Recently, the district court for the Northern District of Illinois ruled on one of the important unresolved issues in chapter 13 bankruptcy: If a chapter 13 bankruptcy is dismissed, what happens to money that the chapter 13 trustee is holding when the case is dismissed? The district court decided that the funds held by the trustee belong to the debtor, and the trustee needs to return the money to the debtor.
I had the privilege of representing the debtors before the bankruptcy court. They had fallen behind in their payment obligations to the chapter 13 trustee, and then came current. They decided, thereafter, not to pursue their bankruptcy case any further. But the trustee had the money they’d paid to catch up. At the time of dismissal, the trustee was holding over $16,000. As their counsel, I wanted my clients to get their money back. The trustee, diligently endeavoring to maximize the creditors’ return, wanted to disburse the funds to their unsecured creditors.
My firm and I undertook this endeavor on their behalf for free. Seeking to advance the law – and help our clients retain a ton of dough – we chose to pursue this litigation against the trustee entirely pro bono.
This is a close legal question, but at the end of the day, the bankruptcy court – and now the district court – reached the right result, and ordered that the trustee should return the funds held at the time the case was dismissed.

Lake Law Blog
(posted 1 day 14 hours ago)

In light of General Mills policy of claiming that its binding mandatory arbitration requirement (with class action waiver) applies to anyone who purchases its products, including via third-party vendors, I have decided, to post the following legal notice, applicable to all persons, everywhere:     

By permitting, allowing, or suffering me to purchase any of your products or services, whether directly from you or indirectly through dealers, vendors, agents, or other third-parties, you agree to irrevocably surrender all rights to compel me to arbitration or to waive my rights to proceed against you as a member of a class action.  In order to make this provision effective and allow effective vindication of my rights, you also agree to irrevocably surrender all rights to compel arbitration and to prevent class actions against all other purchasers of your products and services.  You also agree to cover all of my costs associated with bringing an action, including attorneys' fees and any damages awarded against me, irrespective of the outcome of the action. 

Is General Mills notice any more effective than mine?  I don't see why it would be.  Let's get this long-range battle of the forms on! 

Credit Slips
(posted 1 day 14 hours ago)

Los Angeles Community Bankruptcy Seminar -  sponsored by the Vermont Slauson Economic Development Corporation.
(The program is private for invitees only. But any person in need of bankruptcy advice in Los Angeles is invited to call Mr. Wishman directly for bankruptcy help at 213-629-8801.)

Since 1981, VSEDC has stimulated economic development in South Los Angeles through commercial projects, affordable housing initiatives and business development.To support the needs of small businesses in Los Angeles, VSEDC operates the City of Los Angeles BusinessSource Center for the South region. BusinessSource is funded by the City of Los Angeles Community Development Department to provide training, counseling and access to capital services for small businesses. For more information, click here.

About the Speaker at the Los Angeles Community Bankruptcy Seminar.

Los Angeles Bankruptcy Blog
(posted 1 day 14 hours ago)

kitchen sinkNot every expenditure that benefits the debtor’s household or his family is a household expense.
And, if it’s not a household expense, it doesn’t get added to CMI in a single spouse bankruptcy filing.
That’s how the marital adjustment should work.
But it’s not so simple.
Household expense is not an expansive definition
After last week’s NACBA presentation on challenges where only one spouse files, I wondered why I hadn’t seen what my co panelist Billy Brewer made so clear.billy brewer
When only one spouse files bankruptcy, current monthly income includes only that part of the non filer’s income contributed to household expenses.

Bankruptcy Mastery
(posted 1 day 14 hours ago)

April 15th is the deadline to file 2013 tax returns with the IRS and your state taxing authority unless you’ve received an extension to file.  But you may notice we ask for several years of tax returns (if you were required to file) before we can file your bankruptcy. Why?
Well, let’s say you have regular income and want to do a Chapter 13 filing to make a payment plan for your debts over 3 years.  One of the requirements in the bankruptcy code says you have to file all tax returns for all taxable periods ending during the 4-year period ending on the date of the filing of the petition?  Huh?
Basically you have to have filed your last 4 years of tax returns before filing the bankruptcy.  What happens if you don’t?  Well, your Chapter 13 trustee can hold open the meeting of creditors to file those returns.  If they aren’t filed, the case can be dismissed and your bankruptcy will tank.  That would be bad.
The code also says all debtors have to provide certain tax returns to the trustee before the meeting of creditors.  If you don’t do that, the trustee can’t do their job and conduct the meeting.  Your case could be dismissed and you won’t get the benefit of the hard work, fees, and other documents you’ve already invested in the case.

Lake Law Blog
(posted 1 day 14 hours ago)

Does the creditor asserting a “subsequent new value” exception to preference liability have to be the creditor that provided the value directly to the debtor?  In In re LGI Energy Solutions, Inc., the Eighth Circuit became the first court of appeals to interpret section 547(c)(4) of the Bankruptcy Code under such facts.
Before its bankruptcy, the debtor provided bill payment services to its clients, large utility customers such as restaurant and fast food chains.  During the 90 days prior to bankruptcy, the debtor made transfers totaling approximately $259,000 to two utilities to pay outstanding invoices for services provided to the debtor’s clients.  The debtor’s chapter 7 trustee sought to recover the payments from the utilities as avoidable preferences under section 547(b) of the Bankruptcy Code.  In response, the utilities asserted the subsequent new value defense under section 547(c)(4).

(posted 1 day 15 hours ago)

The typical debts that are eliminated with Chapter 7 bankruptcy include credit cards, medical bills, personal loans and more.  The transcription and video below explain what is eliminated in greater detail. Jesse Barrientes:   What debts are typically eliminated with the Chapter 7? David Siegel: Well, a Chapter 7 is going to eliminate typical unsecured debt such+ Read MoreThe post What Debts Are Eliminated With Chapter 7 Bankruptcy? appeared first on David M. Siegel.

(posted 1 day 15 hours ago)

Under its aggressive quantitative easing program, the Fed is borrowing short-term and investing long-term, exposing itself to severe interest rate risk when short-term rates rise, writes former Fed economist Scott Hein.

BankThink
(posted 1 day 15 hours ago)
Mark Karpeles attends a news conference at the Tokyo District Court in Tokyo on Feb. 28.
Bloomberg

Mt. Gox Chief Executive Mark Karpelès said he would not come to the U.S. later this week to answer questions about the Japanese bitcoin exchange’s U.S. bankruptcy case, Mt. Gox lawyers told a federal judge on Monday. Read the Daily Bankruptcy Review article via The Wall Street Journal.
A federal judge Wednesday said a lawsuit filed by a former MF Global Holdings Ltd. futures customer against former Chief Executive Jon S. Corzine and other top officials could move forward but dismissed all claims against the failed brokerage’s independent directors and investment firm J.C. Flowers & Co. Read the DBR article in WSJ.

WSJ.com: Bankruptcy Beat
(posted 1 day 16 hours ago)