Blogs
Charlie was a bad man. With his aggressive personality he intimidated and threatened others if they didn’t give into what he demanded. He grew rich on the work of others and reminded everyone that without him they were nothing, but such men are destined to fail because they never have enough and so they continuously pledge their empire to gain an even larger empire. In the process they go too far and eventually make risky investments that fail starting a cycle of going from bank to bank and victim to victim seeking precious cash to keep operations going. Realizing that everything he owned would soon be taken away as the banks began to seize his assets, Charlie transfers assets to family members and trusted confidants. But the banks start litigation for unpaid debts and their attorneys ask sharp questions about where all the assets went to and it becomes obvious that there is nowhere to hide. Feeling cornered, Charlie hires a cheap attorney who asks few questions of the know-it-all businessman and files a bankruptcy case. Of course, the bankruptcy petition fails to list all his assets and is completely blank as to all the transfers that occurred in the past year. Predictably, the bank’s attorneys show up at the bankruptcy Meeting of Creditors and begin pounding Charlie with questions about the location of his assets and the various transfers and demand explanations for the inconsistencies between what he wrote down on his loan application and the reality of his financial situation. Charlie gets a bad feeling that filing bankruptcy was an unwise decision and requests that his case be dismissed only to find that the Court and his executioners have no intention of letting him walk away. Welcome to the bankruptcy electric chair, Charlie.
Bankruptcy is a process designed to illuminate, not to conceal. To file bankruptcy is to strap oneself in for an examination.
When you have something to hide the last place you should be looking to park yourself is in the United States Bankruptcy Court. Although bankruptcy does protect a certain amount of exempt property there is a limit to the property exemption laws and that which is not exempt must be turned over to the Chapter 7 Trustee for liquidation. So, bankruptcy courts have a dual purpose: to protect and to liquidate. To facilitate the liquation function the Bankruptcy Code gives Chapter 7 Trustees special powers to avoid and undo fraudulent property transfers or preferential transfers to inside creditors (i.e., transfers to family members or business associates). In addition, the bankruptcy petition signed by debtors under penalties of perjury require a debtor to list each and every property transfer occurring within two years of filing bankruptcy and the Trustee may void fraudulent transfers occurring during the prior four years. The Trustee must be furnished bank statements and tax returns and creditors can easily schedule “2004 Exams” to interrogate debtors about their financial dealings. In short, bankruptcy is a process designed to illuminate, not to conceal. To file bankruptcy is to strap oneself in for an examination.
Unlike Chapter 13, Chapter 7 does not provide for an absolute right of the debtor to dismiss the case.
Charlie’s request to dismiss his case was denied. The court may only dismiss a Chapter 7 case for good cause. (See In re Turpen, 244. B.R. 431 (8th Cir. BAP 2000), and the primary factor in such a motion is whether it is in the best interest of the creditors to dismiss the case. In re Schafroth, 2012 Lexis 2346 (Bankr. New Mexico) (debtors who claimed $120,000 deposited in Swiss bank account were exempt were not allowed to dismiss case when exemption denied). Unlike Chapter 13, Chapter 7 does not provide for an absolute right of the debtor to dismiss the case. For Charlie’s creditors their best interest is served by keeping him locked into his electrifying bankruptcy chair, to use the powers of the bankruptcy proceeding to return transferred property and to investigate his business associates and banking relationships. He has given them powers to attach his property that would not existed to the same degree outside of bankruptcy.
Got something to hide? Don’t want to answer too many questions? The last place you want to find yourself is in a witness chair of the United States Bankruptcy Court. Do yourself a favor, look for a sunny beach instead.
Image courtesy of Flicker.
Crumbs Bake Shop was granted permission to sell itself to Lemonis-Fischer Enterprises in a New Jersey bankruptcy court on Tuesday, August 26th.
Judge Michael Kaplan approved the sale of the famed cupcake chain to Marcus Lemonis, star of CNBC’s “The Profit,” and Fischer Enterprises, which is best known as the owner of frozen treat Dippin’ Dots. The purchase will successfully conclude Crumbs’ Chapter 11 bankruptcy case, annulling $6.5 million in debt, according to the Wall Street Journal.
Crumbs closed all 49 of its locations nationwide in July. About half of those locations will remain closed, but new ownership intends to reopen stores in cities such as New York, Chicago, Washington D.C., Boston and Los Angeles.
Scott Fischer, chief operating officer of Fischer Enterprises, states the stores will still focus on Crumbs’ famed cupcakes, but there are plans to integrate other food brands owned by the Oklahoma based investment company, such as ice cream and popcorn.
