Post-Petition Inheritance

Post-Petition InheritancePost-petition inheritance disclaimer was avoided. Here’s what happened.

Post-petition inheritance disclaimer was avoided.  The Debtor’s mother died on June 27. 2006, and the debtor filed her bankruptcy petition on September 29, 2006. On November 3, 2006. the Debtor. who was executrix of the probate estate, filed a disclaimer of the inheritance she was to receive. The Trustee then sought to avoid the purported disclaimer as an unauthorized post-petition transfer under §549. The Debtor countered that under Fifth Circuit and Texas law the disclaimer related back to the date of death, and therefore did not occur post-petition. ln re Schmidt. 362 B.R. 318 (Bkrtcy.W.O. Tex. 2007).

Finding for the Trustee, Judge Clark followed In re Farrior, 344 B.R. 483 (Bkrtcy. W.O. Va. 2006), which held that federal pre-emption trumps a Debtor’s ability to employ if state law disclaimer as to property designated by federal statute (§54I) as property of the estate. The Court distinguished Simpson v. Penner 36 F.3d 450 (5th Cir. 1994) which involved a pre-petition disclaimer. However Judge Clark questioned whether Simpson was still good law, as it pre-dated Drye v. United States 528 U.S. 49 (1999), where the Supreme Court ruled that a state-authorized disclaimer of inheritance could not defeat attachment of a federal tax lien to the taxpayer’s beneficial interest in the inheritance prior to execution of the disclaimer. The Court also cited Matter of Burgess, 438 F.3d 493 (5th Cir. 2006) (en banc) as further authority that Simpson no longer applies. In Burgess. the Fifth Circuit held that a subsequent event (passage by Congress of a crop disaster relief bill) could not be used to revise a state of affairs that existed on the date of the bankruptcy filing. In this case the inheritance was property of the es tate on the petition date, giving the Trustee dominion and control over it, not the Debtor. Even if the Fifth Circuit did not find Drye persuasive, Judge Clark was certain that the Circuit Court would not permit a post-petition disclaimer to be effective. Post-petition inheritance disclaimer avoided.

For more information about post petition inheritance disclaimer avoided- contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

Bankruptcy tax refund.

Bankruptcy tax refundBankruptcy Tax Refund.  This is an article about what happens when there is a tax refund and the IRS files an offset.

Here’s an example of what happens.  A debtor filed a chapter 13 bankruptcy.  After the filing the IRS retain a portion of the debtors income tax return.  The Debtor sought to recover his bankruptcy tax refund, retained by the IRS in his chapter 13.  The IRS had retained a portion because it had been set off by the IRS against a priority tax liability. In re Jones, 359 B.R. 837 (Bkrtcy. M.D. Ga. 2006).

Judge Walker analyzed the three different approaches to this issue:

(1) the majority view that an IRS setoff under $553 is not permitted by the bankruptcy court for exempt property. See In re Jones, 230 B.R. 875 (M.D. Ala. 199); In re Alexander, 225 B.R. 145 (Bkrtcy. W.D. Ky. 1998);

(2) The minority view, that the setoff by the IRS is allowed, See In re Wiegand, 199 B.R. 639 (Bkrtcy. W.D. Mich. 1996); or

(3) An emerging view that the “overpayment” by the Debtor does not become a “refund” until and unless all setoffs have been applied, See Beaucage v. U.S., 341 B.R. 408 (D. Mass. 206); In re Baucom, 339 B.R. 504 (Bkrtcy, W.D. Mo. 2006); In re Pigott, 330 B.R. 797 (Bkrtcy, S.D. Ala. 2005).

The Court in this case chose the third options, premised on 26 U.S.C. S6402, which specifically allows setoffs from “overpayments”. From the characterization of the claim as an “overpayment”, it follows that the setoff is allowed and, after it is applied, only then does any excess become a ‘refund” which is an asset of the debtor, or the bankruptcy estate.

For more information about Bankruptcy and Taxes  – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

Are Taxes Dischargeable In Bankruptcy?

Are Taxes Dischargeable In Bankruptcy?Are taxes dischargeable in bankruptcy? The short answer is “sometimes”.  If the debts are relatively old and they meet several other conditions, the taxes are dischargable in a bankruptcy; however, you may have to file a complaint in the bankruptcy court to have a Judge determine the dischargeablity of the taxes debts in order to have the IRS honor the discharge.

