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THE CONSUMER BANKRUPTCY LETTER
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In This Issue:
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APRIL 19, 2004
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BANKRUPTCY ACADEMY - ENROLL NOW AND SAVE $100
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SUBSCRIBE TO TAX DISCHARGE UPDATE
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JUDICIARY CONFERENCE COM. TO MEET IN SEPTEMBER
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BANKRUPTCY ATTORNEY MURDERED
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KING BANKRUPTCY ACADEMY SCHEDULES 3-DAY SEMINARS ON DISCHARGING TAXES - LAS VEGAS & SAN FRANCISCO
The first dates scheduled for the 5th annual Bankruptcy Academy program on discharging taxes in bankruptcy cases have been scheduled for LAS VEGAS, Nevada, on Sept. 8, 9 & 10, and at FISHERMAN'S WHARF, San Francisco, October 27, 28, 29, 2004.
Principal presenters will be; Morgan King, attorney and author of Discharging Taxes in Bankruptcy; Charles F. Rosen, former chief of the Los Angeles IRS office of Special Procedures (bankruptcy, insolvency); Eric M. Casper, formerly Senior Trial Attorney, Tax Division, U.S. Department of Justice - Washington, D.C.; and Robert N. Kolb, formerly with the IRS and recently the prevailing attorney for the debtor/taxpayer in two important appellate cases.
The 3-day seminar and workshop will be a thorough exploration of bankruptcy remedies for delinquent taxes and tax liens in consumer bankruptcy cases (chapter 7 and chapter 13), emphasizing hands-on handlng of tax discharge cases.
Early registration for the either program saves $100 off the regular enrollment fee of $695. All previous programs have qualified for CLE in all states for which CLE accreditation was requested. On request the Academy will assist in obtaining CLE accreditation for an enrollee's state.
For more information about the Tax Discharge program, or to enroll, click on red below.
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BANKRUPTCY ATTORNEY MURDERED
Wednesday, April 14, 2004
AUBURN, Washington — A bankruptcy attorney, William Messer, 57, was found beaten to death late Monday in his law office, police said.
No one had been identified as a suspect yesterday. A law-enforcement source familiar with the investigation said there are several leads to follow but declined to be specific.
Messer received an admonishment — the most mild discipline meted out — from the Washington State Bar Association in December for failing to show up for a bankruptcy hearing. As a result, a car was repossessed from two of his clients, according to disciplinary documents. There was no indication yesterday that the case had anything to do with his death.
By J. Patrick Coolican
Seattle Times staff reporter
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TAX TROUBLE FOR BANKRUPT WORLDCOM
WorldCom, which filed bankruptcy listing some $41 billion in debt, the largest in history, may owes the state of Mississippi a billion in delinquent taxes, according to a spokesman for the Mississippi attorney general.
Mississippi's claim, which was submitted a couple of weeks ago, came to light on Friday, when the U.S. bankruptcy court judge heard arguments on the states' KPMG motion. WorldCom was based in Clinton, Miss., when it filed for bankruptcy and is now headquartered in Virginia.
"We have put in a claim for $1 billion," said a special assistant with the Mississippi attorney general. Asked if that amount included interest and penalties, he replied: "It's back taxes."
Mississippi claims that WorldCom concealed approximately $24 billion in revenue to avoid paying state taxes.
SOURCE: Reuters
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MORE ELDERS RELY ON CREDIT CARDS TO SURVIVE
More and more elderly Americans are relying on plastic to pay for their golden years.
The average credit card debt among people 65 and older has risen substantially, and more senior citizens are declaring bankruptcy.
"It's hugely embarrassing to most of the elderly people we talk to," said Susan Hunt, regional counseling manager for Consumer Credit Counseling Service of Greater Atlanta.
"They've prided themselves their whole lifetimes on working hard and taking care of themselves," Hunt said. "Now they are not able to do that anymore."
But they need not feel alone. The average credit card debt of persons over 65 was $4,041 in 2001, according to a study from Demos, a public policy group. In 1992, the average was $2,143. The numbers are adjusted for inflation.
Among those with incomes under $50,000, one in five families was in "debt hardship." That means they spent more than 40 percent of their income on debt payments, including mortgages.
SOURCE: THE ATLANTA JOURNAL-CONSTITUTION
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BANKRUPTCY SYSTEM "HAS SERVED THE PUBLIC WELL," SAYS JUDGE N GRANTING DISCHARGE OF SCHOOL LOAN
"The public policy traditionally served by bankruptcy law is to provide honest debtors with an economic fresh start. In chapter 7 cases, a debtor surrenders nonexempt property to a trustee who distributes it to the holders of allowed claims in exchange for a discharge of dischargeable debts.
"That equation has served the public interest well by recognizing the social benefits of giving honest but economically distressed individuals a chance to start over and at the same time making a distribution to holders of allowed claims in accordance with the priority scheme established by the bankruptcy code.
"As noted, the discharge does not include all debts. Here, the debtor seeks a determination that the outstanding balance of his student loans is discharged pursuant to 11 U.S.C. § 523(a)(8). Judgment shall enter in his favor."
IN RE PORRAZZO, (Bkrtcy.Conn. 2004)
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TAX CLAIM SECURED BY LIEN IS STILL A PRIORITY CLAIM
The debtor focuses on the "kind of claim" that the IRS holds as of the date of the filing of the petition and seizes upon the language in 11 U.S.C. § 507(a)(8) that allows only unsecured claims of governmental units to have priority of payment of claims.
