In Bryan Scott Owens v Owens, 2019 Bankr.LEXIS 1193, Case #17-17628-WHD, Adv 18-1008-WHD (Bankr. N.D. Ga., April 15, 2019) the debtor, Bryan Owens, signed a contract on behalf of a sole proprietorship which owed money to the Georgia Lottery Corporation for proceeds of lottery tickets.  The 1995 contract with the lottery states that the debtor is a fiduciary, and is required to deposit the proceeds of the sales into a dedicated bank account, and that such proceeds shall constitute a trust fund in favor of the lottery corporation until paid to such corporation.   In 1996 Owens subsequently focused his efforts on the truck stop portion of the business, and left another person, Feltrinelli, in charge of the lottery operations.  Feltrinelli subsequently submitted her own application with the lottery asserting she was the owner of the business.  No notice had been given to the lottery, as was required by the contract, of a change of ownership.   In 1999 the lottery attempted to collect funds owed it from the associated bank account, but found there were insufficient funds in the account.  Upon investigation it discovered that the account, set up in Feltrinelli's name since 1993.  The lottery sued Owens in state court, obtaining a default judgment in the amount of $62,028.  Owens then filed for relief under chapter 7 bankruptcy.  This adversary under §523(a)(4) followed, with a motion for summary judgment by the lottery.  Section 523(a)(4) excepts from discharge any debt "for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny." 11 U.S.C. § 523(a)(4). To establish that a debt is non-dischargeable due to defalcation, a party must demonstrate that (1) the debtor held a position as a fiduciary; (2) the claim arose while acting in a fiduciary capacity; and (3) the conduct rose to the level of a defalcation.1  The first and second requirements are met here, as the lottery statute creates an express or technical trust as required under §523(a)(4) and therefore imposes a fiduciary duty on a retailer not only to account for the proceeds of the sales, but also to exercise control and supervision of employeees and be fully responsible for their conduct as to such sales.  The only remaining issue is what mental state is required to find a debt nondischargeable under §523(a)(4).  Defalcation under this section requires a showing either that the defendant intentionally acted wrongly or that he acted with criminal recklessness.2    As there is no evidence that Owens acted intentionally, the court focused on whether he acted with criminal recklessness.  This requires either that the debtor consciously disregarded or was willfully blind to a substantial and unjustifiable risk that his actions would breach a fiduciary duty.3  The plaintiff may show that the risks were so obvious that the Defendant must have recognized them, yet still went forward, acting in a way that his conduct constituted a gross deviation from the standards of conduct expected in his fiduciary role.4  The court found that Owen's absence from the business, the turnover of the business to Feltrinelli, who owed no duty to the lottery corporation, and allowing her to control the lottery sales and proceeds supports a finding of criminal recklessness.  The court found that there was no change in ownership, and that Feltrinelli was only a manager.  Owen, not Feltrinelli ultimately gave permission for the lottery to enter the premises and remove the lottery equipment.    The court also rejected Owen's argument that he was unaware of the specific terms of the contract, or that the contract was terminated or superceded by Feltrinelli's actions. The requirements in the contract for termination were not satisfied, and Owens should have been aware of the fiduciary duty under the agreement.  The court emphasized that the events giving rise to the debt occurred two years after Owen's decision to remove himself from the business.  His actions constituted a great deviation from the standard of conduct expected in his fiduciary role.  A fiduciary cannot simply walk away from an existing duty, creating a substantial risk that a breach of such duty may occur.   The court granted summary judgment to the lottery corporation.1 Caitlin Energy, Inc. v. Rachel (In re Rachel), 527 B.R. 529, 540 (Bankr. N.D. Ga. 2015).↩2 In re Rachel, 527 B.R. 529, 543 (Bankr. N.D. Ga. 2015) (discussing  Bullock v. BankChampaign, 569 US 267 (2013)↩3 In re Rachel, 527 B.R. at 543↩4 Ga. Lottery Corp. v.Thao Huynh (In re Thao Huynh, 549 B.R. 421, 426 (Bankr. N.D. Ga. 2016)↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, Fl 33609-1703www.hillsboroughbankruptcy.com

Many of our clients frequently ask if disability insurance payments are tax deductible and if that income is taxable when received. Here, the attorneys of Young, Marr, and Associates provide an overview of the general inner workings of disability insurance for tax purposes. Many of our clients ask accounting questions in order to understand the implications of their legal […] The post Is Disability Insurance Tax Deductible in PA and NJ? / Is Disability Insurance Taxable? appeared first on .

