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THE CONSUMER BANKRUPTCY LETTER
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In This Issue:
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APRIL 5, 2004
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SIGN UP THIS MONTH FOR ACADEMY DISCOUNT
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CHAPTER 13 DEBTOR OWES INTEREST ON TAX DEBT
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BANKRUPTCY LAWYER IMPERSONATES JUDGE
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FEATURED BOOKS at Bankruptcybooks.com
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ASSET PROTECTION PROPOSED
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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.
SUBJECTS COVERED INCLUDE -
* The basic rules of discharging taxes in Chapter 7 and Chapter 13
* What is a tax return?
* What is willful attempt to evade the tax?
* Dischargeability of income taxes, payroll taxes, sales & use taxes
* What portion of a trust fund-payroll tax is dischargeable?
* How the IRS insolvency function works - practical information
* Handling tax claims and liens in Chapter 13 plans
* Attacking or avoiding tax liens in bankruptcy
* Negotiating with IRS after discharge to remove tax lien
* Valuation of tax liens in Chapter 13
* What to do with tax levies
* Dealing with sovereign immunity of states
* Other violation of stay issues
* Obtaining and understanding tax transcripts
* Tolling events
* Traps for the unwary & frequently missed opportunities
* Other practical aspects of handling delinquent tax liabilities
* Tips on litigating tax liability & discharge in bankruptcy court
Enroll before May 1 and save $100!
For more information about the Tax Discharge program, or to enroll, click on red below.
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REGISTER FOR THE NACBA CONVENTION APRIL 23 - BOSTON, MA. Visit NACBA.com
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BK ATTORNEY PLEADS GUILTY TO BANKRUPTCY FRAUD
Disbarred attorney Bridgette M. Harris of Bowie pleaded guilty today to four counts of bankruptcy fraud and fraudulent transfer of property in bankruptcy. In a statement of facts given to the court as part of her plea, Harris admitted that she had practiced bankruptcy law in Maryland, Virginia and the District of Columbia.
Harris also admitted to another scheme in which she filed personal bankruptcy in Brooklyn, N.Y., and lied about her debts, Social Security number and income. She also made telephone calls to the bankruptcy trustee falsely identifying herself as an NAACP representative, a judge, and a judicial law clerk. After that case was transferred to Maryland, she said she fraudulently transferred two pieces of real estate to relatives.
Harris also admitted that she solicited bankruptcy clients in 2002 under the business name "Foreclosure Prevention Network" and filed the clients under another attorney's name without the attorney's permission.
Harris will be sentenced in U.S. District Court in Greenbelt before Judge Peter J. Messitte on June 13. She faces a maximum sentence of five years in prison, a $250,000 fine and three years of supervised release.
SOURCE: BKinformation
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IRS AUDITS DECREASED IN 2002 BUT HIGH-INCOME TAXPAYERS WILL SEE INCREASE IN AUDITS THIS YEAR
Recent IRS statistics show a substantial decrease in the percentage of returns audited. Only 0.57% of all returns filed were audited in fiscal year 2002. That’s only about half the 0.99% audited in 1998 and only about a third of the 1.67% audited as recently as 1996. It’s simply a question of money and resource allocation. The IRS audit staff is down 29% from 1995, while the number of returns filed has grown by 13%. But the IRS has been redeploying those resources, however limited, to focus on business owners, those with investments and partnerships, and those with the big bucks.
However, taxpayers with incomes over $100,000 can expect higher audit rates in 2004 and beyond, according to new enforcement figures published by the IRS. The IRS reports that audits of higher income taxpayers, which it classifies as taxpayers earning more than $100,000, have jumped 52 percent since 2001. Across-the-board audits of all taxpayers increased 14 percent since 2002.
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UTAH CREDIT COUNSELING SERVICE SHUT DOWN
Consumers who relied on Consumer Credit Counseling Service of Utah to handle their debt payments are being urged to contact creditors directly after the Utah Division of Consumer Protection temporarily shut down the agency Tuesday.
