Call for a professional consult today 734.281.2050

All posts tagged fresh start

Posted:
May 16, 2013
Tags:
Comments:
Comments Off on Bankruptcy Cases in the News

Bankruptcy Cases in the News

Bankruptcy Cases in the News

             The 6th Circuit Court of Appeals (which covers Michigan) issued a very important decision in Richardson v. Schafer, 689 F.3d 601 (6th Cir., 2012). The case is noteworthy because it is of assistance to debtors in their bankruptcy case by allowing them to retain more property.

In this case, the debtor elected to exempt property under the Michigan State Bankruptcy Exemptions instead of the Federal Exemptions. The selection was probably because the debtor had a great deal of home equity protectable as tennants by the entireties (marital home) laws and little joint debt. The trustee, to unlock value for unsecured creditors argued that the Michigan Bankruptcy Exemptions were unconstitutional and that the debtor was only allowed the lesser exemptions provided by the general exemptions statute in Michigan.

The 6th Circuit Court of Appeals disagreed. It held that Michigan debtors were allowed to use either set, i.e., the general exemptions under MCL 600.6023 or the Bankruptcy Exemptions under MCL 600.5451. Generally speaking the latter is more generous to debtors. This allows the debtor to retain more property for his/her fresh start. The bottom line was that the Michigan Legislature did not violate the Constitution by intruding in a Federal law.

Proper exemption planning is critical to a successful outcome in a bankruptcy case. If you or a loved one would like information concerning protection from creditors and obtaining a fresh start, just call Guy Vining. Guy Vining is pleased to discuss your situation confidentially, and without initial charge.

Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Posted:
April 25, 2013
Tags:
Comments:
Comments Off on Bankruptcy Cases in the News: Federal and State Exemptions

Bankruptcy Cases in the News: Federal and State Exemptions

Bankruptcy Cases in the News

Federal and State Exemptions

     Under the Bankruptcy Court, a debtor may elected between two sets of exemptions in a Chapter 7 case, the Federal exemptions, or (in Michigan) the Michigan exemptions. Generally, the Federal exemptions give the greatest coverage of property to the debtor. Exempt property is property that the debtor gets to keep from creditors and the trustee, which forms the basis of his or her fresh start going forward.

     In certain interesting circumstances, however, the Michigan exemptions are more favorable to the Chapter 7 debtor and should be elected. For instance, under the Federal exemptions, exemptions about $42,000.00 in home equity can be exempted by a married couple. However, if the home is jointly owned as entireties property (husband and wife) either may file individually a bankruptcy and exempt their entire equity, no matter how great, from all individual creditors.

     That is because the historical purposes of the state law favors protecting an innocent spouse from the debts of his or her spouse to preserve their primary residence. This concepts has been explored and defined in several published court decisions. For instance, see: In re: Trickett, 14 Br 85 (Bank W.D. Michigan) 1981; and, In re: Grosslight, 757 F2d 773 (6th Cir. 1985).

     One of the keys to this relief is the absence of joint indebtedness. So, if the non-filing debtor is jointly responsible on some of the incurred debt, the trustee may argue that it should be allowed to administer the estate (sell the martital home) to the extent of the joint obligations. Still, this type of harsh relief must be examined on a case-by-case basis as noted by Judge McIvor in In re: Edwin Harlin, 325 BR 184, 189 (Bank E.D. Mich) 2005:

“As a general rule, courts have been very reluctant to apply 11 USC §363 (h) to allow the sale of entireties property owned by the debtor, and a non-debtor spouse. The case law is well summarized in Collier on Bankruptcy as follows: Disputes over the applicability of a section (h) to tenancies by the entireties have created the largest number of reported cases under section, perhaps because of the unique nature of the ownership interest, the variations among the states as to the nature of the interest and the rather draconian remedy that section 363(h) gives the trustee, contrary to the deep historical roots of the form of title, which is supposed to protect each spouse from the unilateral action of the other… Thus, although generally speaking property held by the debtor as tenant by entirety is subject to sale under section 363(h), courts have erected various obstacles to such sale.”

     This suggests, of course, that married couples should strongly consider never co-signing for the other and avoid all joint debt. Also, they might consider making sure to concentrate payments to reduce and eliminate joint debt as a priority over individual debt, in the ordinary of their payments.

