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THE CONSUMER BANKRUPTCY LETTER
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In This Issue:
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October 12, 2003
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BANKRUPTCY THIS WEEK . . .
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LEGISLATION & REFORM NEWS . . .
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SENATE FINANCE COMMITTEE APPROVES BILL TO ALLOW PRIVATE TAX DEBT COLLECTION
Given the country's $280 billion in delinquent federal taxes, the IRS is considering enlisting private collection agencies to help clear some of those accounts.
On October 1, the Senate Finance Committee approved by a vote of 19-2 a bill, S.1637, an international tax bill, entitled the Jumpstart Our Business Strength Act, that includes language that would allow the IRS to hire private companies for the collection of outstanding tax liabilities, with the companies entitled to up to 25 percent of the amounts they collect.
According to a description of the collection provision, all taxpayer protections that are applicable to the IRS also would apply to the contractors. The contractors would be prohibited from collections directly from taxpayers, meaning that all payments would be processed by IRS employees.
While no job losses are expected at IRS based on the amendment, Colleen M. Kelley, president of the National Treasury Employees Union, which represents some 97,000 IRS employees, said that proponents of the provision are ignoring plentiful evidence that private tax debt collection has not worked in the past.
SOURCE: CLLA
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CONVERSION OF NONEXEMPT ASSETS TO EXEMPT ASSETS ON THE EVE OF BANKRUPTCY, BY ITSELF, IS NOT FRAUDULENT
Debtor filed for bankruptcy after the entry of a sizeable judgment against him in an arbitration proceeding. On advice of counsel, he transfered proceeds from a non-exempt Individual Retirement Account ("IRA") into a Profit Sharing Pension Plan which was exempt.
Held, without other evidence of fraud, the mere transfer of assets from non-exempt to exempt on the eve of bankruptcy does not result in a finding of fraudulent transfer.
In re Stern, __ F.3d __ (9th Cir. 2003)
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CREDITORS MAY ENGAGE IN § 727 NEGOTIATIONS WITH DEBTOR
Negotiations regarding a § 727 challenge to discharge are permissible, so long as the creditor does not engage in coercive or harassing tactics. Where an unsecured creditor's negotiation statement (i.e., "I will report you to the licensing board if you do not settle this § 727 action") functionally forces the debtor to treat a professional license as collateral, a cause of action exists for violation of the automatic stay.
In re Diamond, __ F.3d __ (1st. Cir. 2003)
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Early to rise and early to bed makes a male healthy and wealthy and dead. - James Thurber
People hate me because I am a multifaceted, talented, wealthy, internationally famous genius. - Jerry Lewis
To be truly wealthy a man needs only love, family, good character, and choice real estate.- Father Teresa
Money is better than poverty, if only for financial reasons. - Woody Allen
BANKRUPTCY is a sacred state, a condition beyond conditions, as theologians might say, and attempts to investigate it are necessarily obscene, like spiritualism. One knows only that he has passed into it and lives beyond us, in a condition not ours. - John Updike
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