Monthly Archives: December 2011

What Debts Cannot Be Discharged In Bankruptcy?

By

The good news is that most debts are usually dischargeable.  A discharge eliminates the legal obligation to pay the debt that was discharged and prohibits any and all collection actions to attempt to collect the discharged debt.  The following is a partial list of the common types of debts that are not dischargeable.  This article does not provide information about the differences between a Chapter 7 discharge or Chapter 13 discharge.  Determining which debts cannot be discharged can be complicated.  Please seek counsel regarding your specific circumstances.

Income Taxes

Taxes owed to the Internal Revenue Service and in California, the Franchise Tax Board, are generally not discharged in bankruptcy unless the taxes meet the following requirements.  The income taxes could be discharged if they are three years old, filed on time, accessed 240 days prior to the case being filed , no fraud or willful evasion and returns were filed at least two years prior to the case being filed.

Student Loans

The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act eliminated the discharge of all private and government backed student loans.  Any debt incurred for an educational benefit overpayment, obligation to repay funds received as an educational benefit and debts for any other education loan that is a qualified education loan under the U.S. Bankruptcy Code.  Under certain circumstances student loans could be discharged by filing an adversary proceeding.

Domestic Support Obligations

If you are behind on your child support or spousal support payments as ordered by the state court the missed payments are not dischargeable.

Debts Incurred to Pay Nondischargeable Taxes

As part of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act any debt incurred to pay a nondischargeable tax debt is not discharged.

Damages Caused While Intoxicated

If you caused a car accident and you were intoxicated at the time, any damages or claims resulting from bodily injury of the victims are not dischargeable.  Debts resulting from damage to property caused while you are intoxicated could be discharged.  Any debt for death or personal injury that you caused while intoxicated while operating a motor vehicle, vessel or aircraft are not dischargeable.

Any Money, Property, Services, Credit or Renewal of Credit Obtained by Fraud

If you received money, property, services, credit, renewal of credit or refinancing of credit because you made a false pretense, false representation or actual fraud, the resulting debt of the fraud is not dischargeable.

Purchase of Luxury Items Within 90 Days of Filing Bankruptcy

If you owe $500 or more to a single creditor for the purchase of $500 or more of what is considered luxury goods or services within 90 days before the bankruptcy case was filed the debt is not dischargeable.

Certain Cash Advances

Cash advances that total more than $750 obtained within 70 days before the bankruptcy case was filed are not dischargeable.

Post-Petition HOA Dues

If you own a home in an association and are behind on the monthly dues prior to the bankruptcy case being filed, all of the missed payments before the case is filed are dischargeable.  Once the case is filed the dues that come due each month are not dischargeable.  If you plan on surrendering your home and are not making the normal mortgage payment you will still be responsible for the post-petition HOA dues as long as the house is still in your name.

For more information about which debts are dischargeable, contact our bankruptcy lawyers in the Bay Area or our bankruptcy lawyers in San Francisco.

What If I live Outside the United States – Can I File Bankruptcy?

By

Unfortunate circumstances can happen at anytime and anywhere, even when you are working and living outside of the United States.  In today’s economy more and more United States citizens are working in other countries.  So if you have moved and are working in a foreign country can you file for bankruptcy?  If so, where can the bankruptcy case be filed?

Bankruptcy Code 11 U.S.C. Section 109, Venue, provides:

(a) Notwithstanding any other provision of this section, only a person that resides or has a domicile, a place of business, or property in the United States, or a municipality, may be a debtor under this title.

The most common way to determine what the proper venue to file bankruptcy in is look at where you reside, live or have a domicile in that jurisdiction.  Typically venue is determined by where you have lived the most during the 180 days prior to the filing of the case.

Keep in mind that while you may be able to file bankruptcy in a state you moved to recently, over 90 days ago at least, you most likely will not be able to use that state’s exemptions.  If you have recently moved make sure you communicate this to your attorney so they can evaluate which state’s exemptions you can use to protect your assets.  If you have lived outside of the United States for more than two years, determining which exemptions can be used will be extremely complicated.

If you have not lived in the area for the greater of the 180 days prior to the case being filed, then next possible way to determine which venue you may file bankruptcy in is where your principal assets are located or where your place of business it located.  Your business could be in San Jose, California and you live in Modesto, California.  Do you file in the Eastern District of California because that is where you live, or file in the Northern District of California because that is where your business is located?  In theory you could file in both districts.

The last possible way to determine proper venue is if you own or have property in that jurisdiction.  Some courts have ruled that property can even be money on deposit with a bank in that jurisdiction.  What is considered property that rises to the level of permitting you to file bankruptcy in that venue is determined differently by different courts.

If you are in need of a bankruptcy lawyer or bay area wage garnishment lawyer you may contact us toll free at 1-877-963-9543.