     If you or a loved one are considering whether bankruptcy relief would be helpful for you, please make sure to consult a qualified debt relief agency/attorney. Guy Vining is available for a no-charge initial bankruptcy consultation and would be pleased to meet with you.

Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Posted:
September 5, 2012
Tags:
Comments:
0

Bankruptcy Cases in the News: 11 USC § 522: The Residence Exemption

Bankruptcy Cases in the News

11 USC § 522: Residence Exemption

    This past August has had a bumper crop of interesting cases. In re Demeter, Case no.: 12-44593 local Bankruptcy Court Judge, (Easter District of Michigan) Thomas J. Tucker, decided a very interesting and helpful case to individual debtors. In this case, he was called upon to decide because of a trustee’s objection to the debtor’s exemptions whether a second home could qualify as a residence under the federal exemption, giving this debtor couple, up to $53,250.00 in exempt property or whether the exemption could only be applied to a so-called “primary” residence. Although, this other home was in foreclosure and had no equity, whatsoever.

 

In the end, Judge Tucker over ruled the trustee’s objection because the statute did not have a requirement that the residence exemption had to apply to a “primary” residence. In the blog which follows, we will look at some of the rules of statutory construction, employed by Judge Tucker. For our purposes here it is sufficient to say that Judge Tucker found that the debtors did have a significant connection with both houses, used both year round and never rented out. In addition, he reasoned that because 11 USC § 522 (d)(1)(d) did not use the word “primary” that he would not read it into the statute, as the statute only spoke of “real property…that the debtor uses as a residence…”

 

Also, in reaching his decision the Judge noted that his construction of the statute was also consistent with major purposes of the Bankruptcy Court. In doing so, the Court noted:

 

    “Under the Bankruptcy Code, there is an overriding federal interest in providing Debtors with “a fresh start.” See, e.g., In re W.R. Grace & Co., No. 11-199, 2012 WL 2130991, at *72 (D. Del. June 11, 2012)(listing a “fresh start” for a debtor as one of the important countervailing federal interests that could override state contract law); In re Buckley, 404 B.R. 877, 887 (Bankr. S.D. Ohio 2009)(citations and internal quotation marks omitted)(stating that “the overriding goal of the Bankruptcy Code [is] to provide a “fresh start” for the debtor”); In re Spears, 308 B.R. 793, 825 (Bankr. W.D. Mich. 2004) rev’d on other grounds, 313 B.R. 212 (W.D. Mich. 2004)(“Providing an individual debtor with a “fresh start” is a fundamental objective of the Bankruptcy Code.”) By providing debtors with the right to exempt certain property from the claims of creditors so that debtors have basic necessities to begin again, the exemption scheme under § 522 (d) is crucial to, and an integral part of a debtor’s “fresh start.” Schwab v. Reilly, 130 S. Ct. 2652, 2667 (2010)(“We agree that ‘exemption in bankruptcy cases are part and parcel of the fundamental bankruptcy concept of a “fresh start.”); Spears, 308 B.R. at 825 (“Congress enacted the exemption scheme set forth in Section 522 in order to provide an individual debtor with the fresh start it contemplated.”); 4 Collier on Bankruptcy ¶522.01[5], at 522-14 (Alan N. Resnick & Henry J. Sommer, eds., 16th ed. 2012) (“A fundamental component of an individual debtor’s fresh start in bankruptcy is the debtor’s ability to set aside certain property as exempt form the claims of creditors.”).

 

This determination is therefore good news for debtors looking to get their fresh start and retain as much property as is provided by the federal exemption. As Judge Tucker stated in Demeter: “Thus, §522(d)(1) permits a debtor to exempt a residence that is not the principal residence. And this interpretation is consistent with the requirement that bankruptcy courts must construe exemption liberally in favor of the debtor.”

 

If you have any questions about bankruptcy law or exemption planning please feel free to call bankruptcy attorney Guy Vining of the Vining Law Group. All initial telephone conference and office meetings are free of charge.


[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Posted:
August 27, 2012
Tags:
Comments:
0

Bankruptcy Cases in the News

Bankruptcy Cases in the News

In a case just decided by the 6th Circuit Court of Appeals the conviction of a physician for violation of 18 USC 152 (1) and (2) was upheld. The physician, or debtor, filed a bankruptcy, and failed to schedule as an asset an extensive and valuable collection of collector wines. When the wines were discovered by the trustee a referral was made to the United States Department of Justice for prosecution. Please see USA v. Joseph Carver, Case No.: 12-3026.

