Monthly Archives: May 2012

I Received a Notice of Chapter 7 or 13 Bankruptcy Case, Meeting of Creditors and Deadlines

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The Notice of Chapter 7 or 13 Bankruptcy Case, Meeting of Creditors and Deadlines is the official notice to all creditors that a bankruptcy case was filed.  This notice will list the date, time and location of the 341 meeting of the creditors.  The notice also provides the deadlines to file a proof of claim or file an adversary proceeding objecting to discharge of debts.  Each one of these dates or deadlines are extremely important in every bankruptcy case.

The first thing to look for is the bankruptcy case number in the upper right hand corner of the first page.  A couple of lines below the case number you will see the date the bankruptcy case was filed towards the middle of the page.  Below the case number will be the name and address of the person who filed for bankruptcy protection with the person’s last four digits of their social security number to the right.  The next section contains the name and address for the attorney who represents the person who filed bankruptcy and the name and address of the trustee assigned to administer the bankruptcy estate, if any.

Towards the middle of the first page you will see the actual date, time and location of the 341 meeting of the creditors.  This most likely will be the only time the person filing bankruptcy will meet with the trustee assigned to the case and it is the first and cheapest way for a creditor to question the person who filed bankruptcy if necessary.  For the most part it is a waste of time and money ask a person questions at the 341 meeting of the creditors.  Most trustee’s will only allow approximately 5 minutes of questioning before moving on to the next case.  Most trustees have very crowded calendars and eventually they will have no time to eat lunch if the trustee gets behind.

The bottom half of the notice contains the deadline to object to the discharge of a debt or debts.  This deadline should be sixty days after the date of the first schedule meeting of the creditors.  This deadline can be extended by order of the court.  Next will be the deadline to object to exemptions used to protect the assets of the bankruptcy filer.  Lastly, the notice provides information about filing a proof of claim.  In a Chapter 7 case proof of claims are only asked for when the trustee file a notice of possible dividend.  The notice of possible dividend invites creditors to file their proof of amounts owed to possibly receive money from the bankruptcy estate.  The second page of the notice provides an explanation of certain bankruptcy terms.

Add Jamal Lafitte Lewis to the List of Pro Athlete and Celebrity Bankruptcy Filings

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On April 3, 2012, former professional football player Jamal Lafitte Lewis filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code in the Northern District of Georgia, Bankruptcy Case No. 12-58938.  Jamal Lewis played for the Baltimore Ravens for years and retired from the NFL in 2009.  While Mr. Lewis has sought protection from his creditors by filing bankruptcy, Chapter 11 is a reorganization of his debts and not necessarily a discharge of debts.  Most likely some of Mr. Lewis’ unsecured debt will be discharged though.  Time will tell if Mr. Lewis actually files a disclosure statement and plan.

Despite having retired from the national football league Mr. Lewis has listed his monthly income as $35,000 a month.  This is impressive given the number of years Mr. Lewis has not played football.  It would appear from the bankruptcy schedules and statements that Mr. Lewis is facing a number of issues in his business life.  In November 2011 $95,000 was seized from the bank accounts of one of his companies, JLew Enterprises, LLC, a company set up for Mr. Lewis’ speaking and appearance engagements.  If $95,000 was seized from JLew Enterprises, LLC, the company was most likely sued and a judgment was obtained, or a creditor obtained a prejudgment writ of attachment to seize the funds.  Seizing funds prior to obtaining a judgment is an extraordinary remedy and does not bode well for JLew Enterprises, LLC.

Mr. Lewis’ schedules and statements also list a theft of $3,000,000 from Mr. Lewis’ trucking company named All American Xpress, Inc. between 2006 – Present.  It would appear that Mr. Lewis’ has been a victim of embezzlement or some other sort of theft related to his trucking company.  One of the most overlooked reasons why someone chooses to file for bankruptcy protection is when they are victimized by others.

Unlike many of the celebrity and pro-athlete bankruptcy filings Mr. Lewis’ has significant personal assets.  Schedule B lists approximately $12 million in assets including 47 foot powerboat, 2005 F-650 XUV trust, 2008 Mercedes GL 550, 2009 Mercedes CL 63, a $250,000 judgment against Bradley Lowery, Jr.  Some of these assets have loans and liens secured against the assets.

