All items from Bankruptcy Mastery

What They Didn’t Teach You In Law School

MismatchSeen small business clients who clearly have the technical skill set for their field, but can’t make a go of it?
There’s a mismatch between their professional skills and the operational knowledge they need to run a business using those skills.
It’s the same in law:  you can be an insightful and accomplished lawyer, but if you can’t draw clients and serve them economically, you’re toast.
We see it, and now we propose to fix it.
Jay Fleischman and I are bringing the Bankruptcy Practice Workshop to Boston in July.
Joined by three skilled and articulate friends, we’re presenting two, intense days of marketing and practice management, full of low cost, immediately actionable ideas for attracting clients and running a practice.
We’ll cover



From Bankruptcy Mastery
Posted 16 hours 58 min ago

When Insurance Can Be The Death Of You

low flying planeRemember survey courses from college?
Kinda like flying low over new territory without ever landing and getting on the ground?
That’s what I propose to do with the topic of insurance.  Insurance, as we see it in bankruptcy.
It isn’t frequently a hot topic, but when it is, the numbers are large and the possibility for egg on your face is equally large.
Policies owned by the debtor
Insurance, a contract with a provider to pay on the occurance of a specified event, is an asset.  It needs to be scheduled.
Our local practice about scheduling term insurance (pure insurance with no accumulated value) has gone back and forth.
For purposes of symmetry with schedules I and J, I like to schedule it.  If the debtor is paying for insurance, it makes sense to list it. Otherwise, it’s like budgeting for pet care for a pet not visible on the schedules.
If it has a value that the debtor can borrow against or otherwise tap, that value needs to be scheduled.
From an asset perspective, it doesn’t matter whose live is insured.



From Bankruptcy Mastery
Posted 1 week 17 hours ago

Who Wants To Get Paid?

dollar sign leoAnyone interested in attorneys fees?
Are you filing adversaries and motions to collect money from creditors and other miscreants?
Then it’s worth looking at two snippets about attorneys fees that have floated across my radar screen in the last month.
FRCP 54
One of the participants at the Litigating on a Shoe String roundtable at the NACBA convention pointed out the deadline in Rule 54 to request attorneys fees.
Rule 54 contains a 14 day deadline after entry of judgment in which you can move for allowance of attorneys fees.  FRCP 54(d).
Another voice at the roundtable noted that local rules may alter that in your district.
But wait:  in bankruptcy adversaries and contested matters, only subsections a-c of the federal rule apply.
So, check your local bankruptcy rules if your courtroom victory entitles you to attorneys fees.
FRBP 7008
Beware of FRBP 7008  warned the headline in an ABI Journal article in March.  Absent strict compliance, you may lose your attorneys fees.



From Bankruptcy Mastery
Posted 2 weeks 1 day ago

The More We Get Together

San Diego Harbor & NACBA convention hotelNot a bad place for a weekend, eh?
The NACBA convention was great.  The two buildings on the left housed the convention.
But I’m back in the real world, at home, in the realm of real people with real problems.
Kudos to Tara Twomey who had a large hand in selecting the content of the weekend.  She seemed to be everywhere, talking about NCBRC or the amicus project, or just taking the pulse of the convention.
Roundtables
She also ran two of my personal favorite sessions, the roundtable discussions among attendess on mortgage issues and on bankruptcy litigation on a budget.
Those of us in the litigation session agreed to create a google group to continue the conversation on how to succeed in litigation without a gob of money.



From Bankruptcy Mastery
Posted 3 weeks 16 hours ago

Why Realization Dawns Too Late

question-mark-96286_640This time, I have a question for you.
How do we get laymen to see a situation as one involving legal rights rather than just a “life event”?
That question was asked of the audience at a training on new legal rights created by the California Homeowner’s Bill of Rights.  That bill includes protections for tenants in properties foreclosed.
The presenters admitted that the biggest challenge  in the new law was getting tenants to know that there was redress, or at least respite, in the law from immediate eviction .
Most unsophisticated tenants see their landlord’s foreclosure as just one of life’s unfortunate events, rather than an event that should send them to see a lawyer.
Too late
I saw it in my own practice yesterday when a well educated immigrant family came to see me, sent by friends to address an underwater junior mortgage.