Generally speaking, for taxes dischargeable in bankruptcy, you must meet all of these conditions:

1         You filed a legitimate tax return.

2         The tax returned was filed at least two years before filing bankruptcy.

3         The tax liability you want to discharge was due at least three years before filing bankruptcy.

4         The IRS has not assessed your liability within 240 days.

5         You did not willfully evade payment of a tax.

A couple of additional notes.  Penalties for the taxes dischargeable in bankruptcy are also dischargeable, if the taxes are dischargeable in bankruptcy.  But courts are split as to whether you can discharge tax penalties of nondischargeable taxes.

However, if the taxing authority has put a lien on your property, the lien will remain after your bankruptcy.  You will have to pay off the lien before you can sell the real estate will a clear title even if the tax was discharged.

As you can see it’s COMPLICATED!  If you are considering bankruptcy because of your tax debts, consider a consultation with a bankruptcy attorney experienced in discharging taxes in a bankruptcy.

A word of caution, if you get a loan to pay taxes what would otherwise not be discharged in bankruptcy, you can not eliminate that debt in a chapter 7 bankruptcy. You can’t turn nondischargeable taxes in a bankruptcy into a discharageable debt in a chapter 7 bankruptcy. A chapter 13 might be a better alternative for you in this case.

For more information about Bankruptcy and Taxes  – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

Bankruptcy and Disability Income

Bankruptcy and Disability IncomeBankruptcy and Disability Income. Is Disability Income considered income or property of the estate? Here’s a case where the court addressed bankruptcy and disability income.

In 1995, the debtor was diagnosed as suffering from depression. When he filed his Chapter 7 petition in 2000, he was receiving approximately $11,400.00 per month from a former employer as disability insurance, while he continued to work for a subsequent employer. Four days post-petition, the debtor ceased employment. Over a year later he submitted a disability claim to his second employer, seeking benefits retroactive to 1995 (the date the depression disability began). The claim was denied as to the time prior to termination of employment, but granted going forward, from the date employment ceased. This left the Debtor with monthly payments from disability insurance of approximately $21,700.00. The Trustee sought turnover of the disability payments as assets of the bankruptcy estate. In re Stinnett, 465 F.3d 309 (7th Cir. 2006).

Affirming the Bankruptcy and District Courts, the Circuit Court initially found that an insurance contract in which the debtor has an interest pre-petition, generally consituties property of the estate. Further, payments from such insurance contract in which the debtor has an interest pre-petition, generally constitutes property of the estate. Further, payments from such insurance policies, to the extent the debtor has a right to receive and keep such payments, are proceeds of estate property, which are also property of the estate. The court then addressed the debtor’s argument that this disability payment represented post-petition personal services income, which is exempt from becoming estate property under 541(a)(6). The debtor asserted that his entitledment to the payments was predicted on his inability to obtain personal services income, making them a “substitute” for such earnings, and their equivalent. Rejecting this argument, the Court cited In re Prince, 85F.3d 314 (7th Cir. 1996), holding that the “post-commencement earnings exception should be interpreted ‘extremely narrowly’ and ‘excepts only earings from services actually performed by an individual debtor.”

Therefore, “earnings obtained solely by virtue of the inability to perform services cannot be considered the legal equivalent of ‘earnings from services performed.”

For more information about Bankruptcy and Disability Income  – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

 

Statue of Limitation for Debts in GA

Statue of Limitation for Debts in GStatue of Limitation for Debts in GAA – If you are being sued by a creditor you should consider what kind of debt you have with the creditor and what is the statue of limitation for debts in GA.  The difference between the debts are important.

For example, most lawsuits for the collection of debts are considered breach of contract cases.  In Georgia, written contracts have a statue of limitation period of 6 years from the time in which the debt becomes due and payable and the period runs from the date of last payment.

However, if your debts is an open account type debt, or an implied promise to pay a debt or an implied undertaking, these debts have a statue of limitation of only 4 years.

NOTE:  Payment, unaccompanied by a writing acknowledging the debt, does not toll the statue; the statutory period runs from the date of default, not the date of last payment.  If you are wondering if the statue has tolled (or the time clock has stopped) you should schedule a consultation with an attorney.

