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THE CONSUMER BANKRUPTCY LETTER |
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In This Issue:
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September 27, 2004
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FISHERMANS' WHARF COMING FAST
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BankruptcyBooks.com - FEATURING KINGSPRESS
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PENDING EVENTS, SEMINARS & CLE
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HEADS-UP ON RECENT CASES
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IT COSTS HOW MUCH TO RAISE A CHILD?
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DISCHARGING TAXES - THE POWER SEMINAR!
JOIN MORGAN KING AT FISHERMAN'S WHARF - SAN FRANCISCO -
OCTOBER 27, 28, 29
DISCHARGING TAXES MADE SIMPLE & ADVANCED PROBLEMS
The next dates scheduled for the 5th annual 3-day Bankruptcy Academy on discharging taxes in bankruptcy cases have been scheduled for -
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; and other experts including 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 specific faculty may change depending on speaker availablity.
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 for Fisherman's Wharf or San Antonio $645
Double attorney registration any location $995 (saves $400!)
Single attorney from Northern California $495
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.
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US BUDGET DEFICIT TO HIT $445 BILLION
The war on terror is set to lead to a sharp rise in the budget deficit. The US budget deficit will hit a record high of $445bn this year, according to White House projections. It will rise from $375bn in 2003, the Bush administration forecast, citing the war on terror and economic downturn as contributory factors.
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USDA: COST OF RAISING A CHILD IS $178,590
The cost of raising a child in 2003 for middle-income families ($40,700 to $68,400) was projected to be $178,590, according to a recent study by the U.S. Department of Agriculture. Estimates are provided for major components of the budget by age of child, family income, and region of residence. The estimated annual expenditure is $10,760. The monthly expense is $897.
[ed. note: Government statistics on cost of living might be helpful in defending a chapter 13 budget, especially where trustees or judges talk about using the IRS expense standards as budget guides. Some links are provided at BankruptcyMedia.com - in right column under "Library" find "Budget Data."]
The complete report is available at HEADLINES, below.
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KING'S DISCHARGING TAXES IN BANKRUPTCY
5th ed. • 915 pages • 75 exhibits and checklists • over 1,000 cases cited • indexed
This book has been called "the bible" for discharging taxes in consumer bankruptcy cases. Used by thousands of lawyers, trustees, judges and other tax professionals across the country, it explains in simple yet comprehensive terms what kinds of taxes can be erased, when they can be erased, and how they can be erased in chapter 7, 13, or 11. It covers all the issues and traps for the unwary. This book is even used by revenue officers!
Says Ike Shulman, former President of the National Association of Consumer Bankruptcy Attorneys, "Every serious bankruptcy practitioner should have this book!"
At BankruptcyBooks.com
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HIGH INCOME AND ABILITY TO PAY 11% OF UNSECURED DEBT IS NOT SUBSTANTIAL ABUSE
The Debtor has unsecured indebtedness of at least $145,000.00. Based upon that amount of unsecured indebtedness, the dividend that Debtor could pay to those unsecured creditors with his disposable income and a 36 month plan would be approximately 11%. Even this figure probably is overly optimistic given Debtor's mortgage indebtedness which totals $763,197.87 and the likelihood that such indebtedness will not be fully paid in the foreclosure proceedings and result in additional unsecured deficiency debt. Faced with these figures, the representative from the Chapter 13 who reviewed the Debtor's income and expenses and who testified at the hearing concluded that the Debtor did not have sufficient disposable income to fund a 36 month plan that would pay 25% to unsecured creditors. Based upon the foregoing, the court finds that there has been no showing in this case that the Debtor has the ability to pay for purposes of § 707(b).
The court also considers the circumstances leading to the filing of the case and whether there were extenuating circumstances such as illness, loss of employment or calamity that led to the filing. This case was not filed as a result of sudden illness, disability or unemployment.
It does appear, however, that the breakup of Debtor's marriage did play a significant role in the filing of this case. The marital separation resulted in Debtor having increased expenses related to maintaining two households. The Debtor also was saddled with the legal and other expenses related to protracted and expensive litigation involving his former wife.