On appeal the Court found that:

        To be convicted of concealing assets in bankruptcy, in violation of 18 U.S.C. §152(1), the evidence must show that a bankruptcy proceeding existed under the Bankruptcy Code, the defendant concealed interests in property from the bankruptcy trustee or creditors, such interest in property belonged to the bankruptcy estate of the defendant, and the defendant acted knowingly and fraudulently. Wagner, 382 F.3d at 607. A conviction for making a false oath in bankruptcy, in violation of 18 U.S.C. §152(2) requires proof that there was a bankruptcy proceeding, the defendant made or caused to be made a false declaration or statement under penalty of perjury in the proceeding, the declaration related to some material matter, the declaration was false, and the defendant made the declaration knowingly and fraudulently. Sixth Circuit Pattern Criminal Jury Instructions § 10.01 (2011) (mail fraud) (adapted); cf. United States v. Spurlin, 664 F.3d 954, 962 (5th Cir. 2011). Carver’s convictions for these crimes are amply supported by the evidence.

Accordingly, Dr. Carver will have to spend the next 24 months or so in a federal prison for making a false oath in his bankruptcy case. As discussed in other blogs, the trade-off for a fresh start is disclosure of all assets and turn over of non-exempt assets for creditors. Failure to do so can lead to the dismissal of your bankruptcy and even time in prison.

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Posted:
August 27, 2012
Tags:
Comments:
0

Bankruptcy Cases in the News

Bankruptcy Cases in the News

In a recent case, local Bankruptcy Court Judge Walter Shapero granted the Trustee’s Motion to dismiss a debtors’ case under 11 USC 707 (b)(3). The reason was that the debtors with “some belt tightening” should not have been in a Chapter 7 but had sufficient income to pay a dividend to unsecured creditors and so would have to elect to dismiss or proceed in a Chapter 13.

The case is Meletios Golematis, Case No.: 11-52238 out of the U.S. Bankruptcy Court, Eastern District of Michigan. The case turned upon whether the debtors were sufficiently needy – although technically qualified – for Chapter 7 relief. In other words, it was not alleged that the Debtors were dishonest or did anything wrong but argued whether they had an ability to repay some unsecured non-priority creditors going forward. The Court framed the inquiry as follows.

Authority to dismiss a case under Chapter 7 for abuse is derived from §707 (b)(1), which provides in part:

“After notice and hearing, the court, on its own motion or on a motion by the United States trustee, trustee (or bankruptcy administrator, if any), or any party in interest, may dismiss a case filed by an individual debtor under this chapter whose debts are primarily consumer debts, or, with the debtor’s consent, convert such a case to a case under Chapter 11 or 13 of this title, if it finds that the granting of relief would be an abuse of the provisions of this chapter.”

Under §707 (b)(3)(B), when bad faith is not a factor, courts examine the totality of the circumstances in determining whether the debtor’s financial situation constitutes abuse warranting dismissal. The UST carries the burden of establishing by a preponderance of the evidence the applicability of this ground for dismissal. In the Sixth Circuit a totality of the circumstances inquiry under §707 (b)(3)(B) involves an analysis of whether the debtor displays a lack of honesty or want of need, either of which alone may provide sufficient justification for dismissal. In re Krohn, 886 F.2d 123, 126 (6th Cir. 1989) In this case, the UST does not allege that Debtors display a lack of honesty. Instead, the UST questions whether Debtors are in need of relief under Chapter 7.

In determining whether a debtor is sufficiently needy to justify granting relief under Chapter 7, this Court analyzes whether the debtor has an ability to repay its unsecured non-priority creditors. Krohn, 886 F.2d at 126.

The case offers an excellent guide to lawyers and lay-people contemplating bankruptcies as to what are reasonable and necessary expenses for: private school tuition, children’s activities and sports, 401(K) contributions, home maintenance and overall abilities to fund a Chapter 13 plan. If you have these types of expenses you might wish to give this case a read to see how they are viewed locally – a genuine family expense or temporary luxury to be forgone for a while.

Again, the goal is equitable treatment to debtors and creditors. This is the way to a debtor’s fresh start and bankruptcy discharge. This case points out that it is not equitable to schedule unreasonably high costs of living to the creditors who would otherwise enjoy a little dividend on the debt owed to them.

