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Supreme Court Says Being Listed as a Terrorist is ‘No harm.’ Last Friday, in a case called TransUnion v Ramirez, the Supreme Court said the Fair Credit Reporting Act cannot give you the right to sue TransUnion for putting your name on their OFAC terrorist warning list. Led by Justice Brent Kavanaugh, a 5 to […]
The post Supreme Court Says Being Listed as a Terrorist is ‘No harm.’ by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.

AP News reports that every year, only a fraction of Americans that need financial help file for bankruptcy. 14% of U.S households need financial help but only 1% of them file for bankruptcy. Many wonder why these households are not getting the financial help they need. Bankruptcy attorneys have a simple explanation: bankruptcy is a taboo subject. The fear of bankruptcy, the lack of education about bankruptcy, and the fact that many individuals think that this is the start of a difficult time and not an end to one, are all reasons why people disregard the idea of bankruptcy when dealing with financial troubles.
From The Article:

“Too often, people drain retirement funds or other assets that would be protected in bankruptcy to pay debts that will ultimately be erased, she says. Putting off bankruptcy also can make it harder to come up with the $1,500 needed to file a typical case.”

Bankruptcy attorneys want Americans to know that bankruptcy is not the end of your freedom. It’s an opportunity for people to start over.
Information about bankruptcy that everyone should know:

• You won’t lose everything
• You can get credit again
• Those who have a successful bankruptcy don’t wait until the last second

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The post The Taboo Of Bankruptcy Holds Americans Back From Financial Freedom appeared first on Allmand Law Firm, PLLC.

The 8th Circuit Bankruptcy Appellate Court (BAP) has issued a new opinion baring excessive attorney fees involved in the use of bifurcated fee arrangements in Chapter 7 cases. See In re Allen, No 20-6023.
The United States Trustee, the agency that polices bankruptcy cases, objected tot he excessive attorney fees charged by William Riding in two chapter 7 cases filed in Missouri.
The attorney offered his clients two payment arrangements:

• $1,500 for a traditional chapter 7 case where all fees are paid before the case is filed.
• $2,000 fee payable in 12 monthly installments after the case was filed.

Both debtors chose second option to pay fees after the case was filed.
BANKRUPTCY LOANS: FRESH START FUNDING LLC.
In both cases the attorney used a company called Fresh Start Funding LLC to finance the case. Under the Fresh Start program the attorney was paid $1,500 for each case and he sold his unpaid receivable to Fresh Start to collect from the debtor in monthly payments.  Fresh Start would earn $500 for financing each case over 12 months.
Essentially, the debtor is taking out a $1,500 loan with an effective interest rate of 57%.
REASONABLENES OF ATTORNEY FEES
The bankruptcy court found that both chapter 7 cases were relatively simple and routine. No complex issues were involved and both debtors received a discharge of their debts.
Since the attorney performed the exact same duties in these bifurcated fee arrangement cases as are performed in a traditional pay-upfront case, the court deemed the extra $500 charge excessive. The Bankruptcy Appellate Panel agreed and denied the extra $500 finance charge but allowed the attorney to be paid the standard $1,500 fee.
THE GLARING FRAUD NOT ADDRESSED BY THE COURT: THE AUTOMATIC STAY VIOLATION
What completely amazes me about this opinion is why the court did not address the obvious fraud this fee arrangement involved:

On May 21, 2020, Mr. Ridings filed a chapter 7 petition and creditor matrix on behalf of Mr. Allen. The schedules, statement of financial affairs, and disclosure of attorney’s fees were filed forty-four minutes later. Mr. Allen received his discharge September 23, 2020.

Forty-four minutes later!!  The Schedules, Statement of Financial Affairs, and the Means Test were filed forty-four minutes later??
What this means is that all of these forms were actually prepared BEFORE the case was filed. This fee arrangement in the Allen case was clearly a fraud.
The entire concept of a bifurcated fee arrangement is that this work is prepared  AFTER the case is filed. That is why attorneys, in theory, are allowed to be paid after the bankruptcy is filed.  Attorneys are allowed to collect post-petition payments because the bulk of the legal work is supposedly performed after the case is filed. But in this case ALL the work was obviously prepared before the case is filed since it was filed only 44 minutes later.

Why should this attorney be allowed to collect a dime for services that were clearly prepared pre-petition?

Why did the 8th BAP not discuss this obvious fraud and automatic stay violation? Why should this attorney be allowed to collect a dime for services that were clearly prepared pre-petition?  How is this not a violation of the bankruptcy stay that prohibits the collection of payments for services rendered pre-petition?
MESSAGE TO FRESH START FUNDING: YOU WILL NOT BE PAID, GO AWAY
The message to Fresh Start Funding and other bankruptcy fee lenders is clear: You will not be paid in the 8th Circuit (which includes Nebraska, Iowa, Missouri, South Dakota, North Dakota, Minnesota, Arkansas and Oklahoma bankruptcy courts.)
In these cases the debtor got what they needed–an affordable payment plan to file bankruptcy. The debtor’s attorney got paid $1,500 which is his standard fee. But Fresh Start Funding will not be allowed to collect the $500 financing fee.  In other words, get lost, you won’t be paid in the 8th Circuit.
A case is pending in the Nebraska bankruptcy court on this exact issue, and it is now abundantly clear how the Court will rule.
 
Image courtesy of Flickr and Rachel Kramer Bussel
 
 

 
What Debts can a debtor discharge in Chapter 7 bankruptcy filing? A recent article in the American Bar Association Journal discussed a disbarred attorney who attempted to file chapter 7 bankruptcy to discharge the debts he owed to the State  Bar Association for restitution to clients. The article and the decision can be found at https://www.abajournal.com/news/article/disbarred-lawyer-cant-discharge-debt-he-owes-state-for-reimbursing-his-ex-clients-bankruptcy-judge-says?utm_source=maestro&utm_medium=email&utm_campaign=weekly_emailIn that case, the Bankruptcy Judge held that the disbarred lawyer's restitution obligations were fines, penalties, or forfeitures payable to and for the benefit of a government unit and non dischargeable under section  § 523(a)(7) of the Bankruptcy Code.
What debts are dischargeable in chapter 7 bankruptcy? Clients and attorneys representing debtors often ask us this question.As many readers know Bankruptcy is a code-oriented area of the law and the sections  pertaining to a debtor's discharge are 523 and 727 of the Bankruptcy Code. Similarly to the analysis in the disbarred attorney case discussed above, an experienced bankruptcy attorney needs to understand the facts regarding a debt and how that debt would be characterized or treated under Section 523 and 727 of the Bankruptcy Code.What types of debts are generally dischargeable?Business and consumer loans, guaranties and good guy guaranties, credit card debt, medical bills, store purchases, phone bills, mortgage debt and car loans (providing that the debtor surrenders the collateral securing those loans)
What debts generally are non dischargeable?Recent taxes, trust fund taxes such as sales tax, alimony or child support, fines or penalties owed to a government agency,  injury caused from drunk driving or driving while under the influence of drugs
Anyone with questions about which debts are dischargeable in chapter 7  bankruptcy should contact Jim Shenwick   212 541 6224  [email protected]