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THE CONSUMER BANKRUPTCY LETTER
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In This Issue:
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FEB. 23, 2004
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BANKRUPTCY ACADEMY SETS TAX DISCHARGE SEMINAR
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CREDITOR COULDN'T PROVE RELIANCE
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PRIVATE TAX COLLECTION OPPOSED
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MIDDLE CLASS GOING BROKE
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REFORM ACTION URGED THIS WEEK
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KING BANKRUPTCY ACADEMY SCHEDULES 3-DAY SEMINAR ON DISCHARGING TAXES
The first date scheduled for the 5th annual Bankruptcy Academy program on discharging taxes in bankruptcy cases has been scheduled for Las Vegas, Nevada, on Sept. 8, 9 & 10, 2004.
Principal presenters will be Morgan King, author of Discharging Taxes in Bankruptcy, and Charles F. Rosen, former chief of the Los Angeles IRS office of Special Procedures (bankruptcy, insolvency).
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).
Additional tax discharge programs will be scheduled for Fisherman's Wharf in San Francisco, and San Antonio, Texas. Dates will be announced soon.
Seminars on other aspects of consumer bankruptcy practice will also be scheduled.
Early registration for the September 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.
For more information about the Tax Discharge program, or to enroll, click on red below. For more information on the Academy in general, click on the image at right or visit BankruptcyAcademy.com.
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DEBT FOUND DISCHARGEABLE WHERE CREDITOR COULD NOT PROVE REASONABLE RELIANCE
Held, nondischargeability claim for fraud and false financial statement denied where creditor failed to prove reliance.
AGF alleges that it was defrauded by the DEBTOR and that the DEBTOR used a false financial statement to obtain a loan by representing that he owned a truck free and clear of liens when, in fact, it was encumbered with an unpaid purchase money security interest. The DEBTOR maintains that AGF knew of the unpaid lien when it made the loan and did not rely on the financial statement. The Court finds for the DEBTOR and determines the debt to be dischargeable.
In evaluating whether a creditor’s reliance was reasonable, it is appropriate to consider the following three factors: 1. The creditor's standard practices in evaluating credit-worthiness (absent other factors, there is reasonable reliance where the creditor follows its normal business practices); 2. The standards or customs of the creditor's industry in evaluating credit-worthiness (what is considered a commercially reasonable investigation of the information supplied by debtor); and 3. The surrounding circumstances existing at the time of the debtor's application for credit (whether there existed a "red flag" that would have alerted an ordinarily prudent lender to the possibility that the information is inaccurate, whether there existed previous business dealings that gave rise to a relationship of trust, or whether even minimal investigation would have revealed the inaccuracy of the debtor's representations).
American General Finance v. Merritt (Bankr. C.D. Ill. 2004)
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LOST PROFITS RECOVERABLE IN CONTEMPT FOR VIOLATION OF STAY
Held, although lost past and future profits can be recovered as contempt sanctions for violations of the automatic stay, the debtor failed to prove that a creditor's stay violations caused the discontinuance of the debtor's operations.
In re All Trac Transporation, Inc. (Bankr. N.D. Tx 2004)
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DEBT NOT DISCHARGEABLE WHERE DEBTOR TRASHED PREMISES
Held, liability arising under a debtor/tenant's lease obligation to return the leased premises in good condition were nondischargeable where the court found that the debtor intentionally damaged the leased premises.
In re Alderson (Bankr. Neb. 2004)
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HELD, FAIR CREDIT REPORTING ACT REQUIRES THOROUGH INVESTIGATION OF CONSUMER DISPUTE
The case, brought before the 4th U.S. Circuit Court of Appeals in Richmond by Newport News resident Linda Kay Johnson, clarifies a part of the Fair Credit Reporting Act that says credit issuers must investigate complaints. Until now, "investigate" could have meant a cursory records check. The court's decision demands more in-depth investigations when consumers ask for them.
By law, the appellate judges wrote, if a creditor cannot verify disputed information, credit agencies are to delete the item or modify it after further investigation. A jury, the judges wrote, "could reasonably conclude that if the MBNA agents had investigated the matter further and determined that MBNA no longer had the application, they could have at least informed the credit reporting agencies" that MBNA couldn't verify Johnson was responsible for the account.
Johnson v. MBNA AM. Bank (4th Cir. 2004)
SOURCE: AP
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