TheMarch 2019 New York City Taxi & Limousine Commission (TLC) sales resultshave been released to the public. And as is our practice, provided below are Jim Shenwick’s comments about those sales results.1. The volume of transfers fell from February. In March, there were 38 unrestricted taxi medallion sales.2. 28 of the 38 sales were foreclosure sales (74%), which means that the medallion owner defaulted on the bank loan and the banks were foreclosing to obtain possession of the medallion. One sale was an individual to an LLC and two sales were an estate sale. We disregard these transfers in our analysis of the data, because we believe that they are outliers and not indicative of the true value of the medallion, which is a sale between a buyer and a seller under no pressure to sell (fair market value). 3. The large volume of foreclosure sales (approximately 74%) is in our opinion evidence of the continued weakness in the taxi medallion market. 4. The seven regular sales for consideration ranged from a low of $135,000 to $310,000 (three medallions) to $340,000 (one medallion) and a high of $350,000 (two medallions).5.  The fact that 74% of all transfers in March 2019 were foreclosure sales shows continued weakness in the taxi medallion market and no sign of a correction. 6. At Shenwick & Associates we believe that the value of a medallion is approximately $160,000 and the value of medallions continues to weaken. Please continue to read our blog to see what happens to medallion pricing in the future. Any individuals or businesses with questions about taxi medallion valuations or workouts should contact Jim Shenwick at (212) 541-6224 or via email at [email protected].

   In In re Ransom, 2019 Bankr. LEXIS 993, Case #15-10886-TPA (Bankr. W.D. PA, 28 March 2019) the court found Ocwen guilty of civil contempt for failure to comply with a number of court orders requiring the production of loan histories in multiple cases.  The case started from Notices of Postpetition Mortgage Fees filed by Ocwen pursuant to Rule 3002.1, seeking $400 in attorneys fees allegedly incurred by Ocwen in the chapter 13 bankruptcy cases.  In mid-2017 the trustee filed objections to these notices raising issues including that the fees sought were for a firm, Robertson, Anschutz & Schneid, PL (RAS), that was not licensed to practice law in Pennsylvania.  Ocwen asserted that the notices had been filed as a result of 'technical error' and entered a consent motion for an order agreeing to waive the fees and provide proof that any reference to such fees had been removed from the debtors accounts.   At the hearing on such consent order the court inquired whether these cases were isolated instances where RAS fees had been charged by Ocwen or if other cases with such fees had slipped through without challenge.  A week prior to trial on such motion the trustee filed a report noting 30 days it found with similar fees by RAS.   At trial counsel for RAS indicated that RAS had done administrative work for Ocwen from June 2015 through June 2016 but had ceased such work, and no further such fee notices would be filed in that district.  Counsel also noted that the cases involved a 'manual mistake' erroneously indicating that such fees were recoverable in such jurisdiction.  Counsel for Ocwen also indicated that loan histories had not yet been turned over to the trustee as required by the proposed settlement.  The court entered an order on 26 July 2017 expanding the inquiry to all cases with Ocwen involving such fees, and noting that failure to promptly turnover such histories would subject Ocwen to sanctions.   In the sanction order, the court defined loan history as a record of the loan from its inception up to the present showing all money owed and all payments made.    The court ordered loan histories to be provided by August 11, 2017.  On August 4, 2017 Ocwen filed affidavits including an assertion that loan histories had been provided to the trustee.  The trustee challenged this assertion asserting that the documents provided were incomplete.  At a hearing on 31 August the court sided with the trustee, and allowed until October 13, 2017 to provide complete loan histories.   On October 13 the trustee indicated that histories had only started being transmitted to it on October 12 and were continuing to be transmitted on the 13th; and indicated that complete histories had been provided in only 5 of the cases.    A hearing on an order to show cause was continued when Ocwen appealed the order and prior orders of the court.  