Tuesday, November 29, 2011
In my experience many clients often don't consider what they may have been doing as being engage in a business to a level sufficient for the requirement to report to kick in. For example...an adult with a paper route, someone selling handmade jewelry on ebay or craft shows, someone with a rental property collecting rents, etc., etc. All of these examples are considered businesses in the eyes of the bankruptcy court. In both Chapter 7 & Chapter 13 bankruptcy cases the interest in the business (if active) should be scheduled as a property interest (valuation for these purposes is another topic). The income or expense relative to the business should be noted on schedules I & J (the income and expense schedules). Plus the information regarding the business entered into the Statement of Financial Affairs (whether an on-going/active business or not). For the statement of financial affairs the interest should be identified as to the structure of the business...be it a corporation, LLC, partnership or sole proprietor. The tax id will be required (or the last 4 digits of the debtor's social security number). I plug in what the extent of the ownership interest is and who the other owners might be, if any. Plus a general description of what the business activity was....real estate development, remodeling, paper route, jewelry sales...what have you. Lastly, the starting and finishing dates if it is a business no longer operating and/or a start date for an on-going enterprise. There are also questions as to whether there have been any recent financial statements, who has keep the books, who is in possession of the business records, etc. Most of the time this is all fairly simple but it is important info to disclose and the trustee will make inquiries about the business at the creditor's meeting for sure. Basically they want to know if there are any assets there or have been transfers of assets to business creditors or other involved persons in order to determine if there is something there that the bankruptcy estate would be entitled to administer for the benefit of creditors.
Also, the local rules where I practice in Minnesota state that in chapter 13 cases any debtor with a business which generates $200 or more revenues is required to submit a "Business income and expense" form. This form indicates what the revenues were for the past 12 calendar months, what the expected monthly income will be going forward and what the anticipated expenses will be on a monthly basis. The expenses need to be broken down with particularity in terms of how much per month for what category of expense. I generally don't do a breakdown for this in chapter 7 although the trustee or U.S. Trustee could certainly request this information if desired.
So, at a minimum...if someone is generating at least $200 a month doing whatever it is they do and it isn't for wages (comissioned people are often running a business..anyone who is 1099'd is running a business) the we fill out these forms...and most often even if it is less. Best practice is to disclose all the information rather than to leave it out which could raise issues of bad faith due to the failure to disclose.
If you've got questions regarding personal or small business bankruptcy matters we'd be glad to help.
David D. Kingsbury, Atty.
Kingsbury Law Office
Monday, November 14, 2011
If you've got questions about chapter 7 or chapter 13 bankruptcy we'll be glad to help.
Attorney David D. Kingsbury
Tuesday, November 8, 2011
It usually makes sense to file a joint case when there are joint obligations on a significant portion of the debt. I've had some people fairly surprised to learn that they can't get rid of debt for their spouse if they file a bankruptcy on a creditor. Doesn't work that way...if the spouse has signed on the dotted line..then they are liable too and one person who is liable on an account is not going to get rid of the debt for the other because they've filed a bankruptcy case. On the other hand, if one spouse owes the lion's share of the debt and the other spouse is fairly debt free (meaning they haven't obligated themselves to pay on the debt)....then filing an individual case makes all kinds of sense. The court will always, as discussed in other posts, take the non-filing spouse's income into consideration when determining if the person that does file the bankruptcy case is eligible to file from an income standpoint. That's because the debtor and the non-filing spouse are seen by the court as an "economic unit". I usually get a "that's not fair", especially from people who may have just gotten married recently and where one has brought a lot of debt as baggage into the relationship. Whats "fair" hasn't got much to do with it. However, if the non-filing spouse has debt service of his or her own though that can be and should be factored in to the calculation so not all the income of the non-debtor always counts in an "ability to pay" analysis.
Only married persons can file a joint case. So boyfriend/girlfriend...even though it may feel like your married and you've got kids in common, have joint bank accounts or hold title to real estate together..plus any other trappings of a serious and permanent relationship without that marriage certificate you'd be looking at two separate bankruptcy filings as individuals...two filing fees, two attorney fees, two hearings and two separate discharge orders.
If you've got questions about chapter 7 or chapter 13 bankruptcy for personal or small business we've got the answers.
Kingsbury Law Office
Sunday, November 6, 2011
Moral of the story...if you're single and thinking about getting married...and lots people determine they need to file a bankruptcy case so they aren't dragging a bunch of old debt into the relationship...talk to your bankruptcy attorney before you do anything about "tying the knot". Once you're married...then the income counts...no matter what.
If you've got questions about consumer or small business chapter 7 & chapter 13 bankruptcy we can help.
Kingsbury Law Office--Apple Valley and Rochester, MN
Wednesday, November 2, 2011
Tuesday, November 1, 2011
For the most part property that a debtor acquires (or becomes entitled to acquire) after filing for bankruptcy is not something that is considered part of the bankruptcy estate administered by the trustee.
There are some exceptions though. Here's the deal....if the debtor receives or even has a right to receive property of a certain type within 180 days after filing for bankruptcy you must let your attorney know to make the assessment to determine if it can be exempted (protected) for you. Failing to do so could result in a revocation of discharge based on bad faith and non-disclosure of the asset. Not a good result for anyone. In pretty much every creditor's meeting I've ever attended (many thousands) the trustee will make an inquiry as to the potential for the debtor to acquire certain types of property within 180 days of filing their case and will also inform them that if they do...they need to let them know (the trustee assigned to the case) and also their attorney.
- an inheritance (applies if the person dies during the 180 days...as you have the right to inherit at that point...you don't actually have to have received the inheritance within the 180 days...could be years later.
- Life insurance proceeds.