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Posted:
August 2, 2012
Tags:
Comments:
0

Bankruptcy Cases in the News

Bankruptcy Cases in the News

In previous blog postings we have discussed on many occasions the basic tenet that the honest debtor is entitled to relief of a discharge in bankruptcy. But what about those debtors that are dishonest or engage in risky behavior that implicate or harm others. The Bankruptcy Code provides for these types of cases in 11 USC 523 as exceptions to the general rule that in exchange for full disclosures and non-exempt assets that a debtor can obtain a complete discharge and a fresh start. In addition, a body of judge made decisions had also developed interpreting the various parts of 11 USC 523.

Most of the exceptions to discharge are common sense and are not surprising. For instance, debts arising from fraud, false pretenses, misrepresentations, luxury charges made on the eve of filing bankruptcy, child support, alimony, taxes and other types of intentional injuries. These are matters which evidence dishonorable conduct or a bad actor that should not be assisted.

In a very recent case Judge Walter Shapero of the U.S. Bankruptcy Court, Eastern District, Southern Division of Michigan decided a very interesting case. In that case it was fairly undisputed that the debtor was a very reckless driver of an automobile which led to an automobile crash causing personal injuries. When the debtor filed her bankruptcy In re Gumprecht, Case No.: 11-47982; Ad. Pro. No. 11-05909, the injured party objected to the discharge as being unfair based upon 11 USC 523(a)(6) a willfully caused injury. As mentioned the evidence showed that the debtor’s driving was horrendous but there was nothing to show that an injury was specifically intended or willful and malicious. Judge Sharpero held that the case must be reviewed under the standards announced in Kawaauhau v. Geiger, 523 U.S. 57 (1998) and in re Markowitz, 190 F3d 455 (6th Cir. 1999). As such, he stated:

    Until 1999, the Sixth Circuit’s standard for § 523(a)(6)’s “willful” requirement was rather lenient. As long as a debtor could be shown to have intentionally committed an act which led to an injury, he would be found to have acted “willfully” under § 523(a)(6), regardless of whether or not he actually intended the injury. Perkins v. Scharffe, 817 F.2d 392, 394 (6th Cir. 1987). Perkins was overruled in 1998 by the U.S. Supreme Court case of [Geiger]. In Geiger, the Supreme Court held that only acts done with the intent to cause the actually injury will rise to the level of a “willful and malicious injury” as used in § 523(a)(6): We now hold that unless “the actor desires to cause consequences of his act, or… believes that the consequences are substantially certain to result from it,” he has not committed a “willful and malicious injury” as defined under § 523(a)(6). [Markowitz, 190 F.3d at 464.]

Under the new standard the burden of proof is much higher for the creditor. For that reason Judge Shapero determined that the facts that the creditor could establish were insufficient and dismissed the objections to discharge.

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Posted:
May 10, 2012
Tags:
Comments:
0

Bankruptcy Cases in the News

Bankruptcy Cases in the News

The 6th Circuit Court of Appeals issued an important and very interesting case recently in White v. Wyndham Vacation Ownership, Inc., 617 F3d. 472 (2010). This Court is the Court of Appeals for a great number of Midwestern Bankruptcy Courts, including the State of Michigan. The White case shows the importance of full disclosure of all assets in a consumer bankruptcy case. As we have discussed in the past blog postings, failure to make full disclosure can result in the dismissal of a case, attorney fees and in some instances, criminal charges.

The White case dealt with an interesting additional concept called “judicial estoppel.” Here is what happened. When Mrs. White signed and filed her bankruptcy petition she forgot to list as a possible asset of a lawsuit against her former employer, Wyndham. Apparently, the reason she had financial problems was because she had been discharged under circumstances which were suspicious of employment discrimination. A potential lawsuit is an asset.

Neither in her plan, nor in her schedules did she disclose to the Bankruptcy Court or her creditors that she had a significant cause of action for employment discrimination against her former employer, Wyndham. After her plan was approved and before she filed suit against Wyndham, she made some attempts to modify her bankruptcy schedules regarding the employment claim. Still, the U.S. District Court dismissed her lawsuit for discrimination, at her former employer’s request, based upon judicial estoppel and the 6th Circuit affirmed the dismissal. The 6th Circuit discussed in the opinion the doctrine of judicial estoppel:

    In the bankruptcy context, this court has previously noted that “judicial estoppel” bars a party from (1) asserting a position that is contrary to one that a party has asserted under oath in a prior proceeding, where (2) the prior court adopted the contrary position either as a preliminary matter or as part of a final disposition. [Citations omitted.] Id. At 476.