Such appeal was dismissed on March 2, 2018, finding that the appeal was untimely as to the prior orders, and that there was no basis for it to consider the interlocutory appeal of the order to show cause.  At a new hearing on the order to show cause the court found that Ocwen had failed to comply with the orders regarding turnover of loan histories.  The court found 11 U.S.C. 105(a) and the court's inherent power to sanction provides bankruptcy courts the power to impose civil contempt sanctions. The elements required for such sanctions had been met in most cases.  The were valid orders requiring turnover, which were never questioned by Ocwen until the notice of appeal was filed, and Ocwen never sought relief from such orders.   There was substantial analysis of whether Ocwen had proper notice and knowledge of the orders.  Such notice was found where the orders were issued following hearings at which Ocwen was represented by counsel and at which an Ocwen employee was also present.  In cases where either no attorney had entered an appearance for Ocwen, or Ocwen asserted that counsel appearing did not inform Ocwen of the order, the court looked to whether Ocwen conceded it received the orders.  Where it admitted receiving the order, the court found the knowledge requirement satisfied.  Also, where the trustee filed motions to compel compliance with the orders, Ocwen was determined to have knowledge of the orders.  Where the trustee's report, admitted received by Ocwen, made reference to the cases, Ocwen is deemed to have notice of the orders as of the date of the trustee's reports.   While the well-recognized legal principal is that notice to a party's attorney is imputed to the party, the court hesitated to extend such rule in the context of civil contempt for violation of an order if which the party claimed to have no notice.  Hence the court did not impart knowledge of Ocwen's attorney to Ocwen in cases where the only notice of record was to such attorney.  As to orders mailed to Ocwen, the mailbox rule creates a rebuttable presumption that the orders were received by Ocwen.  As Ocwen has not presented credible evidence to the contrary other than a bare assertion of nonreceipt, the court concluded that Ocwen received the orders.  The court found that Ocwen disobeyed the order as the order required Ocwen to provide proof that the records had been adjusted to remove charges no later than 60 days from the date of the orders, by notarized affidavit by a corporate officer reflecting the removal of the charges as well as a full and comprehensive loan history from the inception of the loan.  Ocwen never sought reconsideration or clarification of the order.  Ocwen was found in violation in those cases where proper notice was provided prior to the order of July 26.  In the cases where the 60 day period expired before the above analysis shows proper notice to Ocwen, while the court declined to issue sanctions.   The court also found that the subsequent orders requiring loan histories did not expunge Ocwen for violations of the July 26 order.  The subsequent orders referenced the July 26 order, and stated that Ocwen was required to comply with it.  This was also stressed at the hearing held on August 31.  Extensive extracts from the record were included in the opinion.   The amount of a sanction must either coerce compliance with the order or compensate the opposing party for the damages it suffered as a result of the contempt.  The court found that a coercive sanction is inappropriate because Ocwen did eventually comply with the orders.  Thus, the court limited the sanctions to the damage that the trustee and debtors incurred as a result of the disobedience.    The court also took into account mitigating factors such as the communications by Ocwen with the trustee as to the loan histories, indicating that Ocwen was making some effort toward compliance.  Also, the trustee appears to have been a willing participant in Ocwen's post-deadline attempts to come into compliance.      The parties had stipulated to a $70,000 sanction, based on attorneys fees incurred by the trustee and debtor's counsel from Mid-March 2017 to the time of final disposition of the case.  Also, in some cases the court declined to sanction Ocwen based on notice issues.  Based on these issues the court will set the $70,000 as a cap to sanctions, and set a hearing following a further evidentiary hearing solely on that issue. Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703813 870-3100hillsboroughbankruptcy.com

