Category Archives: Debts

An Equitable Argument by an Unperfected Secured Creditor

An Equitable Argument by an Unperfected Secured CreditorAn Equitable Argument by an Unperfected Secured Creditor.  Has the court ever heard an equitable argument made by an unperfected secured creditor? The answer is yes. Here’s the story.

In a case of very unfortunate timing, a creditor loaned a business $500,000.00 to keep its doors open, took a security interest in the Debtor’s assets to secure the loan, and filed a UCC financing statement five days later to perfect the lien. However, on the day after the loan, and four days prior to perfection of the lien, an involuntary petition was filed against the Debtor. In re Millivision, 474 F.3d 4 (lst Cir. 2007). In this case the creditor argued that the “strong-arm” pro visions of §544 “offended the underlying equitable principles of the Bankruptcy Code by conferring a “windfall” cash infusion…” Further, it was argued that the “relation-back” provision of §5 47(e) (which allows transferees a grace period to perfect a transfer) constitutes “any generally applicable law” under §546(b), which limits the rights of a Trustee to recover under §544. Affirming the lower Courts, the First Circuit rejected the § 547(e) argument, finding that a subsection applicable to prefer entail transfers is not “generally applicable law” for purposes of the strong-arm powers under § 544 (b). The Court then noted that the creditor could have perfected its lien prior to making the loan, and “under long-established principles. Therefore the court found that petitioner’s lack of diligence precludes equity’s operation”. So yes a court has heard an equitable argument by an unperfected secured creditor and lost the argument. If you have a question about your perfected interest, please see a bankruptcy attorney.

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.

Error in the Debtor’s Name Seriously Misleading

Error in the Debtor's Name Seriously MisleadingIs an error in the debtor name seriously misleading? In what appears to be a national trend, two more recent cases have affirmed that a slight error in the Debtor’s name seriously misleading in the age of computer search logic. Here are the cases.

In re John’s Bean Farm of Homestead, Inc., 378 B.R. 385 (Bkrtcy. S.D. Fla. 2007). the creditor filed a UCC- l financing statement with the Florida Secured Transaction Registry identifying the Debtor as “John Bean Farms, Inc.”, instead of the proper incorporation name, “John’s Bean Farm of Homestead , Inc.” When the Trustee searched the database using the Debtor’s correct name, the search yielded no match. The Trustee found the creditor’s financing statement only after striking “previous command” 60 times. The Trustee objected to the secured claim filed by the creditor, and was awarded summary judgment. The Court held that the initial search page displayed the result of applying Florida’s standard search logic. Further, even if what constituted a search result were more than the initial page display, there would be a reasonable limit to the search. The Court deemed this limit to be no more than one page “previous” and one page “next” from the initial result screen.

In a second case, In re Jim Ross Tires. Inc.. 379 B.R. 670 (Bkrtcy. S.D. Tex. 2007), the Court construed Texas law. The financing statement was filed by the creditor in the Debtor’s correct corporate name. However, it added the Debtor’s trade “or d/b/ a” name, which had expired and not been renewed. Judge Isgur found that the financing statement did not contain a proper statement of the Debtor ‘s name, and left the creditor unperfected. The Court reasoned that only exact matches would be returned from a computer search of the Secretary of State’s database , and including the d/b/ a in a financing statement would
inevitably have resulted in the failure of the financing statement to appear.

If you have questions about the validity of a financing statement an attorney can help you decide if an error in the debtor’s name seriously misleading to the bankruptcy court.

For more information about Bankruptcy and an error in the debtor’s name seriously misleading  – 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.

Dischargeable Bankruptcy Debts

Dischargeable Bankruptcy DebtsDischargeable Bankruptcy Debts – All debts of any type or amount, including debts of creditors that are out of state, are dischargeable bankruptcy debts in a chapter 7 bankruptcy except those debts that are by law not dischargeable bankruptcy debts. And, even if the debt is not a dischargeable bankruptcy debt, there are always exceptions to the rule. Following are some of the debts that are not dischargeable bankruptcy debts in a Chapter 7.

