Tag Archives: Dischargable Bankruptcy Debts

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.

 

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.

 

Trustee is Bona Fide Purchaser

Trustee is Bona Fide PurchaserTrustee is Bona Fide Purchaser – Is Trustee is bona fide purchaser despite simultaneous filing of debtor’s electronic petition and schedules. Here’s an example,

When debtor refinanced her condominium, she gave Chase a deed of trust to secure her note that was not recorded. Instead, all that was recorded was the deed of conveyance from the previous loan, which was paid off in full. Thus, it appeared from county records that the condo had been paid off.

Debtor later filed for Chapter 7 relief, electronically filing her petition and schedules simultaneously. The schedules listed Chase’s secured debt. Chase then commenced an adversary proceeding to quiet title to its lien. It actually prevailed in the bankruptcy court on the theory that, under In re Professional Investment Properties of America, 955 F.2d 623 (9′” Cir. i992), the schedules provided constructive notice to the trustee of the unrecorded lien. The SAP reversed.

Chase appealed to the Circuit Court, which affirmed. Chase Manhattan Bank, USA, N.A. v. Taxel (In re Deuel), 594 F.3d 1073 (9′” en.2010). The Circuit Court focused on the phrasing in § 544(a)(3) that the trustee has the status of a bona fide purchaser of real property from the debtor “at the time of commencement of the case” without regard to any knowledge of the trustee “as of the commencement of the case .”

The court observed that when a Chapter 7 case is filed, only the petition commences the case, regardless of what else happens at the same time. “The trustee has not even been appointed when the petition is filed and could not possibly be a bona fide purchaser for value without notice upon the filing of the petition, but he is treated by the statute as though he were.” Moreover, because the strong-arm power exists without regard to any knowledge of the trustee it did not matter whether a hypothetical trustee who immediately read what was filed would have actual knowledge of the lien from the schedules. Finally, the Circuit Court distinguished Professional Investments limited to involuntary petitions that gave notice of an interest and further rejected Chase’s argument that its current lien should be treated as subrogated to its own previous lien, since it used the money from the most recent refinancing to payoff the loan from the prior refinancing.

If you have questions about whether the Trustee is bona fide purchaser in a chapter 7 case, you should contact an experienced bankruptcy attorney.

Trustee is Bona Fide Purchaser – for more information about Bankruptcy laws  – 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.