- property received from a marital settlement agreement or divorce decree.
It's rare that these things crop up in an average case...but it does happen...it's happened in some of my cases over the years. It is more likely that the most or all of the types of assets listed above could be exempted in your bankruptcy depending on the value. Your attorney needs to make that analysis for you.
If you've got questions about chapter 7 or chapter 13 bankruptcy we'll be glad to help.
Attorney David D. Kingsbury
Monday, October 31, 2011
I was just at a National Association of Consumer Bankruptcy Attorneys seminar in Colorado Springs this weekend. One of the conversations I had repeatedly over the course of the seminar was that bankruptcy attorneys all over the country are experiencing the same phenomenon…...lenders are taking forever to foreclose.
There can be a plus side…namely living there with no payment (with the exception of homeowners association dues) if a person is still living there and waiting out the foreclosure. That can be a good option but for those that want to move on in short order the reluctance of a lender to foreclose can be a real problem.
I was speaking with a bright attorney in Indiana who is now bringing suit against mortgage lenders for failure to foreclose...the theory being that the debtors are being denied the benefit of their bankruptcy discharge considering that they are saddled with what once was an asset but is now a liability and they can’t get rid of it even though they filed their bankruptcy and were issued a discharge because the lender refuses to cooperate. Novel argument…makes a lot of sense. I see enough of these situations in my practice from time to time that I will be contemplating the same type of suit for my clients caught in that predicament.
Wednesday, May 11, 2011
Wednesday, March 23, 2011
The court followed earlier court decisions wherein they took a "plain meaning" interpretation of the statutory language and also looked at other exemption statutes that sought to exempt proceeds and payments traceable to exempt sources. Those other statutes (as opposed to one under review here which was Minn Stat. Section 550.37, subd. 22) specifically stated that for example "all money arising from any claim on account of the destruction of, or damage to, exempt property", or in another section under the statutes providing for exemptions that the "right to receive present or future payments, or payments received by the debtor" would be exempt. (Minn Stats. Sections 550.37, subd. 9 and 550.37, subd. 25). So there...the language is inclusive and is plain on it's face. The court determined that had the legislature wanted to provide the same treatment for payments received on account of personal injury that it could have provided the same or similar language in the pertinent statute. Since the legislature could have but didn't include that language the court decided that the intent was not to protect the actual payments received on account of personal injury types of funds/payments to give them exempt status and therefore, they are not exempt.
Lesson to take from this decision...and which has also been my practice for many years is that all the circumstances have to be taken into account when contemplating a bankruptcy. Exemptions are one important part of the analysis. When a client has a personal injury matter and it is of a level whereas the potential damage award is higher than what we can protect under the federal exemptions found in the Bankruptcy Code then we will most likely consider filing under the state exemptions....but ONLY IF it is an unsettled claim at the point of filing. If not...then we have to reassess as this court of appeals decision confirms the prior cases which have held that only the claim or the right to the action is exempt and not the proceeds themselves. The question I always ask is....where is this at? Has it been settled? Has pen been put to paper yet? If not, then all things being equal and we don't have other types of concerns with other assets and the way we need to exempt those to weigh in...then we are good to go. If there has been a settlement...then the funds need to be spent down or converted to exempt assets within the limitations allowed by law.
Be advised that this analysis is pertinent to Minnesota bankruptcy cases and none other. If you are in another state other rules or case law may apply.
If you've got questions and need some answers regarding issues involved in a chapter 7 or chapter 13 bankruptcy filings for either personal or small business bankruptcy cases we'd be glad to help. Please feel free to connect with my office at your convenience.
David D. Kingsbury Attorney at Law
-Bankruptcy Lawyer Kingsbury Law Office
14827 Energy Way Apple Valley, MN 55124
Tel. (952) 432-4388 Fax. (952) 432-4969
Tuesday, March 8, 2011
First off, a person has to understand that bankruptcy takes care of debts. Judgments are simply not debts. They may seem like debts to the lay person but rather they are a legal artifice that helps judgment creditors collect their money. Typically you need a judgment to do a bank levy, wage garnishment or any of the other less commonly used methods to execute on assets in order to satisfy a judgment. Judgments then, are court orders that state that the court has made a finding after a hearing on the matter and agrees that you owe someone some money. However, and as discussed above...in and of themselves they are not in the nature of debt. Since bankruptcy removes debts and not court orders a discharge of the debt in a bankruptcy case does not serve to remove the record of the judgment.
After the bankruptcy order has been issued and the debt has been discharged in Federal court (2 different court systems here) we can then file an action in state/district court where the order on the judgment was issued and request an order removing the record of the judgment. The argument is based on the fact that the underlying debt that supported the issuance of the order for judgment is now discharged. A certified copy of the bankruptcy discharge is attached to the application for judgment removal so there are a few steps to take in terms of paperwork, serving the appropriate parties in a timely manner and noticing them regarding a hearing on the matter. In the majority of cases there is no problem getting the judgment removed without any great difficulty.
If you have debt issues or questions about bankruptcy filing in regard to either Chapter 7 or Chapter 13 bankruptcy for either individuals or small business do not hesitate to contact us.
Offices Located in Apple Valley and Rochester, MN
Direct email for Dave Kingsbury is email@example.com
Visit our web site at www.kingsburylawoffice.com for information to common questions regarding filing bankruptcy or to download our document package if you'd like to schedule a consultation
David Kingsbury, attorney
14827 Energy Way
Apple Valley, MN 55124
Tuesday, February 22, 2011
If you've got questions about the bankruptcy process in Chapter 7 or Chapter 13 for individuals or small business we'd be glad to help. Connect with us at www.kingburylawoffice.com