Tag Archives: Debts

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.

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.

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.

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.

Trustee may use IRS Statute of Limitations

Trustee may use IRS Statute of LimitationsA Chapter 7 Trustee may use IRS statute of limitations to avoid a transfer? The Answer is maybe. Here’s an example.

The Chapter 7 Bankruptcy Trustee, using §544(b)(1), filed an action to avoid a fraudulent transfer made by the IRS, the Trustee believed the transfer was fraudulent because it occurred outside the four years permitted under Pennsylvania law.

The IRS who was the defendant in this action filed a motion to dismiss, in the Trustee’s motion, the Trustee asserted that the statute of limitations had run. The Trustee sited another case, In re Emergency Monitoring Technologies, Inc., 347 B.R.17 (Bkrtcy. W.O.Pat 2006). In this case, the IRS was a creditor in existence at the time of the transfer, and the court noted that the IRS would not be bound by the four-year statute, but rather by the 10 year statute contained in the Internal Revenue Code.   Judge McCullough concluded that the Trustee, using his strong-arm powers, could utilize the same 10 year statute of limitations, since the IRS could have pursued the action itself hence, the case was allowed to proceed. Here, the Chapter 7 Trustee may use IRS statute of limitations to avoid a transfer.

If you have questions about the bankruptcy and taxes, the IRS, fraudulent transfers, and a chapter 7 or chapter 13 trustee and what statue of limitations would or may apply to your situation, you should contact a bankruptcy attorney with experience in tax matters related to the chapter 7 and chapter 13 bankruptcy laws.

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.

Determining the Initial Transferee in a Corporate Transaction

Determining the Initial Transferee in a Corporate TransactionDetermining the Initial Transferee in a Corporate Transaction – How does the bankruptcy court go about determining the initial transferee in a Corporate Transaction? Here is a recent court case example.

The principal of the corporate Debtor obtained a divorce from his wife pre-petition. Pursuant to the divorce decree he had a continuing support obligation to his ex-wife and their children.

During the applicable four-year fraudulent conveyance reach-back period. multiple checks totaling $68,684.25 were written to the ex-wife from the corporate Debtor’s bank accounts. The Trustee sought avoidance and recovery of these payments under §544(b), applicable state law. and §550.

The ex-wife asserted that her former husband, the Debtor’s principal was the initial transferee. She argued that though the corporate checks were made to her.  The “economic reality of the transactions” amounted to her ex-husband withdrawing corporate money to pay the support obligations. She also argued that the Debtor’s corporate financial records identified the payments as advances to its stockholder, or as a distribution of capital to him.

The Bankruptcy Court ruled for the Trustee, and appeal was taken to the First Circuit BAP. Antex, Inc., 397 B.R. 168 (1st Cir. BAP 2008). The Appellate Panel acknowledged that lower courts were split on the question of whether the principal of a debtor corporation was the initial transferee of corporate funds paid to satisfy a personal obligation.  However, the Court noted that all of the circuit courts addressing the issue (being the Fourth , Ninth, Tent h and Eleventh Circuits) had all concluded that the debtor principal was not the initial transferee. These courts found the principal lacked “legal domination and control” or , stated another way, the “right to put those funds to one’s own purpose.” The checks were direct transfers from the Debtor’s corporate account to the ex-wife and, once issued, the principal had no right to use the
money for any other purpose .  Furthermore, characterizing the payments as “advances to a stockholder” or as “distributions of capital” did nothing to establish the requisite “legal dominion and control” by the principal. If you have questions about how the courts go about determining the initial transferee in a corporate transaction – you should seek the advice of an attorney.

Determining the Initial Transferee in a Corporate Transaction – for more information about determining the initial transferee in a corporate transaction – 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.

Non-debtor Denied Jury Trial in Fraudulent Transfer

Non-debtor Denied Jury Trial in Fraudulent TransferWould a non-debtor denied jury trial in fraudulent transfer action? Here’s a story about one case in Georgia.

The Trustees of two related estates filed adversary proceedings against the individual debtor and his non-debtor spouse. The non-debtor spouse had filed no claims in the bankruptcy cases.

The Trustees alleged fraudulent transfers of the defendants’ personal residence for no consideration. The non-debtor spouse demanded a jury trial. The court held that she was not entitled to one. In re Prosser, 2008 WL 2388378 (Bankr. D. V.I. 2008).

The U.S. Supreme Court had held in GranFinanciera v. Nordberg, 486 U.S. 1054, 108 S.Ct. 2818 (1989) that the Seventh Amendment entitled a defendant to a jury trial when the defendant had not filed a proof of claim against the estate and when the plaintiff trustee was seeking to recover an allegedly fraudulent monetary transfer.

Here, however. the fraudulent transfer action was to recover estate property of which the non-debtor spouse had possession along with the individual debtor.

Thus, if a fraudulent transfer was established. the court had core jurisdiction over the issue of the return of estate property for the benefit of all creditors. With respect to the related turnover complaint, the relief sought by the Trustee was purely equitable and there was no right to a jury trial at all. In this case a non-debtor was denied jury trial in fraudulent transfer action. If you have a question a non-debtor denied jury trial in fraudulent transfer action, you should seek the advice of an experienced bankruptcy lawyer.

For more information about Bankruptcy and is a non-debtor denied jury trial in fraudulent transfer action – 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.