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In two recent cases the 8th Circuit Court of Appeals has sustained summary judgments against debtors who failed to report claims against third parties that arose after the bankruptcy case was filed.
In the case of Jones v. Bob Evans Farms Inc., the debtor failed to disclose an employment discrimination claim that occurred 3 years after the bankruptcy case was filed. The bankruptcy case was filed in 2009 and in 2012 the debtor quit his job and filed a discrimination case with the Missouri Equal Opportunity Commission. The employer filed a motion for Summary Judgment claiming that the debtor was judicially estopped from pursuing his claim because he failed to report the claim in his bankruptcy schedules.
The 8th Circuit court agreed with the employer and declared that a debtor who intentionally hides a post-petition claim by failing to amend the bankruptcy schedules lacks standing to assert such claims in future legal proceedings and is thereby judicially estopped from litigating such claims.
A month later the 8th Circuit issued another opinion on this same topic in the case of Van Horn v. Martin where a debtor filed Chapter 13 bankruptcy in 2007 but failed to amend schedules to report an employment discrimination claim that occurred in 2011. After the debtor completed the chapter 13 case the employer was awarded a Summary Judgment because the debtor failed to report the new claim, and the 8th Circuit court sustained the summary judgment.
Judicial estoppel is an equitable doctrine which “prevents a party from asserting a claim in a legal proceeding that is inconsistent with a claim taken by that party in a previous proceeding.” New Hampshire v. Maine, 532 U.S. 742, 749 (2001).
The 8th Circuit applied a three-prong test to determine when judicial estoppel applies.
- A party’s later position must be clearly inconsistent with its prior position. By not amending bankruptcy schedules to report a new claim the 8th Circuit declares that no such claim must exist, and that is a position deemed to be clearly inconsistent with the later litigation.
- Whether the party succeeded in persuading the first court to accept its position. Receiving a discharge in a chapter 13 case where new new claims are not disclosed is considered to cause the first court to accept the position that no claim truly exists.
- Whether the party seeking to assert an inconsistent position would derive an unfair advantage if not estopped. Failure to disclose new claims arising during a chapter 13 gives the debtor an unfair advantage in that creditors may have benefited from increased payments derived from settlement of those claims.
The concept of Judicial Estoppel is widely understood by attorneys to require the disclosure of claims that exist prior to the filing of bankruptcy in both chapter 7 and chapter 13 proceedings, but many were surprised that the doctrine was extended to new claims arising after the bankruptcy was filed.
Attorneys for the debtors pointed out that the “bankruptcy estate” is not compromised of post-petition claims. They claimed that there is no legal duty under the Bankruptcy Code to disclose post-petition claims. However, the 8th Circuit responded that judicial estoppel may apply “regardless of whether he had independent legal duty to amend schedules.”
As a practical matter, these rulings will have a profound impact on debtors and their attorneys. First, many debtors are simply not aware of the requirement to report new claims to their bankruptcy attorneys. Debtors are inundated with information at the beginning of a case and it is unreasonable to expect them to remember such fine legal details during a five year case. Also, once a chapter 13 payment plan is approved the case really just fades into the background of their life. Payments are made the the court monthly, often through a payroll deduction, but there really is no ongoing contact with the court or their attorneys in many cases.
The 8th Circuit takes a drastic and dark view of debtors who fail to amend schedules to report new claims, but this omission is more common and innocent than the court understands. I frequently learn of new claims that arise from clients who have no idea that such claims should be reported. Usually we learn of these claims when a debtor defaults on plan payments and responds that they were off work due to a car accident or job injury.
Very commonly I discover debtors who are in the middle of new lawsuits for worker compensation claims or auto accidents, and their personal injury attorney has no clue of the need to report the claim to the bankruptcy court. Contrary to the 8th Circuit’s concern over dishonest debtors who hide claims with the intent of misleading the bankruptcy court of their ability to pay debts, most debtors and their injury attorneys are completely clueless of the need to amend bankruptcy schedules to report new claims. These rulings will cause a lot of unexpected grief when debtors realize they have lost their right to recover just compensation for injuries.
Bankruptcy attorneys will need to communicate with Chapter 13 debtors on an ongoing basis to ensure that new claims are reported. I can envision scores of malpractice lawsuits being filed against attorneys who fail to report new claims. This is going to be a mess.
