 | 
|
THE CONSUMER BANKRUPTCY LETTER |
|
|
In This Issue:
|
August 23, 2004
|
|
|
|
•
|
DISCHARGING TAXES MADE SIMPLE
|
|
|
|
•
|
BankruptcyBooks.com - FEATURING KINGSPRESS
|
|
|
|
|
•
|
NO LEGISLATIVE ACTIVITY THIS WEEK
|
|
|
|
•
|
HEADS-UP ON RECENT CASES
|
|
|
|
|
•
|
ATTORNEY CAN'T GET OUT OF E-FILING
|
|
|
|
|
|
CLE CREDITS APPROVED IN TEN STATES TO DATE
The Academy on Discharging Taxes in Bankruptcy has been approved for CLE credit in ten states, for from 16 to 19 hours. The states approved so far are: Arkansas, California, Colorado, Florida, Indiana, Iowa, Minnesota, Ohio, Tennessee and Texas. Accreditation from all other states having mandatory CLE is expected.
KING BANKRUPTCY ACADEMY - DISCHARGING TAXES MADE SIMPLE!
THREE SEMINARS ON DISCHARGING TAXES - LAS VEGAS, SAN FRANCISCO & SAN ANTONIO
The first dates scheduled for the 5th annual 3-day Bankruptcy Academy on discharging taxes in bankruptcy cases have been scheduled for -
LAS VEGAS, Nevada, on Sept. 8, 9 and 10, 2004;
FISHERMAN'S WHARF, S. F., on October 27, 28 & 29, 2004,
SAN ANTONIO, Texas, January 27, 28 & 29, 2005.
Additional 2005 dates are pending for Atlanta, Georgia, and Boston, Mass.
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. Also appearing - enrolled agents Jerry Satterberg and Bobby Covic.
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 practical handlng of tax discharge cases from A-to-Z.
CLE ACCREDITATION
Previous programs have qualified for CLE in all states for which CLE accreditation was requested. The Academy is applying for attorneys' CLE accreditation in all states for which CLE is mandatory.
CPE accreditation from the IRS for enrolled agents has been approved.
TUITION
Single attorney registration for Las Vegas - $695
Single attorney for Fisherman's Wharf or San Antonio $645
Double attorney registration any location $995 (saves $400!)
Paralegal or other office staff any location $350
Enrolled agent or CPA any location $495
For more information about the Tax Discharge program, or to enroll, click on red below or call (925) 829-6460 west coast time.
|
|
 |
|
|
JUDGE INSISTS BK LAWYER FILE ELECTRONICALLY
After a bruising 20-minute hearing before a federal bankruptcy judge, a West New York attorney agreed yesterday to learn how to file cases electronically or face court sanctions.
During a hearing in his Newark courtroom, Judge Morris Stern laced into Tomas Espinosa, who has refused to follow court rules requiring bankruptcy matters be filed electronically. He has filed 80 matters since last year.
"This is a tremendous burden on the bankruptcy court," the judge said. "These are all matters that weigh on the clerk's office at a time when the federal budget for the judiciary is being cut, and we just can't do it."
Earlier this month, Espinosa became the first attorney in New Jersey called to court to answer why he wasn't following the new rules. At yesterday's hearing, Espinosa said he had signed up for training for early September.
"I appreciate that it is difficult in a smaller practice to mechanize, but on the other hand, it can only be to the benefit of your clients," Stern said.
SOURCE: KATE COSCARELLI - Star-Ledger Staff
___________________________
FTC BLOWS WHISTLE ON CONSUMER-CREDIT SCAMS
It should not be surprising consumer credit is ripe for fraud, considering the big part it plays in Americans' lives. A new survey by the Federal Trade Commission in Washington found that three of the top four scams perpetrated on consumers involved credit.
The most frequently reported fraud involved advance-fee loan scams, in which a telemarketer or mass mailer promises a consumer a credit card or loan in exchange for an upfront cash payment.
Consumers who pay the money generally get nothing for it.
Other credit-related scams include selling credit card insurance for hefty fees, even though federal law limits a consumer's credit card fraud liability to a maximum of $50; and promising to repair a consumer's credit record by getting information removed from their credit report or setting up a new one.
"Those carrying a lot of debt are the ones most likely to respond to these frauds," said Pauline Ippolito, associate director of the FTC's economics bureau.