(1) Most tax debts, including debts that were incurred to pay federal tax debts (for example if you put your tax debt on a credit card, the credit card debt would not be dischargeable).

(2) Debts for obtaining money, property, services, or creditor by means of false pretenses, fraud, or a false financial statement (and the creditor files an adversarial proceeding against you).

(3) Debts not listed on the bankruptcy petition, unless the creditor knew of the bankruptcy case another way and the creditor had knowledge in time to file a claim.

(4) Debts for fraud, embezzlement, or larceny (and the creditor file an adversarial proceeding against you).

(5) Debts for domestic support obligations, for example, alimony, spousal support, child support, and certain other divorce-related debts, including property settlement debts.

(6) Debts for intentional or malicious injury a person or their property, (and the creditor files an adversarial proceeding against you).

(7) Debts for certain files or penalties.

(8) All types of Student loans debts including both private and government student loans.

If you thinking about filing a Chapter 7 Bankruptcy, and you wish to determine which of your debts are dischargeable bankruptcy debts in a chapter 7, or if an exception to the discharge rules might apply to you, you should discuss the specific circumstances of the debts with a knowledgeable bankruptcy attorney.

For more information about dischargeable bankruptcy debts and a FREE consultations call 404-348-4081 – The Remboldt Law Firm, LLC.

 

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.

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.

Unperfected Secured Creditor

Unperfected Secured CreditorUnperfected Secured Creditor – Notice of unperfected secured creditor? Is the disclosure of an unperfected secured creditor inquiry notice?

Here’s an example, pre-petition, the Debtor refinanced the mortgage on her residence. However, the deed of trust securing the refinanced obligation was not recorded when the Debtor filed her Chapter 7 petition. In her Schedule A, the Debtor listed a “secured claim” of $134,740.00 against the property. In Schedule D, she listed a claim held by the refinancing creditor with a balance of $134,165.00. It further stated: “Incurred: 2002, Lien: deed of trust…” She also attached a copy of her 2003 mortgage interest statement.

When the Trustee sought to avoid the unrecorded mortgage, the creditor argued that the Trustee’s hypothetical bona fide purchaser status under § 544(a)(3)was defeated by constructive or inquiry notice to the Trustee of the unrecorded deed. This notice allegedly came from the information included in the Debtor’s bankruptcy schedules. The Bankruptcy Court agreed with the creditor, citing Professional Investment Properties of America, 955 F.2d 623 (9th Cir. 1992), and the Trustee appealed to the Ninth Circuit BAP, 361 B.R. 509 (9th Cir. BAP2006).

The Appellate Panel considered the specific statutory language, and found that a Trustee’s strong-arm power arises “as of the commencement of the case… before there could be any constructive notice from debtor’s bankruptcy schedules.” The Court then distinguished Professional Investment as an involuntary case in which the petitioning creditors stated, in the petition itself, that the claims were “supposedly secured by assignments of deeds of trust….” There the inquiry notice came from the petition, at the commencement of the case. Here, the case was commenced with the filing of the petition, such that the schedules and statements were filed after commencement of the case.

If no case were commenced by a petition, there would be no case in which to file statements and schedules, which must therefore be deemed filed after the petition, even if presented to the Clerk contemporaneously with the petition. Thus. any inquiry or constructive notice was ineffective against the Trustee, whose strong-arm powers arose prior to receipt of such notice.

See, however, In re Lauver, 372 B.R.757(Bkrtcy. W.D.Pa. 2007). which held contra on essentially identical facts. There. Judge Markovitz held the Trustee did not qualify as a bona fide purchaser of the property under Pennsylvania law. The Court found that a review of the Debtor’s bankruptcy papers, where the petition and statements and schedules were filed contemporaneously, would put a hypothetical purchaser using ordinary diligence upon notice as to whether the mortgage was still in effect. leading to further inquiry. Disclosure of unperfected secured creditor not inquiry notice. If you have a questions about a secured creditor’s lien, you should contact an attorney to help.

Unperfected Secured Creditor – For more information about Bankruptcy and secured creditor’s lien  – 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 Pre-petition checks delivered post-petition avoidable?