Image courtesy of Flickr and The U.S. National Archives
You can buy a house after a Walworth County bankruptcy. The most common types of bankruptcy are Chapter 7 bankruptcy and Chapter 13 bankruptcy. How soon you can buy a house after bankruptcy depends on the type of bankruptcy filed and the type of mortgage loan sought. The various types of mortgage programs each have different requirements. Most financial institutions have their own mortgage loan requirements as well.
Buying a Home After a Walworth County Chapter 7 Bankruptcy
Once your Walworth County Chapter 7 bankruptcy is discharged, the clock starts. The typical wait time for a conventional loan is four years after a Chapter 7 bankruptcy discharge. There is a two year waiting period for FHA or VA loans after a Walworth County Chapter 7 bankruptcy discharge.
Buying a Home After a Walworth County Chapter 13 Bankruptcy
If you received a discharge from a Walworth County Chapter 13 bankruptcy filing, you will generally be eligible for a conventional loan two years after the discharge date. A FHA loan or a VA loan can usually be obtained much sooner.
Buying a Home the First Year After a Walworth County bankruptcy
There are some banks that will lend within the first year after a Walworth County bankruptcy discharge. However, there is a catch. You will pay a higher interest rates and will need to make a much larger down payment than the typical buyer. If you save for a down payment, obtaining a mortgage should not be a problem. (Remember: The bigger the down payment, the better.)
If you are unhappy paying the higher interest rate, but need to obtain a home now, think of the loan as short-term. Remember that you can always ask the bank to refinance into a better interest rate for you. If you have been faithfully making on-time payments for the last couple years, most banks will not have a problem refinancing the loan and lowering the interest rate for you, depending on the current interest rate.
The Best Option When Buying a House After a Walworth County Bankruptcy
Your best bet is to wait at least two years before buying a house after a Walworth County bankruptcy discharge. The mortgage terms and interest rate will be better if you wait. Waiting two years gives you enough time to prepare for a loan. You will have time to rebuild credit, maintain a good debt-to-income ratio, and save money in the bank for a big down payment.
Contact Our Walworth County Bankruptcy Attorney
If you have any questions regarding bankruptcy or home ownership, feel free to contact our Walworth County bankruptcy attorney. Our Walworth County bankruptcy attorney can offer the best advice based up your particular circumstances. You can reach our Walworth County bankruptcy attorney by phone at 262-725-0175 or by email via our website’s contact page. Wynn at Law, LLC has bankruptcy offices located in Delavan, Lake Geneva, Salem, and Muskego.
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*The content and material on this web page is for informational purposes only and does not constitute legal advice.
If you live in the City of Chicago, you have no doubt seen the boot installed all over your neighborhood. This is especially true around tax time when the city knows that the residents typically have access to some sort of tax refund from which to pay off city debts. In years past, to be+ Read More
The post You May Be Closer To Having Your Car Booted Then You Think appeared first on David M. Siegel.
Code Requirements The bankruptcy code enumerates several items that need to be provided in terms of bankruptcy filing. These include, but are not limited to, credit counseling, production of tax returns, production of pay advices and other items that may be requested by the panel trustee or Chapter 13 trustee. If your bankruptcy attorney is+ Read More
The post There Is Only One Absolute Requirement Prior To Filing Bankruptcy appeared first on David M. Siegel.
Here at Shenwick & Associates, we’ve filed approximately 1,000 bankruptcies in our 23 years of practice. And each case is a unique as the person who files it, involving a complex tapestry of assets, debts, real estate, marital status and other factors. But there’s one thing that all individual bankruptcy filings have in common–individual debtors must complete required educational courses both before and after the bankruptcy filing. Businesses filing for bankruptcy do not to take these courses.
These courses became mandated under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Section 109 of the Bankruptcy Code governs who can be a debtor under various chapters of the Code. Section 109(h)(1) of the Code provides that:
. . . an individual may not be a debtor under this title unless such individual has, during the 180-day period ending on the date of filing of the petition by such individual, received from an approved nonprofit budget and credit counseling agency . . . an individual or group briefing (including a briefing conducted by telephone or on the Internet) that outlined the opportunities for available credit counseling and assisted such individual in performing a related budget analysis.
The only exceptions to the credit counseling requirement are for incapacity, disability, or active military duty in a military combat zone. If a debtor has taken a credit counseling course with the 180 days prior to the bankruptcy filing, but not yet received the certificate of counseling, the certificate must be filed within 14 days after the bankruptcy filing.