City Council Files Untimely Notice of Appeal to City of Harrisburg Bankruptcy Dismissal

By

As anticipated, the Chapter 9 bankruptcy filing of the City of Harrisburg came to a crashing end under the pile of motions to dismiss and Pennsylvania state law that still arguably prohibited the bankruptcy filing.  The bankruptcy court entered the order of dismissal on November 23, 2011.  The deadline to appeal the order of dismissal without an extension of time was December 7, 2011.  The council members that originally filed bankruptcy on behalf of the City of Harrisburg filed their notice of appeal on December 10, 2011, three days late.  Then on December 11, 2011, a day later, the council members filed a motion seeking an order to extend the time they had to appeal the order of dismissal given that they filed their notice of appeal three days late.  On December 13, 2011, the bankruptcy court denied the city councils request to extend the time to appeal and struck the notice of appeal from the record.  The bankruptcy court provided that counsel for the City Council of Harrisburg new the basis of the bankruptcy court’s decision to dismiss the bankruptcy case and received the written opinion two days prior to the deadline to appeal.  The failure to timely file the notice of appeal was not excusable neglect, but inexplicable and unjustifiable.

If the appeal is still allowed to move forward, which is still possible, it will challenge the bankruptcy court’s ruling in support of upholding a state’s right to legislate and control cities within its jurisdiction.  Prior to when the City of Harrisburg filed for bankruptcy the State of Pennsylvania had passed a state law forbidding a city classified like Harrisburg from being able to file bankruptcy under Chapter 9 of the bankruptcy code.

There still could be a titanic clash of state law versus federal law if there is still a successful appeal and the appellate court choses to take a different position then the bankruptcy court.  The bankruptcy court rejected arguments that the Pennsylvania state law prohibiting Harrisburg from filing bankruptcy violated the Supremacy Clause or 14th Amendment of the United States Constitution.  The bankruptcy court also rejected the arguments that Pennsylvania state law prohibiting the filing of the bankruptcy petition violated the Pennsylvania Constitution.

Issues of federalism have come up time and time again regarding the federal government’s ability to govern and make individual states follow federal law.  The Tenths Amended provides that powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively.  Under the federal bankruptcy code municipalities can file for bankruptcy protection, but only with state authorization.

Ultimately the bankruptcy court held that the city council members of Harrisburg did not have the authority under Pennsylvania state law to commence the bankruptcy case on behalf of Harrisburg and Harrisburg is not authorized to under Pennsylvania state law to be a debtor under Chapter 9 of the bankruptcy code.

For more information about bankruptcy contact our bankruptcy lawyer or you may contact our bankruptcy lawyers .

Do You Need Actual Damages to File a Lawsuit for a Violation under the Fair Debt Collections Practices Act (FDCPA)

By

On November 28, 2011, the United States Supreme Court will hear arguments regarding this very issue.  The FDCPA allows for recovery of any actual damages, statutory damages sustained and reasonable attorneys’ fees and costs by an individual resulting from a debt collectors violations and in a case involving an individual, any additional damages as the court may allow, not exceeding $1,000.

The issue being heard by the Supreme Court involves whether an individual has the right or standing to file a lawsuit if actual damages are not pleaded or proved.   The FDCPA is a federal law and to sue someone for a violation of the FDCPA they must have standing.  To prove you have standing you must show that there is a connection between what an alleged wrongdoer did and yourself, and you were harmed as a result.  If there is no standing then the complaint will be dismissed.  The argument being advocated to the United States Supreme Court is that many plaintiffs do not have standing to lawsuits under the FDCPA because they do not and cannot prove there was an actual injury to them for the violation of the FDCPA.

The Fair Debt Collections Practices Act outlines many different types of violations.  For example, if the debt collector calls you 50 times a day over and over again harassing you and causing you unwarranted stress and aggravation, this is a violation of the FDCPA.  What are the actual damages though?  Did you get fired from your job because of it and therefore are seeking lost wages?  Or what if the debt collector called your mother and told her they were going to throw you in jail if you did not pay the debt back to them?  This is a violation also, but again, what are the actual damages?  Most courts allow the recovery of statutory damages without having to prove there were actual damages.

It will be interesting to see how the United States Supreme Court chooses to rule on this issue.  The whole point in passing the FDCPA is to protect consumers from the unfair and deceptive tactics used by collection agencies to obtain payment for debts.  A violation of the law is a violation and therefore that should be damage enough.  If consumers are not allowed to file lawsuits for the mere violation of the FDCPA no matter how insignificant, then why have the law at all?  The FDCPA would become a meaningless set of guidelines to be followed while debt collectors know they can do whatever they want without consequence.  For the Fair Debt Collection Practices Act to protect consumers and operate as it was intended, any technical violation of the law has to be an injury to that person giving them the right to file a lawsuit.

If you are struggling with debt or have been abused by a debt collection agency, please contact us to meet with our experienced bankruptcy lawyers and Bay Area bankruptcy attorneys to schedule a free consultation.