Matthew DeBord Yellow taxi cabs and New York City — what could be more iconic? Successfully hailing a cab has always been a rite of passage for New Yorkers. It has bewildered out-of-towners but was traditionally handled with little effort by seasoned residents of the Big Apple: spot an on-duty cab, raise a hand, hop inside, enjoy a potentially strange, yet authentic, experience. The old-school taxi business has been under assault in New York for some time, however, as Uber and Lyft have spent half a decade rapidly expanding their operations. Ride-hailing has flooded Manhattan with cars and driven down the value of the city's allocated taxi medallions: There are 13,500 cabs in New York City — but there is something like 80,000 vehicles aligned with ride-hailing services, according to The Wall Street Journal. Taxis now have a new challenge, and it could be an existential one: congestion charges in New York, which are set to be the first in a US city.  The congestion-pricing scheme is now part of a New York state budget, with the fees to kick in by 2021. People driving into the congestion zone — Manhattan island below 60th St. — will be hit with a $12 to $14 fee (it will likely be assessed using the E-Z Pass system, which already covers many bridges, tunnels, and toll roads in the region). Taxis will be billed $2.50 per ride, while ride-hailing services will be billed $2.75. Taxis don't cause congestion But Uber and Lyft, for example, will be able to carve out a discount for a "pooled" ride, knocking the fee down to $0.75. Taxis won't be able to do this — and it could be impossible to monitor whether ride-hailed pools actually wind up transporting multiple passengers.  The whole thing is intended to generate $15 billion over five years for capital improvements to the city's mass-transit system (in one of those "only in New York" twists, the state government in Albany oversees mass transit in New York City). That's much-needed funding, and one hopes it will be wisely spent. But the most recent expansion of the city's subway, the Second Ave. line, took decades and cost a staggering $3.8 billion, so don't get your hopes up. Congestion pricing, of course, should ease Manhattan gridlock, but it will do this at the expense of turning over the city's most lucrative sections to Uber and Lyft while continuing the destruction of the taxi business. It's a hard political bargain, which was forged by New York Gov. Andrew Cuomo. As far as I can tell, the plan combines accepted economic theory about congestion caused by personal cars — it's an unpriced "externality" — with a cunning effort to get well-capitalized Silicon Valley companies to pay for upgrading mass transit. Taxi drivers caught in the middle Taxi drivers are caught in the viselike middle. They've persuasively argued that because their numbers have long been capped, they aren't part of the congestion problem. This is accurate — in fact, it's hard to see why taxis aren't exempt from the charge. They're sort of the longstanding third leg of a New York City transit stool, with buses and subways being the other two.  The taxi business has evidently lost that argument and could now have a tough time competing with Uber, Lyft, and others because ride-hailing services — already losing massive amounts of money as they chase the growth that investors desire — will simply cut prices to avoid any passenger sticker shock. The double standard at work here is actually so glaring that it's almost hard to believe it's real. Uber, Lyft, and other ride-hailing services simply deluged New York City streets with vehicles in an effort to rapidly build their businesses. And we know how big those businesses can be: Lyft's initial public offering last week valued the company at over $20 billion. The taxi business is hardly pure — economists have often argued that it was a monopoly, and, at one point, taxi medallions were costing more than $1 million. But New York is now using its lawmaking and budgetary power to pick a clear winner in the transit game; the kind of money that the Ubers and Lyfts can bring to the table is simply too humongous to resist. Pragmatists will tell you that the horse, so to speak, has left the barn anyway, so it makes sense for New York to effectively tax ride-hailing to make up for years of neglecting the transit systems that have nothing to do with gridlock. In that case, the taxi business, iconic or not, is expendable.  Copyright © 2019 Insider Inc. All rights reserved.