In practice, as soon as we are retained by clients, we recommend that they take the credit counseling course right away, especially if it’s an emergency filing to stay litigation or foreclosure. It’s rare that clients have to take the course a second time. There are many approved credit counseling agencies, which charge $25 for counseling online and $35-$50 for counseling via phone.
Rule 1007(c) of the Federal Rules of Bankruptcy Procedure requires the debtor to file a certificate of completion of a personal financial management course within 60 days after the first date set for the debtor’s meeting of creditors pursuant to § 341 of the Code (the “341 meeting.”) The requirement to take a personal financial management course is contained in § 727 of the Code, which governs discharge. Section 727(a)(11) of the Code provides that the court shall grant the debtor a discharge [of debts], unless ”after filing the petition, the debtor failed to complete an instructional course concerning personal financial management . . .” The same exceptions for the credit counseling course (for incapacity, disability, or active military duty in a military combat zone) apply to the personal financial management course.
Although the certificate must be filed within 60 days after the first date set for the debtor’s 341 meeting, it can be filed any time after the debtor’s bankruptcy filing. In practice, we recommend that debtors take it as soon as possible after filing, since it often falls through the cracks. And we always remind debtors of the requirement when we attend their 341 meeting. Credit counseling agencies charge $15-$22 to take the course online and $25-$35 to take the course via phone.
For more information about credit counseling, debtor education and the bankruptcy process, please contact Jim Shenwick.
Many first time homebuyers do not understand the closing process. They are uncertain of what will happen in the near future during this stressful, yet exciting, time. Real estate buyers also do not know that it is extremely beneficial to have a Walworth County real estate lawyer on their side during the closing process.
First, let’s begin with the real estate closing process. For first time homebuyers, this will serve as a guide for what is to happen in the next two months. The basics of the real estate closing process are outlined below:
1. Loan Pre-Approval. Before you even begin to look for the perfect home, you should get pre-approved for a mortgage through a financial institution. Not only is this documentation necessary during the closing process, but also will provide you a price guideline for looking at homes.
2. Offer to Purchase. Once you have toured several homes in your price range and found the perfect home for your family, you will submit an Offer to Purchase to the seller. Negotiations will take place until the buyer and seller have both agreed upon a final price and closing date, along with other terms. This results in the seller accepting your Offer to Purchase or Counteroffer. You will present the seller with “earnest money”. The earnest money is held in a third party account and shows the seller you are serious about the purchase.
3. Begin Your Loan Application. Your financial institution will be informed of the home you are wishing to purchase. Your mortgage loan to purchase the home will begin to be finalized, if approved by the bank. Many tasks take place during this process.
4. Home Inspection. If you desire, a home inspection can be performed on the house you wish to purchase. Ordinarily, the buyer pays for the home inspection. Based upon the inspection results, you can request repairs be performed on the home by the sellers.
5. Other Inspections. Other inspections can be performed on the home you are wishing to purchase. You, as the buyer, will often pay for these inspections. Some may be voluntary. Some may be required by law. Some may be required by your financial institution lending you the money. These can include: property surveys, termite inspections, radon inspections, well water testing, etc.
6. Appraisal. Your financial institution will require an appraisal of the property. You, as the buyer, will often pay for the appraisal to be performed. An appraisal ensures the value of the property justifies the loan amount.
7. Loan Finalization. The lending institution will approve your loan to purchase the home based upon the appraisal, any inspections, your income, and your credit history. You will receive a Loan Commitment letter. You may need to show this letter to the seller.
8. Title Company. A title company is selected to verify the title of the property. Your financial institution will want to make sure there are no liens attached to the home title. Most closings are held at the title company’s office. The title company will handle all money transactions during the closing. Your earnest money will be applied to the closing costs.
9. Homeowner’s Insurance. Your lending institution will require homeowner’s insurance to be carried on the property throughout the term of your mortgage.
10. Final Walk-Through. 24 hours before closing, buyers can take a final walk-through of the property. Ensure that all repairs have been made andthat all of the seller’s items are out of the home.
Why Do You Need a Walworth County Real Estate Attorney?
The closing process is a complex one. There are many reasons to hire an experienced Walworth Country real estate lawyer. Read below to learn some the major reasons.