Are Pre-petition checks delivered post-petition avoidable?Are pre-petition checks delivered post-petition avoidable?   Here’s the story:  One day before filing for bankruptcy, a Debtor obtained a cashier’s check payable to his former personal injury attorney.  The check was sent express mail to the law firm’s post office box. The Trustee learned of the transaction, and established that the cashier’s check was not negotiated until five days after the debtor’s petition was filed. When the Trustee sought to avoid the payment under § 549,
the defendant (the personal injury attorney) argued that delivery of the check was before the petition was filed.  In re Scheu, 356 B.R. 751 (Bkrtcy. D. Idaho 2006 ).

Judge Pappas cited In re Mora, 199 F.3d i024 (9th Cir. 1999). which held that “the transfer of a cashier’s check for purposes of § 547(b) occurred at the time it was delivered rather than honored.” Applying Mora to § 549, the issue to be determined in this case was whether the transferee received the cashier’s check before the petition was filed. Based on the Trustee’s showing that the check was negotiated post-petition, the Court found the burden was on the transferee to prove it was delivered pre-petition. Refusing to take judicial notice that “express mail” is delivered on the day following mailing; the Court held for the Trustee, due to the defendant’s inability to prove when the check was actually received. Therefore, the check mailed before the debtor’s petition was presumed to be delivered post-petition and was avoidable under § 549.

Are Pre-petition checks delivered post-petition avoidable? For more information about Bankruptcy and the questions – are pre-petition checks delivered post petition avoidable – 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.

Defective Attestation in security deeds fatal under Georgia law

Defective Attestation in security deeds fatal under Georgia lawDefective Attestation in security deeds fatal under Georgia law – Is a defective attestation in security deeds fatal under Georgia Law. The answer is likely. Here’s a story about one case and how the Judge Massey looked at the problem.

A Debtor owned a home subject to a security deed that was completely unattested. In the companion case, there was an official witness but no unofficial witness to the security deed on the home, one of each is required under Georgia law.

The Trustee successfully avoided each mortgage in his capacity as a bona fide purchaser of real property. In re Hagler, 429 B.R. 42 (Ban kr. N.D. Ga., December 10. 2009), and In re Codrington, 2009 WL 649 7837 (Bankr. N.D. Ga.. December 10, 2009). In both cases, the subject security deeds had been admitted to record. The trustee however challenged them on the basis that they could not be “duly filed, recorded, and indexed on the appropriate county land records in order to provide constructive notice to subsequent bona fide purchaser unless they were properly attested,

The trustee argued that the word “duly” was synonymous with being in pro per form. Judge Massey held that these security deeds were patently defective as distinguished from being latently defective. Security deeds containing latent defects in attestation would nevertheless provide constructive notice to a bona fide purchaser if admitted to record. The lenders argued that the law required constructive notice regardless of whether a defect was latent or patent so long as it was accepted for recording by the clerk of the court. Judge Massey disagreed and granted summary judgment to the Trustee in each case. The court gives the following detailed analysis of the rationale behind the attestation requirements:

“The court cannot agree that the Legislature meant to protect lenders (and in reality negligent lawyers and title insurers who rely on them) at the expense of a system of recordation designed to inspire confidence in the real estate market. Attestation serves to enhance the reliability of a deed to increase the odds that the grantor in fact executed the deed. It creates a presumption of genuineness (cite omitted) for the purpose of inducing the public to act on that presumption …. constructive notice is another way of saying that duly filed, recorded, and indexed deeds and mortgages are worthy of a presumption of genuineness which enhances predictability and thereby encourages commerce in real property,

An unattested deed cannot be presumed genuine merely because the clerk erred by recording it. Moreover, the lenders’ arguments would provide no penalty on anyone for presenting or accepting defective deeds and would reward the negligence of lenders and their agents in those few instances in which a county clerk’s employee carelessly accepts a defective deed. It would hobble, with a single sentence (In a section that begins by commanding clerks not to accept unattested deeds) , a time- tested system of recording real estate transactions at the core of which is a general and well grounded suspicion of unattested deeds , . . [and] tend to lead to an increase in the presentation of fraudulent deeds .”