Bankruptcy 101: 5 Things to Prepare for Your Bankruptcy Meeting Whether you file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, you will have what is known as a Meeting of Creditors, or a 341 Hearing. This meeting is an important part of your bankruptcy case, and it allows the trustee and your creditors to review your assets and your debts. Essentially, this meeting will determine whether your bankruptcy petition will be granted or how your repayment plan will be structured. Typically, no creditors actually show up to this meeting. However, the trustee will be there, and you will be required to show up and provide some documentation and answer some questions. Here are some things you will need to know or to do before this meeting: Review Your Petition Your bankruptcy petition outlines your assets and your debts, and the trustee will review it carefully. If you have made any mistakes on this document, it could be seen as an attempt to hide assets or to commit fraud. It is important that the petition is correct. Review it carefully before the meeting and make any changes that are necessary. You will need to file an amendment if you are making changes. When the meeting starts, you should bring up any changes that were made as soon as possible. Don’t wait to be asked. Even if you have filed an amendment, keeping quiet can be seen as an attempt to be evasive. Gather Your Documents You will be required to show certain documentation during your Meeting of Creditors. Gather the following documents to bring with you: Photo identification, such as a driver’s license. Social Security card. Proof of income. Recent bank statements and other account statements (such as retirement or investment accounts). Bankruptcy papers. Requested documentation to prove expenses under the means testYour trustee may also request additional documents. Make sure you understand from your lawyer exactly what you need to bring, and be prepared on the day of your meeting. Bring Materials to Pass the Time In most cases, your bankruptcy meeting will take about 10 to 20 minutes. However, you may have to wait quite a while until your meeting begins. The trustee will have a list of cases to hear, so your meeting might not begin right at the time you were given. It just depends on the logistics of the meetings that came before yours. Be prepared to keep yourself occupied with a book, some music, or some other diversion. Bring headphones for anything that makes noise, and bring a charger for any electronics. Focus on the Truth You will have to take an oath that you will tell the truth during your bankruptcy meeting. You may not be in a courtroom, but you will be engaging in a legal proceeding, and telling a lie under oath can lead to serious penalties. Go into the meeting preparing to tell the truth. Prepare Answers to Common Questions If you know the questions you will be asked at your bankruptcy hearing ahead of time, it can make it easier to provide the answers. You won’t feel flustered or put on the spot. Here are some of the common questions that are asked at these meetings: Have you transferred any property or personal goods in the last year? Is anyone holding onto property that belongs to you? Will you be getting a tax refund this year? Will you be getting a life insurance payout or inheritance this year? Will you be receiving property or other assets from a divorce this year? Does anyone owe you money? Do you have a claim to money from a business? Are you (or will you be) pursuing a claim for an accident? How did you come up with the value for your big ticket assets? Have you made any large payments to creditors, friends, or relatives recently? These questions are designed to get a better picture of your finances. Answer these questions honestly and as thoroughly as you can. If you are caught lying, or if discrepancies are found in your testimony or documentation, it could destroy your bankruptcy claim and put you at risk of legal penalties. The Meeting of Creditors is an important meeting, and you should be prepared, though you shouldn’t be nervous. Work with your bankruptcy attorney to know what to expect and how to respond. Once the meeting is over, you will be one step closer to getting the debt relief you need. If you need a bankruptcy attorney, call My AZ Lawyers now. Our experienced attorneys can help you learn the difference between Chapter 7 and Chapter 13 bankruptcy so that you can choose the right option to get maximum debt relief. We’ll help you determine the right options for your circumstances and will then put together the right plan to get the relief you need quickly. Call us in Arizona today to talk with a bankruptcy attorney.   Published By: My AZ Lawyers Mesa Location: 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: (480) 448-9800 Glendale Location: 20325 N 51st Avenue Suite #134, Building 5 Glendale, AZ 85308 Office: (602) 509-0955 Tucson Location: 2 East Congress St., Suite #900-6A Tucson, AZ 85701 Office: (520) 441-1450 Avondale Location: 12725 W. Indian School Rd., Ste E, #101 Avondale, AZ 85392 Office: (623) 399-4222 The post Bankruptcy 101: 5 Things to Prepare for Your Bankruptcy Meeting appeared first on My AZ Lawyers.