Participants in CCCS debt-management programs each month paid the nonprofit organization what they owed for all their bills. CCCS then forwarded payments to creditors from a trust account. The state is investigating why the trust account did not have enough money to pay all its clients' bills.
SOURCE: Knight-Ridder / Tribune Business News
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UNEMPLOYED GIVING UP ON FINDING A JOB
The share of the U.S. population working or actively seeking a job has fallen to 65.9 percent, the lowest level in 16 years. Economists say the weak job market is causing people to give up their searches and drop out of the labor pool at an unusual pace. The effect is to hold down the unemployment rate, at 5.6 percent in February.
March figures were being released today by the Labor Department.
The economy, while growing, is failing to produce much new work to entice seekers. Just 126,000 net jobs were added in the past three months. The recovery is the weakest for job creation since World War II.
SOURCE; BKinformation.com; The Seattle Times
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THE FOLLOWING NOTES ARE INTENDED AS A "HEADS-UP" FOR RECENT CASE OPINIONS: OUR WEB SITE DOES NOT DISPLAY THE FULL OPINIONS
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DEBTOR'S DISSIPATION OF FUNDS NOT GROUNDS FOR DENIAL OF DISCHARGE
Although the debtor received and quickly dissipated a substantial insurance settlement within one year of her bankruptcy filing, there was no evidence of fraudulent intent to hinder, delay or defraud creditors sufficient to deny the debtor a discharge.
In re Sims (Bankr. C.D. Ill 2004)
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COURT MUST DETERMINE WHETHER DEBTOR OWNS PROPERTY
Bankruptcy court may not allow sale of property as "property of the estate" without first determining whether debtor in fact owned the property.
In re Rodeo Canon Development Corp. (9th Cir. 2004)
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CH 13 DEBTOR PAID PRINCIPAL OF TAX IN PLAN BUT HELD LIABLE FOR INTEREST AFTER DISMISSAL
Debtor Leonard Moore (the "Debtor") filed an Objection to the Internal Revenue Services' Amended Proof of Claim for the payment of penalties and interest on the Debtor's 1995 tax obligation, arguing that the tax debt was satisfied during the pendency of a prior Chapter 13 filing. The Internal Revenue Service (the "IRS") responds that Debtor's previous filing was dismissed, and as no discharge was granted to Debtor, 11 U.S.C. § 349(b)(3) permits the IRS to seek interest and penalties that accrued during the period that Debtor was under the protection of Chapter 13 of the Bankruptcy Code even if the principal amount of the tax was repaid during the prior bankruptcy case. For the Page 2 reasons set forth below, the Court holds that Debtor is required to pay interest and penalties on a satisfied tax obligation when debtor did not receive a discharge in his previous Chapter 13 filing.
IN RE MOORE, (S.D.N.Y. 2004)
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TRUSTEE MAY PURSUE UNSCHEDULED LITIGATION CLAIM
Where a debtor's failure to list a litigation claim on her schedules was inadvertent, and the equities balance in favor of her estate, judicial estoppel does not bar pursuit of the claim by her trustee.
Parker v. Wendy's International, Inc. (11th Cir. 2004)
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DIFFERENCE BETWEEN TRUE LEASE AND FINANCING AGREEMENT
In four cases combined in one ruling, court held a “lease” under § 365 must be a “true” lease, as opposed to a financing instrument. Because three of the four subject "leases" were not true leases, the debtor is entitled to summary judgment.
The four adversary proceedings that produced the present motions all involve a similar situation: tax-exempt bonds were issued to finance the construction of airport improvements for the benefit of United, and the debt service on the bonds was to be paid with funds received from United.