SOURCE: Eileen Alt Powell - Associated Press
|
|
 |
|
|
COURT RULES ON CONFLICT-OF-INTEREST AND ATTORNEY'S FEES
CONFLICT OF INTEREST - One issue in this bankruptcy appeal is whether a law firm that served as special counsel to the trustee of a bankrupt debtor's estate may be compensated for its services to the trustee from the debtor's estate when the law firm simultaneously represented one of the debtor's creditors.
Held, the interests of the Trustee and Cunningham did not conflict; they coincided; both were interested in enlarging the estate.[fn19] Thus, by seeking to enlarge the estate on behalf of the Trustee, RMF served both the interests of the Trustee and Cunningham.
COMPENSATION - The Bankruptcy Code allows a bankruptcy court to award a professional person performing services for the trustee "reasonable compensation" for those services. 11 U.S.C. § 330(a)(1). The statute itself and authority interpreting this provision makes clear that courts must not award compensation for duplicative services. See 11 U.S.C. § 330(a)(4)(A)(i) ("[T]he court shall not allow compensation for unnecessary duplication of services. . . .").[fn24] This prohibition against "double compensation" includes compensation for services that are duplicative (i) because they were performed by the same individual for two different clients and then billed to both clients and (ii) because they were performed by two different individuals for the same client and billed more than once.
In re Johnson, (E.D.Va. 2004)
_____________________
MULTIPLE COMPENSATION ISSUES
Although a professional is entitled to compensation for preparing a fee application, it is unreasonable to charge the estate for time spent by the professional negotiating its compensation with the estate.
A professional is not entitled to time spent in preparation for, or in anticipation of, advising a not-yet-formed creditors' committe.
A professional is not entitled to compensation for multiple people performing the same task unless the professional proves the need for such duplication.
In re Stations Holding Co., Inc. (Bankr. DE 2004)
_____________________
TRUSTEE CAN'T AVOID IRS LIEN
The IRS is not a "creditor that extends credit" within the meaning of 11 USC 544(a)(2). Thus a bankruptcy trustee is not entitled to stand in the shoes of a hypothetical IRS in exercising strong arm powers.
In United States v. Craft, 535 U.S. 274 (2002), the Supreme Court held that where federal taxes are owed by one spouse, and the spouse has property owned as tenants by the entireties with a spouse who had no delinquent tax liabilities, the IRS may attach the entireties property to collect the tax debt under 26 U.S.C. § 6321. Appellant argued that § 544(a)(2) allows him to stand in the shoes of the IRS as a creditor for purposes of reaching entireties property despite the exemption created by § 522(b)(2).
The bankruptcy court overruled Appellant's objection to the exemption on several grounds. The bankruptcy court noted that § 544(a)(1) conveys the rights of a judicial lienholder, whereas the lien described in Craft is statutory. Further, the bankruptcy court concluded that "[t]here are voluntary creditors and involuntary creditors, and in this situation, the IRS cannot be said to have extended credit."
Schlossberg v. Barney (4th Cir. 2004)
_____________________
UNDER STATE LAW PROPERTY PLACED IN ESCROW IS NOT PROPERTY OF THE ESTATE
Appellants NTA and NTA II placed their primary assets, the Membership Interests in a company, into an escrow account as part of an agreement to avoid foreclosure by a lender, appellee Concourse Holding Company. Appellants subsequently filed for bankruptcy under Chapter 11. They now claim that the Membership Interests placed in escrow are part of the bankruptcy estate and not the property of the appellee. Both the bankruptcy court and the district court ruled that the escrowed assets were not part of the bankruptcy estate and were properly distributed from escrow to the appellee. Interpreting the written agreements that govern the relationship between the parties, and applying both 11 U.S.C. § 541 and Illinois state law, we affirm.
The court cited in support Musso v. New York State Higher Educ. Servs. Corp. (In re Royal Business School, Inc.), 157 B.R. 932, 940-42 (Bankr. E.D.N.Y. 1993) (looking to state law to determine what rights the debtor had under an escrow agreement). A estate cannot succeed to a greater interest in property than the debtor held prior to . 11 U.S.C. § 541(d); see also Ga. Pac. Corp. v. Sigma Serv. Corp., 712 F.2d 962, 968 (5th Cir. 1983) ("[T]he rule is elementary that the estate succeeds only to the title and right in the property that the debtor possessed. . . .")