The White court noted that the doctrine was “utilized in order to preserve the integrity of the courts by preventing a party from abusing the judicial process through cynical gamesmanship.” Id. The Court further noted that it is the debtor’s absolute duty to disclose all assets to the Bankruptcy Court pursuant to various statutes in the Bankruptcy Code. Further, that based upon the purposes of bankruptcy:

  “[W]hen a bankruptcy court – which must protect the interest of all creditors – approves a payment from the bankruptcy estate on the basis of a party’s assertion of a given position that in our view is sufficient ‘judicial acceptance’ to estop the party from later advancing an inconsistent position.” [Citations omitted.]. Id. At 479.

The omission to list property or the true value assets is viewed as very significant when compared to the purpose of bankruptcy law. The White court specifically noted:

    “[T]he disclosure obligations of consumer debtors are at the very core of the bankruptcy process and meeting these obligations is part of the price that debtors pay in receiving the bankruptcy discharge. [Citations Omitted.] Viewed against the backdrop of the bankruptcy system and the ends it seeks to achieve, the importance of the disclosure duty can not be over emphasized. Id. At 480.

 
Dismissal of a significant claim was a drastic remedy. However, it was a remedy necessary to protect the bankruptcy court system. Had Mrs. White disclosed the Trustee might have brought the claim and any settlement or judgment could have been used to pay her creditors which would have got her out of her plan sooner, helping her and her creditors. When you and your bankruptcy lawyer file a petition for bankruptcy, yours assets (subject to proper exemptions) are no longer yours. The trustee has a right to bring those cases for the benefit of all administrative claimants and creditors. If all these folks get paid and there is money left over, the debtor will receive the balance.

The importance of the disclosure duty can not be over emphasized. Be sure to disclose all potential claims with your bankruptcy attorney. Otherwise, you will jeopardize your fresh start.

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in the city of Taylor, Michigan, where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Posted:
May 8, 2012
Tags:
Comments:
0

Bankruptcy Cases in the News

Bankruptcy Cases in the News

Judge Thomas Tucker of the U.S. Bankruptcy Court for the Eastern District of Michigan recently issued an interesting and important decision in the Mehlhose case (11-64190), the lengthy opinion discusses, among other things, the inherent power of the Bankruptcy Court to sanction (punish) debtors who do not play by the rules and make dishonest disclosures. In this case the Court determined that the husband-wife debtors had significantly under reported their income and filed their case in bad faith otherwise. Specifically, Judge Tucker determined that the debtors “lied under oath” concerning their income and filed a case that could not serve a legitimate purpose as they had or should have known that their particular debts were non-dischargeable. Consequently, it was determined that the case was filed in bad faith and merely for delay. The Court set up an evidentiary hearing that the debtors did not appear to testify and explain their actions. Judge Tucker noted that a Bankruptcy Court has both the inherent and the statutory authority to sanction misconduct:

In John Richards Home Bldg. Co., L.L.C. v. Adell (In re John Richards Homes Bldg. Co., L.L.C.), 404 B.R. 220, 226-27 (E.D. Mich. 2009), the court discusses the scope of a bankruptcy court’s inherent power to issue sanctions as follows:

    Bankruptcy Courts, like all courts, have an inherent power to issue sanctions, as explained by the Untied States Supreme Court in the Chambers case. See Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S.Ct. 2123, 115 L. Ed. 2d 27 (1991) (“Courts of justice are universally acknowledged to be vested, by their creation with power to impose silence, respect, and decorum, in their presence, and submissions to their lawful mandates.” (Quoting Anderson v. Dunn, 19 U.S. 204, 6 Wheat. 204, 227, 5 L.Ed. 242 (1821)). The Sixth Circuit Court of Appeals has similarly stated that “[b]ankruptcy courts, like Article III courts, enjoy inherent power to sanction parties for improper conduct.” Mapother & Mapother, P.S.C. v. Cooper (In re Downs), 103 F. 3d 472, 477 (6th Cir. 1996). … [T]he inherent power to issue sanctions is not limited to only those instances where a party violates a court order. “The federal courts’ inherent power to protect the orderly administration of justice and to maintain the authority and dignity of the court extends to a full range of litigation abuses.” Mitan v. Int’l Fid. Ins. Co., 23 Fed. Appx. 292, 298 (6th Cir. 2001) (ruling that a court can award sanctions “when bad faith occurs”).