The Pros and Cons of Filing for Bankruptcy Bankruptcy is a strategic way to get debt relief when you are struggling to pay your bills. It’s a legal right that is provided to those who cannot keep up with their debts. Depending on the type of bankruptcy you file, you might be able to clear all of your unsecured debts, such as your credit card debts, or you might be able to get a structured repayment plan that reduces your debts and makes them easier to pay off. Before you decide whether or not to file for bankruptcy, you might want to consider all of the pros and cons first. Here’s a look at some of the advantages and disadvantages to filing for bankruptcy, depending on your unique circumstances: Advantages Clear Your Credit Card Debt One of the biggest benefits of filing for bankruptcy – and one of the things that attracts so many people – is the ability to clear out all your credit card debt. If you qualify for Chapter 7 bankruptcy and file, you will get a fresh slate when it comes to your credit cards. You will no longer have to make payments on those cards, and the debts will be completely erased from your credit report. Stop Harassment from Creditors If you are late even one time with a payment, you will get a lot of phone calls and emails from your creditors reminding you to pay or asking you when you will be able to bring the account current. Start falling far behind on the one account or fall behind on multiple accounts, and it can feel like the harassment never stops. As soon as you file for bankruptcy, those calls will end. If a creditor calls you while you are in bankruptcy proceedings, they could face legal action. Get Rid of Some Tax Liabilities In most cases, you cannot discharge tax debts in a bankruptcy. However, you can clear tax debts that are older than three years in most cases. Depending on how much you owe, that could make a huge difference to your financial health. Start Rebuilding Your Credit Faster While you are struggling to repay your debts, you are compounding your credit problems. You are getting a negative mark on your history every time you make a late payment or don’t make a payment. When you file for bankruptcy, you can immediately clear up the money to start making those payments or to start paying on a new, smaller line of credit. You don’t have to wait to get your debts under control to start rebuilding. You can start immediately. Plus, it’s much easier to explain to future creditors why you declared bankruptcy than to explain a long line of missed payments, defaults, and other problems. Keep Your House and Other Assets When you file for Chapter 7 bankruptcy, you are allowed to keep assets up to a certain value. Most people are able to still keep their houses, cars, and retirement accounts. When you file for Chapter 13 bankruptcy, you’re able to keep these assets because your repayment plan allows to catch up on your payments and stay current. Either way, you keep the things that are most important to you. Disadvantages Embarrassment One of the biggest disadvantages to bankruptcy for many is that they feel embarrassed because of it. They feel shame in having let their debts get away from them. However, bankruptcy was designed to help people, and it has long been a legal right. There is no shame in taking advantage of the help that is being offered. Sometimes, bad things do happen to good people, and we all need a second chance sometimes. Besides, no one ever has to know that you’ve filed for bankruptcy unless you tell them. Losing Luxury Possessions If you do have luxury possessions – such as a high-priced home, a vacation home, expensive jewelry, or recreational vehicles – you will likely lose them in a bankruptcy. However, the price you might pay if you don’t file for bankruptcy could be higher, such as continuing the downward spiral into debt. Losing a boat could be worth the fresh start. You Can’t Get Rid of Some Debts No matter what type of bankruptcy you file, you are unlikely to be able to discharge tax debts or student loan debt. Therefore, if your primary financial problem is that you owe thousands to the government, filing for bankruptcy may not help you much. It’s a Hit to Your Credit Filing for bankruptcy will most certainly take a big toll on your credit. You will find it very difficult to get credit after filing. However, this won’t last long. You will be able to be approved for some credit cards within a few months of filing, and you’ll be able to get approved for a mortgage within a year or two. Filing for bankruptcy can actually help you restore your credit faster. You’ll take a hit, but it will be short-lived. Conversely, if you don’t file, your debt problems can linger, and they can wreak havoc on your credit. Ultimately, whether bankruptcy is right for you or not will depend on your personal circumstances. You will need to weigh all the pros and cons to understand how it will benefit you or not. Consulting with an experienced bankruptcy lawyer can also help you understand the potential benefits. The bankruptcy lawyers at My AZ Lawyers can help you understand your bankruptcy options and how filing for this debt relief may help you. Our attorneys may be able to help you get a fresh start so that you can rebuild your credit and reach your financial goals. Call us today to schedule a free consultation and learn more about what bankruptcy could do for you.   Published By: My AZ Lawyers Mesa Location: 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: (480) 448-9800 Glendale Location: 20325 N 51st Avenue Suite #134, Building 5 Glendale, AZ 85308 Office: (602) 509-0955 Tucson Location: 2 East Congress St., Suite #900-6A Tucson, AZ 85701 Office: (520) 441-1450 Avondale Location: 12725 W. Indian School Rd., Ste E, #101 Avondale, AZ 85392 Office: (623) 399-4222 The post The Pros and Cons of Filing for Bankruptcy appeared first on My AZ Lawyers.