However, this court finds that the language of 11 U.S.C. § 523(a)(1) which excepts from "any debt — (1) for . . . (A) of the kinds and for the period specified in § 507(a)(8) of this Title . . ." points to the "kind of tax " and not the "kind of claim" as determinative of the issue. The 11th Circuit Court of Appeals reached the same conclusion in In re Gust, 197 F.3d 1112 (11th Cir. 1999). This court finds the reasoning of the Gust court persuasive in the case at bar and holds that 11 U.S.C. § 523(a)(1) does not confine its exception to to allowed unsecured claims of governmental units.
IN RE BARRANCO, (W.D.Va. 2004)
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COURT MUST LOOK TO DEBTOR'S PROSPECTIVE EARNING CAPACITY IN RULING ON HARDSHIP DISCHARGE OF STUDENT LOAN
The "additional circumstances" prong of the three-part Bruner test for an undue hardship discharge of a student loan requires that the court make a predictive judgment as to the likelihood that the debtor's financial hardship will continue for a significant portion of the repayment period.
Additional circumstances are not defined solely by their nature or by a convenient label, but instead by their effect on the debtor's continuing inability to repay over an extended period of time.
In re Nys (9th Cir. BAP 2004)
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U.S. TRUSTEE RETURNS CLAIM TO WRONG ENTITY
When a creditor mistakenly submitted its proof of claim to the UST, that agency was required by Rule 5005(c) to note its date of receipt and forward it to the Bankruptcy Clerk. The UST's decision to return the claim to the creditor was in derogation of that Rule, ad the claim was entitled to be treated as an informal proof of claim.
In re Wheatfield Business Park LLC (9th Cir. BAP 2004)
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OMISSIONS ON SCHEDULES RESULTS IN DENIAL OF DISCHARGE
The bankruptcy court concluded that the Debtor demonstrated a "continued pattern . . . of making omissions and false statements in his bankruptcy schedules" and exhibited reckless indifference for the truth, notwithstanding any memory loss. The bankruptcy court based its decision on the following omissions from Debtor's schedules and amendments:
the Debtor's position as president of Freedom Properties; his debt-reduction agreement with Valore; his $50,000 personal injury action, listed only in the third amended schedules as a pending claim; and the Debtor's $62,304 judgment lien against Financial America.
The Debtor had knowledge of his involvement with Freedom Properties but asserted that he did not consider it an asset of the bankruptcy estate because he had no ownership interest in the company. He also knew that Financial America owed him money but explained that he thought the claim was worthless and did not know a judgment had been rendered. We agree that the "recalcitrant debtor may not escape a section 727(a)(4)(A) denial of discharge by asserting that the admittedly omitted or falsely stated information concerned a worthless business relationship or holding; such a defense is specious." Chalik v. Moorefield (In re Chalik), 748 F.2d 616, 618 (11 Cir. 1984).
Moreover, Debtor's detailed account at trial of his accident refutes his assertion that he could not remember the personal injury claim until his third amended schedule.
UST v. Wilson (Bankr. C.D. Il. 2004)
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ORAL MISREPRESENTATION DOES NOT RESULT IN NONDISCHARGE OF DEBT
Debts procured by oral misrepresentations of the debtor's financial condition are not made nondischargeable by Bankruptcy Code section 523(a)(6). That section cannot be used to circumvent the writing requirement of section 523(a)(2)(B).
IN RE GULEVSKY (7th Circ. 2004)
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TRUSTEE MAY PURSUE DEBTOR'S LAWSUIT
Bankruptcy trustee is not judicially estopped from pursuing plaintiff's employment discrimination claim on behalf of her creditors in bankruptcy; plaintiff's failure to disclose the suit to the bankruptcy court was inadvertent and the equities balance in favor of allowing the trustee to proceed.
PARKER v. WENDY'S INT'L, INC. (11th Cir. 2004)
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IN OTHER NEWS –
Famed economist and social philosopher Rooker Feldman, author of the best-seller, “I Have A Credit Card, Therefore I Am,” was interviewed recently about the new Economic Invisible Money plan, which was adopted across the country last month.
“Credit,” says Feldman, “is merely invisible money. More goods and services are paid with this invisible money than with tangible cash. The extent to which the economy relies on this virtual cash has made paper money and coins obsolete.”
Under this new system, says Feldman, each employer issues its own credit card, which is accepted by all retail and commercial entities. Employees are no longer paid with checks; instead, the employer simply credits the employee’s credit card account. Consumers only have one card … his or her employer’s card.
Many consumers are uneasy with the system. Feldman explains: “If you can’t see your money, you feel broke. In a simpler society where wealth is judged by the number of pigs and cows one has, it would be like having invisible pigs and cows. You see? It just doesn’t work.”
According to Feldman, the ones most affected are debtors’ attorneys. So often they are forced to disgorge their fees that they have come to think of retainer fees as merely short-term loans, rather than compensation. Nevertheless, seeing actual dollars placed on their desks by clients gives them the momentary illusion that they are being paid for their services.
Now, with invisible money, they have lost any sensation of being paid, with the result that they have lost all sense of self-worth. “This is why, continued Feldman, “these days we see so many debtors’ attorneys wandering aimlessly on city streets, dazed, unkempt and frequently drunk as skunks.”
“You can read all about it in my next book” Feldman says, “If I Can’t Fondle My Money, Do I really Exist?”
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