to dismiss, finding that the use of the allowances comports with the plain language of the statute.  The administrator appealed, and the 4th Circuit allowed a direct appeal to that court.     The 4th Circuit initially turned to the decision in Ransom v. FIA Card Servs., 562 U.S. 61, 70 (2011), holding that an expense is “applicable,” as used in § 707(b)(2)(A)(ii)(I), “only if the debtor will incur that kind of expense during the life of the plan.”  However, the Court expressly declined to reach the issue of “the proper deduction for a debtor who has expenses that are lower than the amounts listed in the Local Standards.” Id. at 75 n.8.   The Court then examined the plain language of the statute.  “[i]t is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.” Davis v. Mich. Dep't of Treasury, 489 U.S. 803, 809 (1989).Here, the language is quite clear. Once an expense is incurred, then “[t]he debtor's monthly expenses shall be the debtor's applicable monthly expense amounts specified under the National Standards and Local Standards.” 11 U.S.C. § 707(b)(2)(A)(ii)(I) (emphases supplied). A debtor is entitled to take the full amount of the National and Local Standards if they incur an expense in that category.LYNCH, , 2017 WL 59011, at *4.     The statute reads:Section 707(b)(2)(A)(i) the court shall presume abuse exists if the debtor's current monthly income reduced by the amounts determined under clauses (ii), (iii), and (iv), and multiplied by 60 is not less than the lesser of: (I) 25 percent of the debtor's nonpriority unsecured claims in the case, or $7,700, whichever is greater; or (II) $12,850.In turn, clause (ii), § 707(b)(2)(A)(ii)(I), states:the debtor's monthly expenses shall be the debtor's applicable monthly expense amounts specified under the National Standards and Local Standards, and the debtor's actual monthly expenses for the categories specified as Other Necessary Expenses issued by the Internal Revenue Service for the area in which the debtor resides ....   Section 707(b)(2)(A)(ii)(I) uses both “applicable” and “actual” in the same sentence, and “[d]ifferent words used in the same ... statute are assigned different meanings.”2A N. Singer, Sutherland on Statutes and Statutory Construction § 46:6 (7th ed. 2007).   The first clause requires use of the applicable national and local standards, whereas the second clause  looks to the actual expenses of the Debtor.  The use of two different words in the same sentence presumes they must have different meanings.  Further, acceptance of the administrator's position would result in punishing frugal debtors, an intent producing absurd results which should be avoided.  Michael Barnett.  www.tampabankruptcy.com

Overview This is the bankruptcy case study for Mr. M., who resides in Chicago, Illinois. He is seeking advice on whether or not chapter 7 bankruptcy will provide relief. Let’s go through and look at the particulars of his case. For starters, he has no significant assets whatsoever. He is not a homeowner; He does+ Read More The post Bankruptcy Case Study 1/5/17 appeared first on David M. Siegel.

Looking Back on HAMP and Forward on Student Loan Relief Congress should soon take a look at fastest growing category of consumer debt—student loans. During the 2016 Presidential election, Donald Trump added his voice to the Democratic law makers, led by Senator Elizabeth Warren, calling for student loan relief. President Trump was elected on the promise […]The post Trump, Republicans and Student Loans: Don’t Follow Obama’s HAMP by Robert Weed appeared first on Robert Weed.

Can I file? For the most part, when people seek out bankruptcy relief they are seeking the type of relief offered through chapter 7. To file, you must: • Reside, be domiciled, or have property or a place of business in the United States (U.S.). A person does not have to be a U.S. citizen to file, nor live in the U.S., as long as they have assets in the U.S. • You are able to file if you do not have a prior Chapter 7 discharge or it has been more than 8 years, or 6 years since a Chapter 13 discharge. • Within 180 days before filing the bankruptcy petition, you must receive credit counseling briefing from one of the approved nonprofit agency that focuses on budget and counseling. • Be subject to a means test to determine how your income compares to Arizona’s median income and whether or not you qualify to file under Chapter 7. The post Pursuing Bankruptcy under Chapter 7 appeared first on Tucson Bankruptcy Attorney.

As the holiday season gets fully into swing here in midtown Manhattan, with tourists thronging around the store displays, we at Shenwick & Associates wanted to take this time to wish you a happy, safe and warm holiday season and a very happy and healthy 2017. We also wanted to thank you for your friendship, your business, your referrals and your trust in us. Complex cases that involve a mix of personal, business and tax debts are keeping us busy as 2016 draws to a close.  We’re here for you now and in the upcoming year, and we look forward to working with you. Happy holidays and happy 2017 from Shenwick & Associates!

Hope for Student Loan Debt Did you get a student loan? Did your school let you down?  Some […] The post Avoid Student Loan in Bankruptcy if no Educational Benefit appeared first on LakeLaw.