The judgment against Bradley Lowery, Jr. resulted from another unfortunate business dealing.  According to court documents, Bankruptcy Case No. 09-06771, Mr. Lewis entered into a contract with Mr. Lowery to build a home at 568 Trabert Avenue, Atlanta, Georgia.  Mr. Lowery received approximately $680,000 of the $2.4 million Mr. Lewis borrowed to build the home.  Mr. Lewis then sued Lowery in Superior Court. The Superior Court Order and subsequent judgment awarded Lewis $1,314,694 in actual damages, $304,000 in consequential damages, $4,010 in attorney’s fees and $250,000 in punitive damages. Lowery then filed for bankruptcy protection himself in October 2009.  Mr. Lewis and his bankruptcy attorney then sued Mr. Lowery seeking a determination that his state court judgment against Mr. Lowery not be discharged in the bankruptcy.  Mr. Lewis was successful, but just because you have the right to collect does not mean you are going to collect.  Mr. Lewis’ schedules list that the judgment against Mr. Lowery is uncollectable.  So now after all the legal wrangling Mr. Lewis is left holding a loan of over $2 million and a partially built house worth $500,000.

Another interesting note in the bankruptcy case is the listing of a claim against the Baltimore Ravens, Cleveland Browns and the NFL for worker’s compensation and personal injury.  It is unclear if Mr. Lewis have filed hit own lawsuits or is part of the class action lawsuits we have all heard about regarding concussions.

I tell clients every day that there are a millions reasons why people file bankruptcy.  It would appear that between Mr. Lewis’ unfortunate experience trying to build a home and the alleged theft of $3,000,000 from his trucking company were too much.  Currently there is a motion to dismiss Mr. Lewis’ bankruptcy case.  Hopefully Mr. Lewis and his bankruptcy attorney will do what is necessary for the case to continue and Mr. Lewis can move on to happier things.

What is This Notice to File a Proof of Claim I Received?

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If you have receive a notice of possible dividends or notice of 341 meeting of the creditors, then someone who owes you money has filed for bankruptcy protection.  You should seek the counsel of an experienced bankruptcy attorney for advice.  Do not just show up at the 341 hearing yourself if you are not sure what is going on.

One of the most important parts of the bankruptcy process when there are assets available to creditors is the claims process.  The vast majority of bankruptcy filers do not have assets that are available to the people they owe money.  All assets can be protected or exempted.  But what about the cases in which there are assets available to creditors?  How do they get paid and what amount?  A proof of claim must be filed that proves how much was owed to them at the time the bankruptcy case was filed.

Federal Rule of Bankruptcy Procedure 3001 provides the rules for the filing of a proof of claim and what documentation must be provided to prove how much is owed.  In asset Chapter 7 bankruptcy cases the trustee assigned to the case does not ask for proof of claims to be filed until they file the notice of possible dividends.  Once this notice is filed then creditors have to file their proof of claims to be paid in the case.  In a Chapter 13 bankruptcy cases we already know there are assets available to creditors.  All Chapter 13 bankruptcy cases have either money or assets available to creditors, so creditors are asked to file their claims with notice of the meeting of the creditors.

The deadline for normal creditors to file a claim generally should not exceed nineties days after the first date of the 341 meeting of the creditors.  Government entities such as the Internal Revenue Service are provided more time to file a claim.  A frustration of many bankruptcy lawyers is how long it takes creditors to file their claims sometimes.  Not knowing how much is owed on secured claims or priority unsecured claims at the time the case is filed can delay confirmation of the Chapter 13 Plan.

Sometimes debts are transferred or sold to multiple parties.  Other times creditors file claims that are just not accurate.  Whether a creditor tries to get paid more than they are entitled to or just does not provide the necessary documents to prove their claim; an objection to the claim should be filed if any inaccuracy exists.  The evidentiary effect of filing a claim is that if the proof of claim meets the rules it will constitute prima facie evidence of the validity and amount of the claim.  If you do not object the claim is assumed to be accurate.  There has been litigation regarding collection agencies filing junk claims to get paid nominal amounts.  If the collection agency does this in a thousand cases and merely receives $50 from each case, they will have fraudulently received $50,000.  The good news is most Chapter 13 Trustee’s also review the filed claims and will object to some on behalf of the bankruptcy estate under certain circumstances.

Accurate Answers to Bankruptcy Questions Requires Accurate Information

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One of the most frustrating challenges bankruptcy lawyers and other legal professionals face is obtaining accurate information from clients or other parties.  During a free consultation we will discuss your income, expenses and assets to determine if bankruptcy can help your circumstances.  What if you do not know or are not sure about something?  Well, that is going to significantly change the answers to your questions.  Some things are more important than others, but not knowing how much money you make each month or whether your name is on title of a house will create huge problems.