Crumbs began searching for a buyer in late 2013, but a $5 million investment from Fischer Enterprises in January 2014 temporarily halted the search. Filings show the company resumed hunting in May after an “out of court restructuring failed to take hold,” as stated by The Wall Street Journal.
Unsecured creditors of the company now have little options for recovery of money. However, it is possible a creditor committee could attempt lawsuits against unspecified parties in an effort to recoup their losses.
CEO Edward Slezak is slated to maintain his position through the end of the year. Crumbs also expects to rehire previous employees who lost their jobs in the July closings.
"The court is pleased to see there will be employees going back to work, and that there will be certain landlords with continuing tenants," said Judge Kaplan.
Crumbs opened its doors in 2003 in a small shop on the Upper West Side of Manhattan. Jason and Mia Bauer, husband and wife entrepreneurs, quickly expanded their line of signature cupcakes throughout the continental U.S. with up to 79 stores.
After a rapid growth, the company went public in 2011 and soon faced hardship after years of losses and a decline in capital.
The post Crumbs to reopen after sale appeared first on The Bankruptcy Blog.
Crumbs Bake Shop will reopen after sale to Lemonis-Fischer Enterprises in a New Jersey bankruptcy court on Tuesday.
Judge Michael Kaplan approved the sale of the famed cupcake chain to Marcus Lemonis, star of CNBC’s “The Profit,” and Fischer Enterprises, which is best known as the owner of frozen treat Dippin’ Dots. The purchase will successfully conclude Crumbs’ Chapter 11 bankruptcy case, annulling $6.5 million in debt, according to the Wall Street Journal.
Crumbs closed all 49 of its locations nationwide in July. About half of those locations will remain closed, but new ownership intends to reopen stores in cities such as New York, Chicago, Washington D.C., Boston and Los Angeles.
Scott Fischer, chief operating officer of Fischer Enterprises, states the stores will still focus on Crumbs’ famed cupcakes, but there are plans to integrate other food brands owned by the Oklahoma based investment company, such as ice cream and popcorn.
Crumbs began searching for a buyer in late 2013, but a $5 million investment from Fischer Enterprises in January 2014 temporarily halted the search. Filings show the company resumed hunting in May after an “out of court restructuring failed to take hold,” as stated by The Wall Street Journal.
Unsecured creditors of the company now have little options for recovery of money. However, it is possible a creditor committee could attempt lawsuits against unspecified parties in an effort to recoup their losses.
CEO Edward Slezak is slated to maintain his position through the end of the year. Crumbs also expects to rehire previous employees who lost their jobs in the July closings.
"The court is pleased to see there will be employees going back to work, and that there will be certain landlords with continuing tenants," said Judge Kaplan.
Crumbs opened its doors in 2003 in a small shop on the Upper West Side of Manhattan. Jason and Mia Bauer, husband and wife entrepreneurs, quickly expanded their line of signature cupcakes throughout the continental U.S. with up to 79 stores.
After a rapid growth, the company went public in 2011 and soon faced hardship after years of losses and a decline in capital.
The post Crumbs Bake Shop will reopen after sale appeared first on The Bankruptcy Blog.
The Earned Income Tax Credit (EIC) is a tax credit that helps you keep more of what you earned. The credit was initially passed in 1975 to offset the burden of social security taxes and provide incentive for working. How is it calculated, and who qualifies?The post What is the Earned Income Tax Credit, and How Can It Help You? appeared first on Tucson Bankruptcy Attorney.
The Earned Income Tax Credit (EIC) is a tax credit that helps you keep more of what you earned. The credit was initially passed in 1975 to offset the burden of social security taxes and provide incentive for working. How is it calculated, and who qualifies?The post What is the Earned Income Tax Credit, and How Can It Help You? appeared first on Tucson Bankruptcy Attorney.
The Earned Income Tax Credit (EIC) is a tax credit that helps you keep more of what you earned. The credit was initially passed in 1975 to offset the burden of social security taxes and provide incentive for working. How is it calculated, and who qualifies?
The post What is the Earned Income Tax Credit, and How Can It Help You? appeared first on Tucson Bankruptcy Attorney.
When a person files for chapter 7 bankruptcy relief in Florida, he is allowed to exempt certain property from his bankruptcy estate. Exempt property generally means property that a person is allowed to keep free from liquidation by the chapter 7 bankruptcy trustee for distribution to creditors.
If a person has lived and been domiciled for a sufficient period of time in Florida, a person is allowed to claim the exemptions provided for under Florida and federal non-bankruptcy law. Florida exemptions include the homestead exemption provided by Article X Section 4 of the Florida Constitution. The homestead exemption is limited in size but not in value unless one of the limitations added in the 2005 bankruptcy code amendments homestead value applies.