IN RE SHINN, (M.D.N.C. 2004)
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DEBTOR NEED NOT OBTAIN COURT AUTHORIZATION TO EMPLOY AN ATTORNEY TO HANDLE HER DIVORCE DURING CHAPTER 13
Debtor employed Brewer, Anthony as her divorce attorneys. Brewer, Anthony requests total compensation and reimbursement of expenses of $65,276.79 for that entire period. The court did not enter an order authorizing debtor to retain Brewer, Anthony as her special divorce counsel during the Chapter 13 case. A Chapter 13 debtor does not need court authorization to employ an attorney. The Code provides that a “trustee” may, with court approval, employ an attorney. 11 U.S.C. § 327(a) and (e). Section 327, both subsections (a) and (e), apply only to “the trustee.” Chapter 13 does not decree that a Chapter 13 debtor has the rights or performs the functions or duties of a trustee. However, the Code does require court approval of fees.
In re Powell (Bankr. N.D. Tx. 2004)
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GAMBLING LOSSES MAY JUSTIFY DENIAL OF DISCHARGE IF LOSSES CANNOT BE DOCUMENTED
Section 727(a)(5) of the Bankruptcy Code provides that "[t]he court shall grant the debtor a discharge, unless . . . the debtor has failed to explain satisfactorily . . . any loss of assets or deficiency of assets to meet the debtor's liabilities[.]" 11 U.S.C. § 727(a)(5).
"Section 727(a)(5) is broadly drawn and clearly gives a court broad power to decline to grant a discharge in bankruptcy where the debtor does not adequately explain a shortage, loss, or disappearance of assets." Martin, 698 F.2d at 886 (citations omitted). The Court is not concerned with the wisdom of a debtor's disposition of assets but instead focuses on the truth, detail and completeness of the debtor's explanation of the loss. See In re D'Agnese, 86 F.3d 732, 735 (7th Cir. 1996).
The Creditor demonstrated that in January 2003, the Debtor obtained approximately $64,000.00 from the refinance of the first mortgage on the Property. By October 2003, those funds were no longer available for his creditors. The only evidence adduced at trial was the Debtor's testimony that he lost the money gambling.
The Debtor offered no documentary or other testimonial evidence to corroborate his explanation. Those gambling loses are not reflected in his bank account records. See Creditor's Group Ex. F. The Court finds that the Debtor has not satisfactorily explained the loss of those funds. The Debtor simply has no corroborative records or other credible testimony to substantiate his explanation.
IN RE MANTRA, (N.D.Ill. 2004)
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PREPETITION ATTORNEY'S FEES OF CHAPTER 13 DEBTOR ARE NOT DISCHARGEABLE IN THE CHAPTER 13
In this case, the debtor's attorney ran up several hundred dollars in prepetition services in connection with the case, and which were unpaid as of date of filing. The attorney filed a motion for court approval of the fees.
The only issue addressed at the final hearing was whether the Prepetition Fees could be paid as an administrative expense. Daniels, the trustee, and a third party, appearing amicus curiae, argued without opposition in favor of allowing the Prepetition Fees as an administrative expense. Shortly after the final hearing, the bankruptcy court entered an Order allowing all postpetition fees and costs requested in the Fee Application, as modified by an agreement between Daniels and the trustee, as an administrative expense (the "Postpetition Fee Order"). The bankruptcy court did not rule on the Prepetition Fees in the Postpetition Fee Order, stating that the matter remained under advisement.
The bankruptcy court subsequently entered its memorandum opinion and order disallowing the Prepetition Fees as an administrative expense and allowing them as a general unsecured claim to be paid pro rata with the claims of other unsecured prepetition creditors under the terms of Debtor's confirmed plan.
The bankruptcy court held that, despite case law and sound policy in favor of treating the Prepetition Fees as an administrative expense, such treatment was not expressly authorized by 11 U.S.C. §§ 330 or 507, and those sections could not be interpreted to grant prepetition fee claims priority in light of the fundamental distinction between prepetition and postpetition assets and liabilities.
The Tenth Circuit BAP reversed, apparently holding that fees incurred prepetition could be deemed an administrative expense under 11 U.S.C. § 503(b)(1)(A), and thus were priority claims under 11 U.S.C. § 507(a)(1). Thus they could be paid in full through the chapter 13 plan.
[ed. note: the opinion fails to explain how services performed prepetition could be deemed administrative expenses. - M. King]
IN RE BUSETTA-SILVIA, (10th Cir. BAP 2004)
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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
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