Judge H. Christopher Mott of the Western District of Texas is known to fill his opinions with references to movies and pop songs.   His latest opinion in Xtreme Power Plan Trust v. Schindler, et al (In re Xtreme Power, Inc.), No. 16-1004 (Bankr. W.D. Tex. 12/22/16) continues this trend with allusions to Disney's Frozen, an ironic reference given the current warm weather in Austin.   The opinion begins:This type of lawsuit has become somewhat commonplace—directors of a now defunct corporation are sued for breach of fiduciary duties. Here, the parties are currently “Frozen” in battle—as the Defendants filed motions to dismiss under Rule 12(b)(6), echoing “Indina Menzel” to demand that the Plaintiff just “let it go.” For the most part, the Court agrees with the Defendants and will send all but a single claim to a wintery grave.Opinion, pp. 1-2.Following a lengthy opinion, the Court allowed a claim against four directors for breach of the duty of loyalty to proceed while concluding that "the remainder of the Complaint skates on such thin ice that it must be dismissed under Rule 12(b)(6)."  While I do not have time for a lengthy analysis, click on the style of the case above to read it.   It is useful reading for those litigating director and officer liability claims.

There is an emerging circuit split as to whether late filed tax returns can ever be considered to be “returns.”   The issue arises because BAPCPA included a paragraph stating that a return “means a return that satisfies the requirements of applicable nonbankruptcy law (including applicable filing requirements.”    This is known as the hanging paragraph of section 523(a) because it appears following section 523(a)(19) without any other designation.A Hanging Paragraph The hanging paragraph was added by BAPCPA to address the situation where the IRS files a return for the debtor.   Its full text is:For purposes of this subsection, the term "return" means a return that satisfies the requirements of applicable nonbankruptcy law (including applicable filing requirements).   Such return includes a return prepared pursuant to section 6020(a) of the Internal Revenue Code of 1986, or similar State or local tax law, or a written stipulation to a judgment or a final order entered by a nonbankruptcy tribunal, but does not include a return made pursuant to section 6020(b) of the Internal Revenue Code of 1986, or a similar State or local law.  Section 6020(a) addresses the situation where the taxpayer does not file a return but the IRS files one for her with the taxpayer's active participation.   Section 6020(b) arises where the IRS prepares a return without the taxpayer's cooperation.   The hanging paragraph should have made it easier to discharge a tax because it allowed the taxpayer credit for two instances in which the taxpayer did not actually file a return.   These are where the government filed a return for the taxpayer with the taxpayer's cooperation or where the debtor entered into a written stipulation to a judgment.   In both of these instances, the taxpayer participated in determination of the tax even if the taxpayer did not file a formal return.A Split Arises McCoy v. Miss. State Tax Comm'n (In re McCoy), 666 F.3d 924 (5th Cir. 2012), cert. den. 2012 U.S. LEXIS 6632 (2012) was the first circuit case to address the issue after the adoption of BAPCPA.   The Court relied on the definition of “return” as a return filed in accordance with applicable non-bankruptcy law.   Because non-bankruptcy law required a return to be filed within a specific period of time, a late return was not a return at all and could not be discharged. I strongly criticized the McCoy decision when it came out (which you can read here) and Mrs. McCoy employed me to file a petition for cert.   Unfortunately, I was not successful. The First Circuit and the Tenth Circuit followed suit, although the First Circuit case drew a vigorous dissent.   Fahey v. Mass. Department of Revenue (In re Fahey), 779 F.3d 1 (1st Cir. 2015); Mallo v. IRS (In re Mallo), 774 F.3d 1313 (10th Cir. 2014), cert. den., 135 S.Ct. 2889 (2015).   In the Mallo case, Prof. Ronald Mann filed the petition for cert. A second line of cases rejects the one day late rule and follow an earlier four part test, which includes whether the document is an “honest and reasonable attempt to satisfy the requirements of the tax law.”    The Ninth and Eleventh Circuits follow this approach along with district courts in several states.   Smith v. United States IRS (In re Smith), 2016 U.S. App. LEXIS 12859 (9th Cir. 2016); Justice v. United States (In re Justice), 817 F.3d 738 (11th Cir. 2016); Biggers v. IRS, 2016 U.S. Dist. LEXIS 123219 (M.D. Tenn. 2016).A Matter of Interpretation The difficulty with the cases that follow McCoy is that they read section 523(a)(1)(B)(ii) out of the Code.   Prior to BAPCPA, there were three ways that a tax could be non-dischargeable.   First, if it was a priority tax under section 707(a)(3) or (a)(8) it could not be discharged.   Second, a tax could not be discharged if the return was not filed or if it was filed late, the return was filed less than two years before the petition date.   Finally, the tax could be non-dischargeable if the debtor made a fraudulent return or willfully attempted to evade or defeat the tax.   The cases that follow McCoy overlooked both the amendment's purpose and the existing language of section 523(a)(1)(B)(ii) which allowed discharge of taxes where the return was filed late but at least two years prior to the petition date.   Instead, they focused on the words "including applicable filing requirements."    They interpreted "applicable filings requirements" to have a temporal condition, that is, was the return timely filed.   However, section 523(a)(1) already had a temporal condition, that is, was the return filed at least two years before the petition date.   Therefore, the better reading is that applicable filing requirements should refer to the act of filing the return as well as whether it was filed on the proper form.   For example, a letter to the governor stating that a person was being unfairly persecuted by the taxing authorities would not constitute a return while a form 1040 filed with the IRS would. A New Hope?   Although the Supreme Court has denied cert twice on this issue, now that there is a clear circuit split, the Court may be persuaded to take up the issue.