Personal property is exempt to the extent of $1,000.00 and a further $4,000.00 in cases where a person does claim or received the benefits of a homestead exemption-. A vehicle is exempt to the extent of $1,000.00 in value.
Certain retirement plans and benefits such as IRAs and 401(k) plans are also generally exempt. Other exemptions include social security benefits and worker's compensation benefits.
A chapter 7 debtor claims his exemptions on schedule C of his bankruptcy schedules. If the chapter 7 bankruptcy trustee or other party does not object to the claim of exemptions, they are deemed allowed.Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankruptcy Cases and Mortgage Modifications (305) 891-4055
If you’re filing for bankruptcy, move your money out of Wells Fargo before you file – even if you don’t owe them any money.
It’s long been the practice of Wells Fargo to place what they call a “temporary administrative pledge” on bank accounts when the account holder files for bankruptcy. At that point, Wells Fargo will contact the Chapter 7 trustee to determine whether the funds are exempt or should be turned over to the trustee.
If the trustee tells Wells Fargo that the funds are exempt then the pledge is released. Until then, however, the funds are locked up and the person filing for bankruptcy has no access to the money.
As you can imagine, that doesn’t sit well with most people who are filing for bankruptcy. It’s not as if they’ve got a lot of extra cash sitting around as is, and locking up a bank account has the unfortunate effect of making it impossible to pay the rent and car loan, among other necessities of life.
In a decision handed down on August 26, 2014, the United States Court of Appeals for the Ninth Circuit held in the matter of In re Mwangi that the bank’s actions were perfectly legitimate.
Here’s a link to the decision (the PDF will open in a new tab).
I’m not going to get into the legal details of the case. If you’re a lawyer, you can read it on your own. If you’re thinking about filing for bankruptcy, all you need to know is that Wells Fargo will freeze your account when you file your Chapter 7 bankruptcy case.
Though the decision deals with a bankruptcy case originating in Nevada, this is now (until some other decision comes down on the other side) the law of the land in California as well because the Ninth Circuit covers California. No word on how other parts of the country will handle the issue.
What’s the fix for people who are filing for bankruptcy?
Largely the same solution as for people who have bank accounts with institutions to which they owe money when the case is filed.
Take your money out of Wells Fargo before your bankruptcy case is filed – even if you don’t owe the bank any money.
If you don’t, just accept that you’ll lose access to your money as soon as your bankruptcy case is filed.
When a debtor files Chapter 7 bankruptcy in California, the debtor will likely be requested to reaffirm their car financing debt. Most consumer credit agreements for cars include a provision that defines filing bankruptcy as an act of default. If the debtor is current on payments, and the only default is filing bankruptcy, this is known as “ipso facto” default. Unlike some states, California does not have a law that prohibits a creditor from enforcing ipso facto default in a consumer credit agreement. So a creditor, like Ford Motor Company, can enforce an ipso facto default in California. In other words, the creditor can repo the car if the debtor files a chapter 7 bankruptcy and does not agree to complete and sign a Reaffirmation Agreement.
If the debtor signs a reaffirmation agreement that is approved by the bankruptcy court, the "ipso facto" default dissolves. To execute a Reaffirmation Agreement in Chapter 7 means the debtor is agreeing that he/she will owe an outstanding balance on the car. The order that discharges the debtor's other debts will not apply to the reaffirmed car loan debt.
A debtor does not have to reaffirm the debt. Sometimes its better to not reaffirm debt, especially when the financing terms are very expensive compared to the present value of the car. For instance, if a car is financed for $15,000 at 5% interest with 4 years of payments remaining, and the car is only worth $8,000, it would be in the debtor's interest to not reaffirm the debt.
If the debtor refuses to timely enter into a reaffirmation agreement, then the automatic stay terminates on day 31, as per 362(h). That means that the creditor would have recourse to repo the car anytime thereafter.
Sometimes, the bankruptcy Judges in Fresno will not let a debtor reaffirm a car loan debt. A judge can find undue hardship to the debtor if the debtor would take on the old car loan debt. If this happens, the car could be repo'd by the car lender, as explained above. Just because the lender has the legal right to repo a car, does not mean that it will. Many times a car lender will hold off on exercising this right so long as the debtor is current with payments. The choice of whether a car gets repo'd in this scenario, is entirely up to the lender. The debtor has no legal right to prevent a repo.
Good News: Fannie Mae Announces New Shorter Waiting Period. Here’s the most important question for people who file bankruptcy because they can’t make their house payments: How soon can I buy a house again? Since the housing crisis, there have been two waiting periods: Two years after the bankruptcy; but three years after the house […]
The post How Soon After Bankruptcy Can I Get a Mortgage? by Robert Weed appeared first on Robert Weed.
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.