For example, we recently had a client come in for a free consultation.  One of the issues in this person’s case was whether they were on title to their parent’s home, on the mortgages or on both or vice a versa.  Initially this person told me they were only on the mortgages.  Okay great.  We discussed whether they had ever made a mortgage payment, whether they had ever paid the property tax or contributed to the down payment to purchase the home.

Unfortunately it turns out this person was not only on the mortgages but on title to the house as well and they were on title and the mortgages from the time the house was purchased.  Now wait a second, this is going to change what we had originally discussed during the initial free consultation.  Bankruptcy attorneys can only base their answers to questions upon the information provide and if the information provided is not accurate the advice or answers will not be accurate either.

How hard is it to understand that if you do not know your financial circumstances how can anyone else?  One of the first steps in getting out of financial difficulties is to review your income and expenses in detail.  Look into what your assets are worth.  Then sit down and start making the hard decisions about how to spend your income.

How Do I Dispute Negative Credit History?

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As bankruptcy lawyers we have potential clients and clients ask us about their credit scores and negative history on their credit reports almost daily.  The Fair Credit Reporting Act controls how long negative history can remain on your credit report.  The limit is seven years.  In 2005, Congress reformed the Bankruptcy Code to extend the number of years a Chapter 7 bankruptcy case stays on your credit report to 10 years.  Your negative history regarding the individual accounts should be deleted or fall off in seven years.  If not, then you need to dispute the negative credit history.

How do you dispute negative credit history?  The first think you need to do is go to the Federal Trade Commission’s website and search “credit repair.”  Then scroll down a little and there will be a choice that says “Credit Repair: How to Help Yourself.”  A page of the FTC website will come up that provides step by step instructions on what you need to do.  The FTC even provides a sample letter for you to use and the addresses and contact information for all three credit bureaus.

Basically you need to write a letter to all three credit bureaus disputing the negative history appearing on your credit report.  The FTC provides the names and addresses for each.  Once the credit bureau receives your letter they will conduct an investigation to determine if the history is correct.  Negative history that cannot be substantiated should be removed.  Negative history that should have been removed will only drag down your credit score.

Make the credit bureaus do their job and investigate the negative history on your credit report.  Mistakes are made all the time and can be very costly.  A thirty point difference in your credit score can cost you thousands of dollars in increased interest rates over the life of a loan.  If you have filed bankruptcy then this is especially important.  Most bankruptcy lawyers recommend that their client check their credit reports at least three to four months after the order of discharge is signed by the bankruptcy court.

Individuals Do Not File Bankruptcy When a Business They Own Does

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There seems to be a misconception about when a corporation or limited liability company files for bankruptcy and the business is owned by one or a few individuals.  In the news, talk shows and with speaking with people on the street I hear over and over again such and such has filed bankruptcy.  I think the most common name I hear is Donald Trump.  I had a client at a meeting of the creditors meeting whisper in my ear something about the debtor currently being questioned by the Trustee and then Donald Trumps name.  What she said was as if Mr. Trump had filed bankruptcy too.  As far as I know Donald Trump has never filed for personal bankruptcy and only his casino holdings has ever filed for bankruptcy protection.  This is a huge distinction that is very important.

Corporations and limited liability companies are separate legal entities from the owners.  This is the whole point in creating the business in this form.  Creating a separate legal entity keeps your personal assets safe and protected from the debts or harms created by the corporation or limited liability company.  You must keep up the corporate formalities and run the corporation as a separate legal entity.  You must keeping the assets, expenses and income separate from your own personal finances.  Like many Americans Mr. Trump has many business interests that are set up under various legal entities.  This is smart.  If one business venture does not work out it should not negatively effect or destroy his other interests.  Mr. Trumps venture into gambling has not gone well.

The formerly named Trump Hotels and Casino Resorts (DJT) and now the Trump Entertainment Resorts, Inc. has filed for bankruptcy protection under Chapter 11 three times since 1991.  I cannot imagine the amount of bankruptcy attorneys fees that have been expended in all three cases.  Chapter 11 allows corporations to restructure their debts and allow the corporation to survive and hopefully prosper.  The company still exists so something must have gone right.

For more information about bankruptcy, either personal or business, you may contact one of our bankruptcy lawyers by calling 1-877-963-9543 or providing us your information on-line in a submission form.