Monday, April 15, 2013

Bad faith in a Bucks County Bankruptcy

I have represented many people in Bucks County who have filed bankruptcy more than once.  Due to significant life changes (i.e. death of a spouse, divorce, loss of job), individuals turn back to bankruptcy for relief. 

In a Bucks County Chapter 13 case, an individual may have multiple filings.  Sometimes, the Trustee will request a "Consent Order", which an individual would sign that acknowledges that any future filings must be granted by a bankruptcy judge. 

Tomorrow, I am appearing in court for an individual where the Trustee is requesting a Consent Order.  I have advised my client to not agree to signing the order.  As an advocate for my client, I have to make sure that the client does not waive certain rights.  In this case, I don't want my client to "handcuff" their future if this bankruptcy goes through.  As a Bucks County Bankruptcy lawyers, we have to make sure they are put in the best position to protect their financial future. 

Of course, you have to know the case law surrounding "what is bad faith" in refiling a bankruptcy.  The seminal case in the matter in the United States Bankruptcy Court Eastern District of Pennsylvania is In re Richard LegreeLegree involves a debtor with a history of at least 10 prior filings over 18 years.

The court indicated that many factors must be weighed under the "totality of the circumstances", including:
 
  • The nature of the debt.
  • The timing of the petition.
  • How the debt arose.
  • The debtor’s motive in filing the petition.
  • The effect on creditors.
  • The debtor’s treatment of creditors pre- and post-petition.
  • Whether the debtor has been forthcoming with the bankruptcy court. 
  • The length of time between the prior cases and the present one.
  • Whether the successive cases were filed to obtain favorable treatment afforded by the automatic stay.
    The effort made to comply with prior case plans.
  • The fact that Congress intended the debtor to achieve its goals in a single case.
  • Any other facts the court finds relevant relating to the debtor’s purposes in making successive filings.
  • Was there a material change in the debtor’s circumstances since the previous filing that warrants a fresh start?
  • Can the debtor show a confirmable and feasible Chapter 13 plan?
  • Does the debtor’s history of past filings reflect an intent to abuse the bankruptcy process through a strategy of successive filings without any real reorganization effort?
The judge in Legree prohibited the debtor from filing a bankruptcy for one year.  In my case tomorrow, my Bucks County client's specific history indicates a tremendous lack of bad faith.  As such, after weighing his case against Legree, I am confident we will prevail. 

3 comments:

  1. Thank you for sharing. Bankruptcy is a viable option that gives many honest, hard working people a safe alternative and a fresh start. Bankruptcy helps people who may have taken on too much debt, lost a job, went through a divorce, or had uninsured medical bills or other financial problems that have just become too overwhelming, to get back on their feet.

    - bankruptcy attorney Suffolk county, NY

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  2. Thanks for this post. I think its interesting what bankruptcy can offer people. In London Ontario its actually a fairly common thing. Thanks again.

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  3. My legal career has been dedicated to helping people who are struggling to meet their financial obligations. I know you have alternatives. Federal and Pennsylvania state laws are in place to give you relief when you need it and protect your rights. With honest, professional advice, you can identify all your options and choose the best solution. Bankruptcy Advice

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