In re NTA, LLC, (1st Cir. 2004)
________________________
SECURITY INTEREST PERFECTED AFTER FILING BK IS NOT ALLOWED AS SECURED CLAIM - TRUSTEE MAY AVOID EQUITABLE LIENS
The Trustee objects to Instant Auto Credit's proof of claim because Instant Auto Credit did not attach to its proof of claim evidence that it had perfected its security interest in the Debtor's 4Runner prior to the Debtor's filing.
Even if Instant Auto Credit could prove that it was entitled to an equitable lien, the Trustee's avoidance powers trump equitable liens. See In re May, 310 B.R. 405, 421-23 (Bankr. E.D. Ark. ). Accordingly, Instant Auto Credit's claim was not perfected at the time Debtor filed , and the Trustee's avoidance powers allow it to avoid Instant Auto Credit's lien notwithstanding a contrary plan provision in Debtor's confirmed plan.
In re Shelby, (E.D.Ark. 2004)
_________________________
UNDER STATE LAW MONEY ON DEPOSIT FOR APARTMENT RENTAL MAY BE CLAIMED AS HOMESTEAD EXEMPTION
Casserino filed a joint Chapter 7 petition with his then-wife. At the time, Casserino was separated from his wife (from whom he is now divorced) and living in an apartment that he leased on a month-to-month basis. Pursuant to the rental agreement, Casserino had paid his landlord $2,000 prior to occupancy: $750 for the first month's rent, $750 for the last month's rent, and $500 as a security deposit ($100 of which was a nonrefundable cleaning fee). Casserino claims a homestead exemption on the funds.
Casserino argued before the court that the prepaid rent and security deposit were part of Oregon's homestead exemption pursuant to Or. Rev. Stat. §§ 23.240 and 23.250.[fn1] The Court held that Casserino was entitled to exempt the prepaid rent and deposit. Noting that "the homestead statute . . . is to be construed liberally to advance its purpose," the court found that "[u]nder Oregon law, a homestead may be claimed in any interest in property that carries with it the right of possession," including a tenancy. It further concluded that the deposit and prepaid rent, as "rights attendant [to]" the leasehold, were subject to the exemption.
In light of Oregon courts' focus on the debtor's possessory interest and the conclusions of most other jurisdictions, we hold that the term "owner" in Or. Rev. Stat. § 18.395 includes residential leaseholders. Casserino's leasehold therefore comes within Oregon's homestead exemption from the estate.
In re Casserino (9th Cir. 2004)
|
|
 |
|
|
BANKRUPTCY OLYMPICS NEWS
American Bankruptcy Olympic competitor Rooker Feldman last night captured 3 medals, including the coveted gold medal in the category, Testing The Trustee's Credulity.
For the Gold, Feldman won strong points with the originality of his bankruptcy schedules, in particular the debtor's budget, which included $500/month tithing to The Church of The Last Laugh, a religion which had only one member, to wit, the debtor.
Feldman also picked up points on his property schedules, which did not list a $1 million yacht; when asked about this asset at the 341 meeting, the debtor testified it belonged to his son. It was only later that the trustee learned the son was only six years old. When the trustee asked Feldman why this was not disclosed, Feldman's face turned beet-red, a nice touch which easily clinched the gold for this scrappy competitor.
Feldman also picked up the silver for Slickest Fee Agreement, a written document some 19 pages long, signed by the debtor's 6-year old son on behalf of the debtor, and showed that the $10,000 retainer fee was taken "in trade," namely, the son providing four weeks of little-league pitching coaching for Feldman's three-year old daughter, who it turns out is the debtor's half-sister, and who is also a creditor in the bankruptcy, claiming damages because she was hit for nine home-runs in the first inning of her first game. All of this drove the trustee to drink in an Olympic record 17 minutes, clinching the Bronze for Feldman in the Statement of Financial Chaos category.
|
|
 |
|
 |
|
PUBLISHED BY KING BANKRUPTCY MEDIA FOR BANKRUPTCY PROFESSIONALS 7080 Donlon Way Suite 222 Dublin California 94568 (925) 829-6460
© King Bankruptcy Media 2004 CONTACT US AT editor@bankruptcymedia.com
|
|
|
|
|
|