In addition to a bankruptcy court’s inherent authority to sanction misconduct, 11 U.S.C. § 105(a) provides a bankruptcy court with statutory authority to do so. It provides:

(a)The court may issue any order, process, or judgment that is necessary;or appropriate to carry out the provisions of this title. No provisions of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.

In the end, the Court noted that sanctions would well include attorney fees. Debtors were sanctions by having their case dismissed, being ordered to pay reasonable attorney fees and costs and having been barred from refilling for 2 years. In filing your case, make sure to make complete and honest disclosures of debts, assets and income to the court, trustee and your creditors.

That is the trade-off. To obtain a discharge and a fresh start, the debtor must make an honest and full disclosure. Do not jeopardize your life or liberty and fresh start.

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in the city of Taylor, Michigan, where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

 

Posted:
March 30, 2012
Tags:
Comments:
0

Top Ten Bankruptcy Mistakes: Bankruptcy Fraud

TOP TEN BANKRUPTCY MISTAKES

 

#9

Bankruptcy Fraud

The United States Bankruptcy Code, 11 USC 101 et seq. contains numerous provisions addressing issues of fraud. Essentially, the subject matter can be divided into two broad areas: (1) civil bankruptcy fraud and (2) criminal bankruptcy fraud. Each have their own serious implication with the main point to be made being … honestly and thoughtfully make full disclosures.

One of the primary purposes of filing your bankruptcy is to obtain a discharge which is essentially the order by which your obligations are cancelled. The discharge can be denied, however, for debtor misconduct in violating disclosure requirements, cooperation requirements and other misconduct. In the civil context 11 USC 727 (a) provides bases for the denial of a debtor’s discharge. One of which is under 11 USC 727(a)(4), which, in part, provides that the court shall not grant a discharge if the debtor “knowingly and fraudulently, in or in connection with the case… made false oath or an account…” Being denied a discharge is a disaster in itself but the criminal ramifications portend time in prison, too.

For instance, the making of a fraudulent statement in connection with a bankruptcy case may also constitute a crime. A violation of 18 USC 152 is a five year felony. A person who:

    (1) Knowingly and fraudulently conceals from a custodian, trustee, marshal, or other officer of the court charged with the control or custody of property, or, in connection with a case under title 11, from creditors or the United States Trustee, any property belonging to the estate of a debtor;

(2) Knowingly and fraudulently makes a false oath or account in or in relation to any case under title 11; or,

(3) Knowingly and fraudulently makes a false declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1746 of title 28, in or in relation to any case under title 11;

may be convicted under this felony statute.

In the end, your fresh start and freedom are too precious to risk. Always make a full and fair disclosure of assets in your bankruptcy case or do not file it.

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

 

Posted:
March 19, 2012
Tags:
Comments:
0

Top Ten Bankruptcy Mistakes: Payment from Exempt Assets

TOP TEN BANKRUPTCY MISTAKES

# 4

Paying from Exempt Assets

The Bankruptcy Code in keeping with equitable treatment of creditors and fresh start considerations for debtors provides a comprehensive set of exemptions. Exemptions in Michigan are also provided under state laws so that the debtor may choose that set — either Federal or State — which are the most favorable.

Upon the filing of a petition in bankruptcy, 11 USC 541 states that all of the debtor’s property – legal or equitable – and wherever situated, becomes the property of the estate. The exemptions determine what property a debtor may keep for his fresh start. It is therefore critical to determine, based in the facts of each case, which set of exemptions to choose and whether the filing may proceed or should be delayed.

Competent advice on these issues is essential. When debts start to appear overwhelming get immediate advice. Otherwise, you may with good intentions hurt your family by paying dischargeable bills from exempt assets, which you could otherwise keep. For instance, it may be foolish to borrow from your 401-K (an exempt asset), with tax penalties, and use the money to pay a bill which could be eliminated by a Chapter 7 discharge. Before you make a major mistake make sure to talk to a bankruptcy lawyer so that your family is best protected.

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]