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THE CONSUMER BANKRUPTCY LETTER
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In This Issue:
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APRIL 12, 2004
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KEEP CURRENT ON TAX DISCHARGE ISSUES
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AFFORDABLE BANKRUPTCY RESEARCH
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REFORM BILL NOT ON FRONT BURNER?
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RETAIL VALUE MUST BE USED FOR REDEMPTION PURPOSES
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OPEN LETTER TO DEBTORS AND THEIR ATTORNEYS
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TIGHT LEGISLATIVE SCHEDULE LEAVES LITTLE ROOM FOR BANKRUPTCY
In recent statements, Senate Majority Leader Frist (R-TN) has been outlining the agenda for the Senate for the upcoming months and also, to some extent, the remainder of the session. Acknowledging time is "tight" Sen. Frist has not mentioned bankruptcy, HR 975, as being on the short term list (the next month or so) nor the list for the balance of the year.
However, this does not mean the bill is "dead" since proponents continue to negotiate and look for opportunities to move the bill, not to mention it would not be the end of a Congress without the 2-minute drill in early September.
SOURCE: David Goch
Washington Legislative Counsel
Commercial Law League of America
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PRIVATE TAX COLLECTION STALLED
What began as a strongly supported, bipartisan tax bill has been stalled by election year politics in the Senate. The corporate tax bill (S. 1637), primarily intended to repeal a disputed tax break that has resulted in European trade sanctions and replace it with other corporate tax provisions, hit a roadblock when Democrat senators sought to use the measure as a vehicle for several controversial amendments.
The corporate tax bill, which was approved by the Senate Finance Committee last fall by a near unanimous vote of 19-2, included language authorizing the Internal Revenue Service (IRS) to contract with private collection agencies (PCAs) to assist the IRS in the collection of overdue federal income taxes. This language has not precipitated any of the partisan wrangling that is occurring over S. 1637. However, it is unlikely that the IRS authorization language would move as a stand alone bill, thus leaving its fate subject to congressional action on the larger tax package.
Office of Management and Budget officials have estimated that utilizing PCAs to assist the IRS in collecting past due tax debt would bring close to a billion dollars to the Federal Treasury over 10 years.
SOURCE: ACA (Association of Credit & Collection Professionals)
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BK JUDGE'S OPEN LETTER TO DEBTORS AND THEIR COUNSEL
N.D. CAL, Santa Rosa Division, 10/03/97
I have noticed a disturbing trend among debtors and their counselto treat the schedules and statement of affairs as "working papers" which can be freely amended as circumstances warrant and neednot contain the exact, whole truth. Notwithstanding execution under penalty of perjury, debtors andtheir counsel seem to think that they are free to argue facts and values not contained in the schedules or even directly contrary tothe schedules. Some debtors have felt justified signing a statement that they have only a few, or even a single creditor, in order to filean emergency petition, knowing full well that the statement is false.
Whatever your attitude is toward the schedules, . . .
Read the rest of Judge Jaroslovky's letter by clicking on HEADLINES, below.
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SENATE REPORT ATTACKS CREDIT COUNSELING SERVICES
According to a report issued late March by the Senate Governmental Affairs Committee's Permanent Subcommittee on Investigations staff, the business model for the traditional nonprofit credit counseling company has changed significantly with many newer entities generating profits from for-profit subsidiaries. The report resulted from an investigation to determine the state of the credit counseling industry and to explore viable solutions to remedy problems.
In the report, entitled Profiteering in a Non-Profit Industry: Abusive Practices in Credit Counseling, many of those new organizations are "using a for-profit model designed so that 'their nonprofit credit counseling agencies generate massive revenues for a for-profit affiliate for advertising, marketing, executive salaries, and any number of other activities other than actual credit counseling. The new model looks to the consumer to provide those revenues."
Staff concluded this model resulted in "increased consumer complaints; such as excessive fees, nonexistent education, poor service and generally being left in worse debt than when they initiated their debt management program."
According to the report, there is little uniformity in industry regulation with their currently being various professional, state, and federal standards; some being mandatory, others are voluntary.
For full report visit HEADLINES.
SOURCE: CLLA listserve
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RETAIL VALUE MUST BE USED FOR REDEMPTION PURPOSES
The Debtor, Ms. Joann Smith (“Smith”), in this Chapter 7 proceeding proposes to redeem her automobile pursuant to 11 U.S.C. § 722 based on its wholesale value. The main issue presented is whether a wholesale value standard or a retail value standard should be used to determine the amount of a secured claim for redemption purposes. For reasons discussed below, the automobile must be valued under 11 U.S.C. § 506(a) according to its retail value discounted to eliminate inapplicable elements of that value, not wholesale value. Moreover, the showing as to purported wholesale value is not proper and must be rejected, though a proper showing could be made under Evidence Rule 803(17). For both reasons, the motion is by separate order denied.
The opinion cites for authority Associates Commercial Corporation v. Rash, 117 S. Ct. 1879 (1997)
In re Smith (Bankr. ND IL 2004)
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ADVERSARY PROCEEDING REQUIRED TO FIX VALUE OF LIEN
Held, in a Chapter 12 proceeding the court erred in finding JaKS was not a secured creditor, in using the confirmation process to avoid a valid lien absent an objection to said claim, and in using the confirmation process, instead of an adversary proceeding, to determine the extent and validity of the lien.
In re Anderson (8th Cir. BAP 2004)
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DEBTOR'S AUTISM JUSTIFIES HARDSHIP DISCHARGE
The presence of a disability is an important factor in assessing whether undue hardship exists warranting discharge of a student loan. A debtor who suffered from autism, and was unable to work due to that disability, was entitled to an undue hardship discharge.
In re Porrazzo (Bankr. CT 2004)
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THOUGHTS TO PONDER ABOUT DEBTS, POVERTY ETC.
Another good thing about being poor is that when you are seventy your children will not have you declared legally insane in order to gain control of your estate.
If you don't fail now and again, it's a sign you're playing it too safe.
- Woody Allen, comic
One must have some sort of occupation nowadays. If I hadn't my debts I shouldn't have anything to think about.
In this world there are only two tragedies. One is not getting what one wants, and the other is getting it.
When I was young I used to think that money was the most important thing in life. Now that I am old, I know it is.
- Oscar Wilde, author
If you merely don't pay your bills, you are nothing more than one more faceless, nameless deadbeat. But if you file bankruptcy, your creditors will mention your name often.
Try to avoid filing bankruptcy. Anybody can do that. The trick is dying owing as much debt as possible. That way you avoid the filing fee.
- Rooker Feldman, cheap philosopher
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