Not all real estate transactions go smoothly. During the closing process many problems can occur. A Walworth County real estate attorney is specially trained to deal with problems that arise during the closing process.
Real estate agents use standardized forms when conducting real estate transactions. These forms are not created to cover all unexpected circumstances. What happens when a problem arises that is not covered on the standardized form? A real estate attorney is often needed.
You may need to consult with a lawyer to answer important questions. An experienced Walworth County real estate attorney can help explain and revise your Offer to Purchase or Counteroffer. Although the form may seem ample enough in its standardized form, there may be many changes to make. If the property has an addition or deck, was the construction done correctly and lawfully? If you, as the buyer, wish to build a garage or build an addition onto the property, can it be done adhering to all association and zoning laws? What happens when one of your home inspections comes back undesirable, i.e. mold, termites, radon, etc.? What if the closing goes wrong: the seller backs out, your loan doesn’t get approved, you decide not to close based on inspection results?
A Walworth County real estate attorney can also negotiate on your behalf during the purchase process. A real estate lawyer will make sure that all contracts adhere to state law. A real estate lawyer can also address any issues that might affect the future use of the property.
What happens when during your final walk-through you find repairs not made or sellers’ items still in the home? Your Walworth County real estate attorney may decide a cash “holdback” from the seller’s proceeds is in order.
A knowledgeable Walworth County real estate lawyer is necessary to review title of property. The opinion of the real estate attorney is vital in regards to title in lieu of a title policy. Do you need title insurance? Are there title exceptions? What is not covered by the title insurance? Is the legal description correct on the title? Are there any easements? Did the previous owner make any agreements or restrictions and how will those affect you after purchasing the property? Are there liens or judgments on the property? Does the seller have the legal right to sell the property? These are all instances where you will need a Walworth County real estate attorney.
Without a seasoned Walworth County real estate lawyer by your side at closing, you are relying on the title company to complete an honest and fair closing statement. Are closing costs fair? Is the deed signed properly? Do you need further explanation on some items? What if there are last minute disputes? Without a real estate lawyer, your money and rights are at risk. Only a real estate lawyer can help you with these items.
Contact Our Walworth County Real Estate Lawyer
Real estate transactions are complicated. Having legal representation during the closing process makes the best sense for your future. Our Walworth County real estate lawyer can help protect your interests, ensuring your real estate transaction is completed fair and lawfully. Contact our Walworth County real estate lawyer today. You can reach our Walworth County real estate office by phone at 262-725-0175 or by email via our website’s contact page. Wynn at Law, LLC has real estate offices located in Lake Geneva, Delavan, Salem, and Muskego.
*The content and material on this web page is for informational purposes only and does not constitute legal advice.
Terrance was standing outside my door when I unlocked, Friday last week. Terrance filed Chapter 7 bankruptcy with me, January 2013. I tell people you can get approved for a mortgage as soon as two years after your bankruptcy discharge. Terrance got his mortgage approved two years and four months after his bankruptcy. Or he thought he […]The post Narrow Escape: After-Bankruptcy Mortgage Approved by Robert Weed appeared first on Robert Weed.
Terrance was standing outside my door when I unlocked, Friday last week. Terrance filed Chapter 7 bankruptcy with me, January 2013. I tell people you can get approved for a mortgage as soon as two years after your bankruptcy discharge. Terrance got his mortgage approved two years and four months after his bankruptcy. Or he thought he […]
The post Narrow Escape: After-Bankruptcy Mortgage Approved by Robert Weed appeared first on Robert Weed.
Two Common Chapters Most people are aware that there are two common chapters of bankruptcy for individuals and families. The two chapters are chapter 7 and Chapter 13 of the United States Bankruptcy Code. Nearly 75% of all bankruptcy cases are of the chapter 7 variety. Chapter 7 provides for a fresh start for someone+ Read More
The post What A Difference A Bankruptcy Chapter Makes: What A Relief! appeared first on David M. Siegel.
In a recent case, a lawyer was sanctioned by an Ohio bankruptcy judge for his conduct in connection with an adversary proceeding he brought on behalf of a client against a Chapter 7 debtor. The lawyer was vindicated, though, after the Bankruptcy Appellate Panel of the Sixth Circuit (the “BAP”) reversed the bankruptcy court on appeal. Read More ›
Tags: 6th Circuit Court of Appeals, Chapter 7
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