Prior to entering into an agreement to pay off a debt you should ensure the debt is actually still due and payable.  It would be wise to seek the counsel of an attorney prior to discussing an agreement to pay the debt to review the current law regarding the statue of limitations for debts in GA.

For more information about the Statue of Limitations for debts in GA – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

Bankruptcy Exemption – Bank Account

Bankruptcy Exemption - Bank AccountBankruptcy Exemption – Bank Account What amount should be used in your bankruptcy schedules when you list the account on your schedule?  The amount should be the exact amount in the account on the day you file your petition.  What happens if you have outstanding checks that have not cleared your account?  You still must disclose the total amount in the account. 

Here’s the court case regarding Bankruptcy Exemption – Bank Account: The Debtors scheduled their bank account balance at $513. The actual bank account balance on the petition date was $5,862.38. The difference was due to checks written by the debtor before they filed their petition that had not cleared before the petition was filed. The trustee demanded the Debtors turnover of the account balance on the petition date of $5,862.38. Debtors opposed the motion arguing that because the funds were no longer in the account the trustee could not obtain turnover of the petition-date balance, citing In re Pyatt, 486 F.3d 423 (8th Cir. 2007).

The bankruptcy court here disagreed.  The Court sited In re Brubaker, 426 B.R. 902 (Bankr. M.D. Fla. 2010). The Court took notice that were two schools of thought regarding the bankruptcy exemption – bank accounts.

(1) the burden is placed on the debtor to recover the money and

(2) the trustee should be responsible and have to pursue the transferees (the people the checks were written to).

However, both schools had agreed that the funds were property of the estate and that neither outcome would be good for debtors. The court held that the funds remained in the account until the checks cleared and were therefore property of the bankruptcy estate subject to the control of the debtors until they had cleared. The checks that had been written were negotiable instruments that constituted an unconditional promise to pay. Although debtors may not have had technical custody of those funds as to which they had written checks to their creditors, they did have control over the funds on the date they filed their petition.

Therefore, the debtors were ordered to turnover the funds to the trustee with no reduction for checks which the debtors had written pre-petition, but which had not cleared their account as of the petition date.

For more information about Bankruptcy Exemption – bank account, contact the Remboldt Law Firm at 404-348-4081. Free consultations can be scheduled by calling 404-348-4081.

Good Faith Bankruptcy

Good Faith BankruptcyGood Faith Bankruptcy – What is a good faith bankruptcy and why do we care  so much about it?  Here’s the issue – the bankruptcy code requires that a debtor’s petition is filed in “good faith”.  However, whether a person has filed their petition in good faith is subjective and a test by the Court can not begin to address all of the reason’s a petition is filed in good faith and in bad faith.  But generally, the Court historically looks at the 11 factors there were presented in the case of In Re Kull, 12 B.R. 659 (S.D. Georgia 1981.) Following is a list of the the 11 factors the Court considers when determining a good faith bankruptcy:

  1. the amount of the debtor’s income from all sources (for example was all the income disclosed);
  2. the living expenses of the debtor and his dependents;
  3. the amount of attorney’s fees
  4. the probable or expected duration of the Debtor’s Chapter 13 plan;
  5. the motivations of the debtor and his/her sincerity in seeking relief under the provisions of a Chapter 13 bankruptcy;
  6. the Debtor’s degree of effort (for example, did the debtor complete all the schedules);
  7. the Debtor’s ability to earn and the likelihood of fluctuation in his earnings;
  8. special circumstances such as inordinate medical expense;
  9. the frequency with which the has sought relief under the Bankruptcy Reform Act and its predecessors (has there been multiple filings);
  10. the circumstances under which the Debtor has contracted his debts and his demonstration bona fides, or lace of same, in dealing with his creditors; and
  11. the burden which the plan’s administration would place on the trustee.

Good Faith Bankruptcy – For more information about Bankruptcy Laws, contact the Remboldt Law Firm at 404-348-4081. Free consultations can be scheduled by calling 404-348-4081.  If bankruptcy is a good solution for your financial concerns, payment plan are available if needed and weekend appointments are also available.

Newly Discovered Creditors

Newly Discovered Creditors

Newly Discovered Creditors – Sometimes, after your bankruptcy case has closed, you discover that you inadvertently left off a creditor on your schedule.  (Newly Discovered Creditors) What happens next?  If your case is still open you can amend your schedules adding the creditor.  But what happens if you don’t discover the creditor until after your bankruptcy closes?  It happens all the time, you lose track of a creditor.  The chances are great that the debt will still be considered discharged.

