Violations of the Automatic Stay

If a creditor in your Bucks County bankruptcy continues to harass you, what can be done?

If you are filed, you are protected by the Automatic Stay.  I always like to say that the automatic stay is "sacred" in the bankruptcy code as it provides one of the main benefits of filing for a Bucks County bankruptcy -- you can be free of creditor harassment.

If however, an individual is injured by a willful violation of the automatic stay, they may recover actual damages, including costs and attorney's fees, from the creditor who violated the stay.  There is also potential for punitive damages when appropriate.

Under Section 362(h) of the bankruptcy code, damages may be recovered if the creditor knew of the stay and its actions were intentional.  Frequently, this is proven by showing the creditor listed on the petition and showing evidence of their continued violations.  Moreover, additional letters from the bankruptcy attorney to the creditor is helpful.

I just had this situation with a person from Feasterville.  He was sued by a creditor who was definitely listed on the bankruptcy petition.  I wrote a short, terse, and scary letter to the attorney representing the creditor.  In rapid fashion, the attorney withdrew the suit.  Why was the suit withdrawn so quickly?  Because the attorney knew the power of the automatic stay.

Eviction and Bankruptcy, Part 3

We have previously blogged about eviction and bankruptcy here and here.

There is a big exception to our previous posts -- even if you cure your deficiency and post the one month rent with the bankruptcy court as we discussed in Part 2, you may still not prevail if your eviction was based on the endangerment of the property or the illegal use of controlled substances on the property.  The landlord/lessor would have to file with the court and serve the Bucks County Bankruptcy lawyer a sworn certification stating that the eviction action was due to one of the aforementioned exceptions.

Eviction and Bankruptcy, Part 2

Previously, we spoke about the limited effect of a bankruptcy if a landlord has obtained a judgment in Bucks County.

But, there are potential fixes.  The Bucks County renter can keep the automatic stay in effect for 30 days (meaning -- not get evicted) IF, pursuant to 11 U.S.C. 362(l)(1), the debtor files with the bankruptcy petition and serves on the landlord a sworn certification under non-bankruptcy law that the debtor is permitted to cure the default that gave rise to the eviction AND by depositing with the clerk of the bankruptcy court a month of rent.

If, during the 30 day period, the debtor cures the entire default, then the automatic stay will be permanently reinstated unless the landlord objects.  If the landlord objects, a hearing will be held on the reinstatement of the stay within 10 days.

Eviction and Bankruptcy, Part 1

If a person in Bucks County files for bankruptcy and they are facing an eviction, they must first determine in if the lessor (i.e. landlord) has obtained a judgment of possession against the debtor prior to the filing of the bankruptcy case.

If a judgment has occurred, then the automatic stay does not stay/stop the continuation of an eviction or similar action for nonpayment of rent.  See 11 U.S.C. 362(b)(22).

BUT!  There are potential fixes.  In our next blog post, we will discuss potential strategies.

Cooperation with the Trustee in a Bucks County Bankruptcy

In a Bucks County bankruptcy, a debtor has numerous obligations with the court.  Your lawyer should have advised you about the paperwork requirements and your duty to disclose all of your assets.

There's an even more loose requirement -- 11 U.S.C. 521(a)(3) requires the debtor to cooperate with the Trustee to the extent necessary to enable the Trustee to perform his or her duties and the debtor, per 11 U.S.C. 727 (a)(6), (d)(3), must comply with all lawful orders of the bankruptcy court.

Thus, it is incumbent upon a debtor to stay in touch with their Bucks County Chapter 7 and 13 lawyer to discuss any additional obligations they may have.

Social media, being smart, and looking for fraud in Bucks County bankruptcy

I went to the 18th Annual Bankruptcy Institute in Philadelphia.  It is the main conference bankruptcy practitioners go to every year.  Yes, it is perhaps the most boring conference possible for 99% of the population.

But, I love the conference.  This year, the ethics panel discussed social media.  One particular item of interest was how social media can "catch" fraud and false pretense.  One of the U.S. Trustees told a story about how MySpace (back when it was popular) showed a debtor had a side business that was not listed on their petition.  At the 341 hearing, the debtor lied under oath when directly asked about additional businesses.  The Trustee informed the crowd that the person served jail over the fraud.

