Keeping boat, camper, trailer & tractor might be abusive in Chapter 7
IF YOU look at a boat, a camper, a trailer and a tractor separately and as individual items they may not be considered as badges of a luxurious lifestyle. But…
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A Chapter 13 plan should correspond with disposable income of means test
THERE is always a conflict between actual expenses and expenses allowed in the means test. Actual expenses are usually more than those allowed by the means test. As between actual…
Husband loses $9,000 to BK trustee when bride files for Chapter 7
THE advantage of a prenuptial agreement is clear when one of the spouses files for Chapter 7 bankruptcy soon after the marriage. But even in a community property state, money…
Income tax refunds is property of bankruptcy estate unless exempt
LET’S say that you decide to file for Chapter 7 relief this month to discharge $100,000 of hospital bills and credit card debt. You anticipate that you will have an…
Is defalcation by fiduciary dischargeable in bankruptcy?
DEFALCATION is an act of misappropriating funds that were entrusted to a person. The person who is entrusted with the funds is called the fiduciary. For instance, your friend wins…
Workshop or weekend home does not qualify as homestead
IN California, the equity in your homestead (your residence) is exempt up to a certain amount, depending on your circumstances. For instance, if you are at least 65 years old,…
Is inherited IRA exempt in bankruptcy?
NOT many people know that parents can transfer their retirement accounts such as 401k and IRA to their children tax free. For instance, you have a 401k of $150,000. At…
Autistic debtor discharges student loans
“In Re Todd, the 63-year old debtor had an autism disorder since early childhood. The court described the debtor as articulate and intelligent. If one were to read select portions…
Is Social Security part of disposable income in Chapter 13?
IMAGINE that you are a Chapter 13 debtor. You owe $100,000 of credit card debt. You receive a pension of $1,000, $1,500 from a part time job, and $1,500 from…
Can debtor compel bank to foreclosure?
WHY would a debtor want to compel bank to foreclose on his house? Recently, the LA times ran a story about a man who filed for Chapter 7 bankruptcy in…
Is $193,000 worker’s comp received one day post-bankruptcy exempt?
SUPPOSE that you lost your finger in a work related accident. You filed a worker’s compensation claim for that, then you filed a Chapter 7 bankruptcy. A day after you…
Pre-filing transfer of house to son fraudulent
LET’S assume that you lost your job and are no longer able to make the mortgage payments on your house, so you quitclaim the house to your son who takes…
Bank president convicted of bankruptcy fraud
THE bankruptcy petition must be as accurate as possible, otherwise, debtor may have to go to jail for bankruptcy fraud. I cannot overemphasize the fact that the bankruptcy petition must…
Failure to schedule rental income may be bad faith in bankruptcy
SECTION 707 of the bankruptcy code provides for the court’s authority to dismiss a bankruptcy case for abuse. What kind of conduct amounts to abuse of bankruptcy law by the…
Large mortgage payments from sale of assets may be evidence of fraud in bankruptcy
IMAGINE you won the new Prius in your church lottery. Instead of keeping the car, you sold it for $25,000. You use the $25,000 to pay down the mortgage on…
Is stockbroker’s forgiveable loan bonus dischargeable?
YOU know what a stockbroker is and what he does for a living, right? A stockbroker recommends what stocks to buy and sell to his client, and he makes a…
Ocean View apartment not reasonably necessary for Chapter 7 debtor
SCHEDULE J of the bankruptcy petition shows the actual monthly expenses of the debtor. This is different from the means test which specifies the allowable deductions of debtor using IRS…
House valuation for lien strip excludes foreclosure sales
CHAPTER 13 debtors are able to “strip” junior liens on their residences if there is no equity supporting the lien. To illustrate, debtor owes $100,000 of credit card debt, owns…
Sexual harassment damages not dischargeable in bankruptcy
LET’S say that you’re a man who loves women and you own a business distributing lingerie. You require all your women employees to wear the company’s products in the office….