A minor glimmer of hope for Bucks County bankruptcy filers

If you have student loans and are considering a Bucks County bankruptcy, the future may be a little brighter since the last time I blogged about student loans. Currently, it is very difficult to discharge student loans in a bankruptcy.  Even if you're a senior citizen with limited future earning potential (despite senior citizen's maintaining 4.2% of total student loan debt).  As law student Jason Iuliano studied, only 300 out of 69,000 student loan borrowers who entered a bankruptcy attempted a discharge of their student loans.

Now, however, a bit more movement towards justice, equality, and debt forgiveness is occurring.  Recently, the 9th U.S. Circuit Court of Appeals (out of California) softened the hard-line stance.  In a nutshell, after reading the opinion, the influential 9th Circuit has slightly relaxed the standards of the Brunner test.

Some practical takeaways for Bucks County bankruptcy lawyers and their filers:
1)  Look to fight for a discharge if you are "tapped" out on your budget
2)  Prior to filing, don't give the court any reason to believe you are not "tapped" out -- get rid of Comcast, timeshare payments, etc.

Fraud and False Pretense: Lenny Dykstra Sentenced in Bankruptcy Case

In December of last year, Lenny Dykstra was sentenced for bankruptcy fraud and related crimes.  Specifically, he pleaded guilty to bankruptcy fraud, concealment of assets and money laundering.  He received a 6 1/2 month sentence.  The crux of the case was that Dykstra was busted from taking and selling things from his mansion while he was in bankruptcy.

The biggest thing I tell my Bucks County bankruptcy clients is that they must realize that everything they own comes under the purview of the bankruptcy court.  Specifically, you can't conceal assets, sell assets, or hide assets.  There are creditors who are owed.  A Trustee must determine if you have assets that can be liquidated (after your exemptions) and be paid to your creditors.  If you take those assets and liquidate them (or hide them) on your own, you are committing fraud.  In Dykstra's case, it was pretty egregious.  He tried to sell some memorabilia and furnishing from his home to, presumably, pay for his lifestyle.  You can't do that.

Thus, what I tell my Bucks County Chapter 13 clients and my Bucks County Chapter 7 clients is "when in doubt, wait and check."  You cannot take matters into your own hands and you cannot seek to liquidate assets while in bankruptcy.

Cancer and Bankruptcy

I tell a lot of my Bucks County bankruptcy clients that people come to see me for one of six reasons:

1. Death of a spouse
2. Divorce
3. Sickness
4. Unemployment
5. The economy
6. Some other life tragedy

The CBS article, "Cancer patients more than twice as likely to go bankrupt, study shows" is a telling sign about our health care system, the reason bankruptcy exists, and support for #3 on my list.

I have represented many people, as a Quakertown bankruptcy lawyer, who are in similar positions.  Rounds of tests, months of treatments, huge co-pays, and loss of wages due to sickness all create an unfortunate, perfect financial storm.  It is a crying shame to see people in this situation.

Frequently, the most difficult issue relating to a medical debt bankruptcy is the timing of the bankruptcy.  If a person has a chronic condition, the potential for post-petition debts may prevent a true "fresh start".  If a person is unsure of when their condition/sickness/illness may end, it may make sense to wait until the health situation is resolved.

In the end, if there ever were a reason for bankruptcy, medical debt seems to be it.  When someone gets sick and incurs debt simply trying to live, they are entitled to relief to move on.

How Did My "Bad Faith" Case Go?

I previously blogged about my case relating to a bad faith case in a Bucks County Chapter 13 bankruptcy.  The hearing lasted approximately 80 minutes.  The beginning involved arguments, timeline over, and review of the case with the bankruptcy judge and the Trustee.  I called my client to testify.

My Bucks County client did a terrific job.  We reviewed my questions a day before the hearing and on that day.  Federal bankruptcy court in Philadelphia is an imposing scene.  I often joke that the courtroom is so ominous that it is perfect for a setting in a courtroom drama movie.  Many clients, in this setting, can be intimidated.  My client, however, did a great job.  We fully explained the reasons for his filing, why it was in good faith, and what his goals were in this new Bucks County filing.

The judge heard final arguments between myself and the Trustee.  He then advised that he would take the matter under consideration and issue an opinion.

We received the decision this week.  We were successful.  My client is allowed to continue on in his Bucks County bankruptcy and he could not be more excited.

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 Legree.  Legree 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. 

Big News: New Firm, Same Results

As of April 22, 2013, I will be departing my current firm and moving to Gallant & Parlow, PC, a highly-rated Bucks County law firm that is home to some Super Lawyers. I will continue as a Bucks County Bankruptcy lawyer.  As the years continue on, I am so happy to look back and see all the lives that I have changed for the better through bankruptcy. 

As I tell most of my clients, "No one ever wants to see me."  But, the power of bankruptcy can fix a major source of frustration for people:  debt.  It can get rid of oppressive debt that impacts marriages, one's health, sleep, children, and work.  I am honored to proved a "fresh start" through a Bucks County Chapter 7 or 13.  As I receive thank you cards and holiday cards, it makes me proud to make a difference in so many people's lives.  Thank you for choosing me and thank you for inviting me into your lives during your most difficult times. 

Very Honored with My New Award - Client's Choice Award

Lawyer Paul Lang | Lawyer Bankruptcy