I recently have begun to use Google and Facebook to double check certain issues with clients.  So far, it has afforded me the opportunity to turn down a Bucks County bankruptcy client based upon issues I found online.  Obviously, I'm keeping the reasons vague for attorney-client confidentiality.  

Could the bankruptcy have gone smoothly?  Possibly.  But, I was reluctant to believe the potential client based upon the voluminous information I discovered.

It wasn't worth it for me as an attorney.  It could have been a major problem and one that possibly could have tarnished my reputation.

Sub-Prime Mortgages

My good friend who is also a bankruptcy lawyer in Burlington, NJ, sent me this pathetically funny video on the housing crisis and how we got to where we are.  The video is funny (watch out from some bad words) and uses stick figures to explain the least funny part of this economy -- people losing their homes.  When you have 6 minutes to spare, check it out.

Domestic Support Obligation

Most experienced bankruptcy lawyers know that a Domestic Support Obligation ("DSO") is a debt that is not dischargeable in bankruptcy.  Under 11 U.S.C. § 101(14A), a DSO is:

(14A) The term “domestic support obligation” means a debt that accrues before, on, or after the date of the order for relief in a case under this title, including interest that accrues on that debt as provided under applicable nonbankruptcy law notwithstanding any other provision of this title, that is—
(A) owed to or recoverable by—
(i) a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible relative; or
(ii) a governmental unit;
(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child’s parent, without regard to whether such debt is expressly so designated;
(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of—
(i) a separation agreement, divorce decree, or property settlement agreement;
(ii) an order of a court of record; or
(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and
(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child’s parent, legal guardian, or responsible relative for the purpose of collecting the debt.

Bucks County residents frequently come to me before, during, and after a divorce.  The biggest issue is whether they have debts with the former/separated spouse and what type of debt they have.   Shared credit card debt is likely not a DSO, unless it is assumed in lieu of a DSO.  Confusing?  Of course.  That's why you need to get a fresh start and get a free consultation immediately.

Why I Can't Stand "Debt Settlement" Companies for Bucks County Families and Individuals, Part 1 Billion

I was speaking to a Bucks County bankrupty client today who had tried "debt settlement".  I Googled the company's name and included "scam" in the search.  The first result was intriguing.

What is completely buried in the Terms of Agreement with the debt settlement company, which is highly unlikely to be slowly, and exhaustively, explained to the client is that debt settlement is that settled or forgiven debt is taxable.  But, discharged debt in a bankruptcy is not taxable.

So, not only does debt settlement not work, but you get hit with a tax bill at the end.

This makes me sick

A Washington Post investigative article shows the despicable state of tax liens in Washington, D.C.  Specifically, people are losing their homes over small (~$2,500) tax liens.  A lot of the properties were in low-income areas and had elderly homeowners.

I read the article twice and saw no mention of bankruptcy.  A Chapter 13 bankruptcy could have stopped the sale of these homes.  For $281 (the filing fee), a person can be in a Chapter 13 for 5 years and spread the payments over that 60 months.  I know the community legal services in the country  are tapped beyond their capabilities (just like Legal Aid in Bucks County is cutting back), but this would have been a quick fix if a program existed.  If you are looking for a Bucks County bankruptcy attorneys to stop a tax lien sale, call me immediately.  I do not want to see your home lost.

I can't believe I'm linking to TMZ.com

Here's a first for the Bucks County Bankruptcy Blog -- I'm linking to TMZ.com.  I'm not writing about the latest celebrity pregnancy, however.  I'm still writing about relevant issues relating to being a Bucks County Bankruptcy attorney.

It appears that Warren Sapp, former NFL superstar, had a "massive" collection of Nike shoes sold at auction pursuant to a Chapter 7 bankruptcy filing.

For those who don't know, when you file for Chapter 7 and have "excess assets", a Trustee can liquidate the assets.  If, for example, a person has a second home that is paid off, the Trustee could hire a realtor to

So, I have not read Warren Sapp's bankruptcy petition.  But what I guess happened was that he exceeded the debt limit on a Chapter 13 (reports say he was "millions in debt") and decided that he was willing to have some assets liquidated by the Trustee to satisfy some portion of the debt, while discharging the remaining "balance".  His attorneys told him that some of his assets that were "non-exempt" would be sold and he was willing to do that to have the vast majority of his debt discharged.

Now, if Mr. Sapp did not list these assets, he would be committing fraud and false pretense in a bankruptcy. You never want to do that as you are looking at significant jail time.  

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.