In re UAL Corp. (Bankr. IL 2004)
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ORAL MISREPRESENTATIONS DO NOT SUPPORT FRAUD EXCEPTION
§523(a)(6) does not allow for debts procured by oral misrepresentations of the debtor's financial condition to be found non-dischargeable because this interpretation would be incompatible with the more specific provisions of §523(a)(2)(B)
In re Gulevsky (7th Cir. 2004)
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IRS MAY LEVY ON TRUSTEE'S FUNDS AFTER DISMISSAL OF CHAPTER 13
Because the dismissal of a bankruptcy case prior to confirmation removes the protections afforded by the Bankruptcy Code, the funds held by a Chapter 13 trustee after administration of the estate are not afforded protection from levy. Although § 1326(a)(2) mandates that the Chapter 13 trustee return such funds to the debtor after deducting allowed administrative expenses, a taxing authority is entitled to levy such funds after dismissal and prior to disbursement by the trustee.
In re Steenstra (1st Cir. BAP 2004)
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TRUSTEE MUST ABANDON CAUSE OF ACTION
A Chapter 7 bankruptcy trustee's acquiescence to the continuation of an appeal of an estate cause of action by the debtor's attorney is insufficient to confer standing on the debtor or his attorney. For such permission to be effective, the cause of action must be formally abandoned by the trustee.
Turner v. Cook (9th Cir. 2004)
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Kings combo, CHAPTER 7 LAW & PRACTICE + CHAPTER 13 LAW & PRACTICE - save $58 / To order this book click on image at right . . .
Morgan King, FEES & ETHICS IN CONSUMER BANKRUPTCY CASES
Pamela I. Everett, BANKRUPTCY COURTS & PROCEDURES
Dahlstrom, BANKRUPTCY CODE & RULES BOOKLET
William Elliott, FEDERAL TAX COLLECTIONS, LIENS & LEVIES
Michael Crames and Herbert Edelman, FUNDAMENTALS OF BANKRUPTCY & CORPORATE REORGANIZATION
Stephanie Wickouski, BANKRUPTCY CRIMES
Morgan King, DISCHARGING TAXES IN BANKRUPTCY
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For online bankruptcy case legal research, visit SearchCases.com
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To combat out-of-control credit card use by consumers, the administrative office of the U.S. Bankruptcy Courts tried an experiment by issuing its own credit card.
Called the Bare Necessities Credit Card, it was limited to necessities of life, and could not be used for luxuries.
When Rooker Feldman, a bankrupt consumer, tried the card for the first time to pay for airline tickets to visit his dying aunt in Des Moines, the travel agent handed the card back to him, saying, “Sorry. This card was declined. The message says, “Take your car.”
When Feldman tried to use the card to purchase gas for the car, the attendant handed it back to him saying, “Sorry. This card was declined. The message says, 'Buy a bike.'”
So, he walked into a bike shop. He picked out a top-of-the-line racer, with all the trimmings. But when he went to pay for it with the Bankruptcy Credit Card, the clerk handed it back, saying, “Sorry. The card was decline. The message says, 'In Your Dreams.'”
Feldman, always the optimist, then picked out a cheap bike with fat tires. But when he tried using the card to pay for it, the message came back, “Try walking.”
Next, Feldman shopped for hiking shoes. He picked out a moderately priced pair, and presented his credit card. Not surprisingly, the card was declined, with the message, “Go barefoot.”
Feldman, who may be dumb but isn’t stupid, saw the handwriting on the wall. So, he set out for Des Moines in his bare feet. By the time he arrived, he had been run over by a kid on a skateboard, splattered with mud by a passing truck, had picked up parasites from walking barefoot on public roads, and to add insult to injury, his Bankruptcy Credit Card had been revoked.
When he inquired why the card was revoked, the court clerk reported that there had been too many inquiries on it, including inquiries for airplane tickets, gas, bikes, and shoes.
“But,” he said, “These were all necessities to get to my dying aunt in Des Moines.”
The bankruptcy clerk looked at him skeptically. “You took so long to get to Des Moines, by the time you got there your aunt was dead and buried six feet under. The whole trip was frivolous.” The clerk then reached through the window and stamped “REVOKED” on his forehead in large red letters.
“I think,” muttered Feldman, “I need a martini.”
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REGISTER FOR THE NACBA CONVENTION APRIL 23 - BOSTON, MA
Visit NACBA.com
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