From Bankruptcy Mastery
Posted 4 weeks 16 hours ago

Got These Dates?

210px-Blank_Calendar_page_icon.svg
Friday
The Chapter13 trustees ‘ Academy is sponsoring a free Means Test webinar Friday, April 19, 2:00 Eastern/1:00 Central.
(Somehow they forgot to hold the hands of those of us in the Pacific time zone.  My sources say that would be 11 am. PDT.)



From Bankruptcy Mastery
Posted 4 weeks 5 days ago

Projecting Tax Expense In A Life In Flux


taxesWhen your client’s tax situation is changing, projecting taxes for the means test becomes more challenging.
We talked earlier about correcting projected taxes for means test purposes when the situation is stable and the debtor is either under or over-withheld.
When there are more moving parts, for tax purposes, you’ve got different adjustments to make.
Loss of deductions
The most frequent change is that the debtor has either had property foreclosed or will be surrendering property following the filing.
The mortgage interest deduction is gone, as is the property tax deduction.  If the property is rental property, depreciation deductions are also lost.
A reader comment to the earlier treatment of this subject suggested that the bankruptcy lawyer just resort to figuring projected taxes via PaycheckCity.com.
That doesn’t do it for me if the client itemizes deductions.  The site just has no ability to deal with that level of complexity.



From Bankruptcy Mastery
Posted 5 weeks 1 day ago

Bankruptcy’s Eternal Struggle

greek wrestlersThe timeless questions asked by mankind include “why are we here“, “which came first...” and “coffee or tea“.
Bankruptcy lawyers wrestle with  ”which controls, b-22 or Schedules I and J“.
Having argued and lost the Pak case when BAPCPA was new, and felt vindicated when Kagenveama reversed Pak, I have strong opinions.
If Congress wanted a means test, then the means test controls, unless you show special circumstances.
But if I minus J controls, then every time the means test doesn’t work as some trustee thinks it should, he resorts to the schedules and his value judgments about what the debtor ought to pay.
I see that as opening the door to a standard that, put baldly, reads: use the test that squeezes the debtor more.



From Bankruptcy Mastery
Posted 5 weeks 5 days ago

Business Bankruptcy and The Bingo Effect

bingoThe lives of business bankruptcy clients are peopled with a less than obvious cast of creditors.  
You need to flush them out and get them in line before the case is filed.
Near miss
I had a close call, or rather my client had a close call, this week when some new information just slipped out.
Thankfully, it was prepetition.
The client, a very bright entrepreneur,  thought that the wrongful death suit pending against him could not be included in his bankruptcy until a judgment was rendered.  And he was pushing to file immediately!
BINGO, we had the name of another creditor for the filing.
Now, I ask you, how could he have neglected to mention a wrongful death complaint, even if his involvement was as the employer of the accused driver?  That has to be another story.
But further discussion brought out the fact that he had some further, related exposure to the customers of his business.
The homeowners on whose job the driver was working were the beneficiaries of an indemnity clause in the contract between client’s business and the homeowners.  More BINGO’s.



From Bankruptcy Mastery
Posted 6 weeks 1 day ago

Tax Withholding Not Etched in Stone

© kasparart - Fotolia.comTaxes are one of the means test expense items that I have labeled as a gamechanger.
Those gamechangers are entries on B-22 where a thorough bankruptcy lawyer has an opportunity to significantly alter the disposable monthly income.
Facility here starts with the concept that the “right” tax figure may not be what’s been withheld from the debtor’s paycheck.
 Expenses are forward looking
With the exquisite logic found in the means test, we’re projecting the debtor’s expenses in the future and deducting them from historic income.
So the question for Line 25  is not what was historically withheld or even, necessarily what was owed last year.  It’s what will it take to pay the coming year’s taxes.
When life unchanged
If you expect the debtor’s income and deductions to remain essentially constant, your first step is to check the last year’s tax return.  If the debtor got a meaningful refund, federal and/or state, then the withholding on the paychecks you’re working from is too large.
Most simply, you need to reduce the monthly tax withholding on Line 25 by 1/12th of the net refund.



From Bankruptcy Mastery
Posted 6 weeks 6 days ago