If your case is a no-asset case (meaning all your property was exempt), the debt is considered discharged unless by leaving out the Creditor , the Creditor lost the opportunity to contest the discharge on the ground that the debt was caused by a fraudulent or embezzling conduct, or by a willful and malicious act (such as assault).  It is generally possible to reopen the bankruptcy and let the bankruptcy Judge rule on whether the debt is, in fact, dischargeable.

If your case is an asset case (meaning some of your property was distributed to the unsecured creditors), the answer is more difficult and you should contact a knowledgeable attorney.  Your nonexempt assets were already distributed to your other unsecured creditors, so the omitted Creditor would be unfairly discriminated against if the debt was discharged.

If you have left off a creditor on your bankruptcy petition, and the newly discovered creditors debt was a large one you may want to discuss with a lawyer re-opening your case.

Newly Discovered Creditors – For more information about Bankruptcy Laws – and what happens if you leave creditors off of your schedules after your case closes, contact the Remboldt Law Firm at 404-348-4081. We offer a Free consultation with an attorney at the Remboldt Law Firm, LLC and an appointment can be scheduled by calling 404-348-4081.  We offer weekend and evening hours as well as payment plans.

Foreclosure Bankruptcy Laws

Foreclosure Bankruptcy LawsForeclosure Bankruptcy Laws – Foreclosures are initially stayed by a bankruptcy. But, the stay won’t apply if you filed another bankruptcy case within the previous two years and the court, in that proceeding, lifted the stay and allowed the lender to proceed with the foreclosure. Sadly, the law does not allow you to prevent a foreclosure by filing serial bankruptcies.

Even if this is your first bankruptcy, filing doesn’t stop time periods associated with the state’s foreclosure procedures from “running”. For example, once a homeowner receives advance notice of foreclosure, the home may not be sold until the notice period has ended. Filing bankruptcy won’t stop the notice period from elapsing. But the sale itself can’t happen while you are in bankruptcy unless the foreclosing party gets permission form the bankruptcy judge by filing a Motion to Lift Stay.

Even in circumstances where the stay would otherwise apply, you can lose its protection through your own actions. The stay may not protect you from collection efforts if 1) you had a bankruptcy case pending within the year before you file your current case, and the court refuses your request to allow the stay to kick in, or you don’t meet the deadlines set out in the bankruptcy code for dealing with property that serves as collateral for a secured debt.

If you are facing the threat of the foreclosure of your home you need to act quickly if you would like to use the Foreclosure Bankruptcy Laws to help you protect your home. An attorney can help you decide if foreclosure bankruptcy laws can help by discussing all your options.

For more information about the Foreclosure Bankruptcy Laws in GA – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

 

Automatic Stay Violations

Automatic Stay ViolationsAutomatic Stay Violations – When you file for bankruptcy, the automatic stay goes into effect. The stay prohibits creditors and most kinds of debts you owe them from continuing to attempt to collect the debts, unless the law or the bankruptcy court says they can.  It’s “automatic” because you don’t have to ask the court for the stay, and the court doesn’t have to take any special action to make it effective; once you file a bankruptcy, the stay is in place automatically.

Sometimes, the creditor can file an action in court to have the stay lifted (this is called a Motion to Lift Stay). However, there are times when the automatic stay does not apply and the creditor can simply begin collection proceedings without seeking advance permission from the court.  If you have questions about if a debt will be subject to the bankruptcy automatic stay, you really need to contact a knowledgeable bankruptcy attorney.

Thankfully, the most common types of creditor collection actions are still stopped by the stay – harassing calls by debt collectors, threatening letters by attorneys and lawsuits to collect payment for credit card and health care bills. Following are some of the debts which collection “may” be stopped by the automatic stay.

1. Credit Card Debts, Medical Debts, and Attorney Fees
2. Debts Associated with Criminal Proceedings
3. IRS Liens and Levies
4. Foreclosures
5. Utilities

Automatic Stay Violations – if you believe a creditor has violated the automatic stay or you have questions about the automatic stay violations or the times the automatic stay would not apply – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

RSS WordPress Plugin by WP Tutor.io