If you have a questions about whether a defective attestation in security deeds is fatal under Georgia Law – you should seek an experience bankruptcy lawyer.

Defective Attestation in security deeds fatal under Georgia law – for more information about Bankruptcy and security deeds – 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.

Does a Motion To Dismiss Trump Motion to Convert

Does a Motion To Dismiss trump a Motion to ConvertDoes a Motion To Dismiss trump Motion to Convert?  After being served with the Chapter 13 Trustee’s Motion To Convert the case to Chapter 7, the Debtor filed a Motion To Voluntarily Dismiss the case.

In a recent case, the Trustee opposed the dismissal motion filed by the Debtor, noting that there appeared to be substantial undisclosed, non-exempt assets in his estate. The Debtor asserted that 1307(b) provided him an absolute right to dismiss prior to adjudication of the conversion motion. The Trustee argued that 1307(c) limited the Debtor’s right to dismiss. In re Jacobsen, 378 B.R. 805 (Bkrtcy. E.D. Tex. 2007).

Judge Rhoades noted a split of authority on this issue, with some courts holding that 1307(b) trumps subsection (c) “even where cause exits to convert the case under subsection (c).”

However, the Court found that both the language and policy of the Code require a different finding. If Congress had intended subsection (b) to prevail over subsection (c) it could have included language that the court could convert or dismiss a case “except” as provided in subsections (b) and (e).” Further, the Court found that its 105(a) powers support this reading of 1307. Mandating conversion, rather than dismissal, was in the best interest of the bankruptcy estate. Therefore, a conversion order was necessary to further the purpose of this substantive provision of the Bankruptcy Code.

Does a Motion To Dismiss trump a Motion to Convert – for more information about Bankruptcy and whether you have an option to dismiss your chapter 13 case when the trustee files a motion to convert the case to chapter 7  – 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.

 

Dismissal of Chapter 7 Case

Dismissal of Chapter 7 CaseDismissal of Chapter 7 Case. Can the Court reject a debtor’s request to dismiss his case? The answer is yes! Here’s an example.

After a Debtor’s case was converted from Chapter 13, the Chapter 7 Trustee proposed settlement of a discrimination suit which the Debtors had belatedly disclosed in a second amendment to their schedules. The Debtors did not agree with the settlement; and moved to dismiss their case for failure to file payment advices and a statement of monthly net income within the requisite 45 days under 521. The Trustee objected and the Bankruptcy Court “excused” the Debtors’ failure to file under these circumstances. The District court reversed, finding no authority to do anything other than dismiss after the 45-day deadline. Appeal was taken to the First Circuit. In re Acosta Rivera, 557 F.3d 8 (1st Cir. 2009).

The Circuit Court noted the two opposing views. On one side, In re Parker, 351 B.R. 790 (Bkrtcy, N.D. Ga. 2006); In re Jackson, 348 B.R. 487 (Bkrtcy. S.D. Iowa 2006); In re Bonner; 374 B.R. 62 (Bkrtcy, W.D. NY 2007), finding that special circumstances can warrant nunc pro tunc relief.

On the other side, Warren v. Wirem, 378 B.R. 640, (Bkrtcy, N.D. Cal. 2007) and In re Hall, 368 B.R. 640 (Bkrtcy, W.D. Tex 2007), holding that the Court must dismiss the case after expiration of the 45 days.

The First Circuit found that neither approach “satisfies both the head and heart in equal measure.” Acknowledging that the stricter reading might appear to address a congressional effort to reduce the escalation of bankruptcy filings, the Court also found that Congress, through the enactment of BAPCPA, “was not bent on placing additional weapons in the hands of abusive debtors.”

Thus, the Court held that “where…there is no continuing need for the information or a waiver is needed to prevent automatic dismissal from furthering a debtor’s abusive conduct, the Court has discretion to take such action…The great divide in 521 is between information that is required and information that is not. The Act allows courts to do the sifting suggested by that divide without rigid adherence to the 45-day deadline.

Dismissal of Chapter 7 Case – for more information about Bankruptcy and if you are able to dismiss a chapter 7 case after you file it  – 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.