  In a rebuke to the bankruptcy judges in the 7th Circuit, the circuit court rejected the general conclusion by such judges that vehicles remained property of the estate post-confirmation, and therefore were not subject to booting or towing for post-petition fines.  In re Steenes, 2019 U.S.App.LEXIS 7543 (7th Cir. 14 March 2019).  The City of Chicago asked the court to vacate orders keeping vehicles in the estate in pending cases in bankruptcy court.  The bankruptcy court denied them, stating solely that the court as an institution routinely keeps all assets in all chapter 13 cases.  The bankruptcy court also denied the request to treat the fines as administrative expenses, necessary for the preservation of each estate's property.   On appeal the 7th Circuit expressed concern that chapter 13 bankruptcy would create immunity from traffic laws.  Under 11 U.S.C. §1327(b) unless the plan or order confirming provides otherwise, all property of the estate vests in the debtor upon confirmation of the chapter 13 plan, thereby making the debtor personally responsible for the expenses of maintaining such property.   While §1327(b) gives bankruptcy judges discretion to include in the confirmation order a provision holding assets in the estate in particular cases, good cause must be shown for such an exception.  It is error to simply flip the statutory presumption as a norm.  The reasons cited by counsel for debtors, that debtor's need cars to earn a living and make the plan payments, is insufficient.  The owner of a vehicle must pay for gasoline, insurance, repairs, maintenance, parking, and all operating costs.  There is no basis to distinguish public providers of parking from the other involuntary creditors for such costs.   In order to overturn the presumption of property vesting in the debtor upon confirmation, courts are required to carry out a case specific analysis supported by good reasons.  As this was not done, the bankruptcy order was reversed, and an order should be entered restoring the estate assets to the debtors' personal ownership.  Note that the result could easily be modified by debtor's attorneys by simply including a provision in the plan itself to vest property in the debtor upon discharge, rather than upon confirmation.  Any parking fines would remain non-dischargeable post-petition debts collectible after discharge; and the court could consider such expenses an administrative expense.  The case also calls into question many bankruptcy court's conclusions that post-petition causes of action are property of the estate when plans provide for vesting upon confirmation.Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703www.hillsboroughbankruptcy.com

  In a case that raises both the issue of what should be included in the notice of final cure, as well as the effect of an order on such notice, the debtors prevailed in W. Dmsion Specialized Loan Servicing v. Devita, 2019 U.S. Dist. LEXIS 41652, Case No 5:18-cv-283-D (E.D. N.C. 14 March 2019).  While it is common for debtor's to request a ruling under Fed. R. Bankr. P. 3002.1 that the mortgage is current upon completion of payments in a chapter 13 plan, the chapter 13 trustee's notice of final cure payment under this rule went a step further, and stated the total amount due on the mortgage as of completion of the plan.   This amount was computed by deducting the amount paid by the trustee (apparently including interest and escrow) from the total indebtedness as of when the case was filed.  The trustee sent this notice to the mortgage company, SLS, which filed a response agreeing that the prepetition mortgage arrearage had been paid in full, and that all post-petition payments had been made, but did not respond to the allegation as to the balance due on the mortgage.  In the motion to the court to declare the mortgage current, the trustee stated that he requested a detailed mortgage history from the mortgage but that the mortgage did not respond.   The motion stated that the notice had stated the proposed unpaid principal balance of $104,547.51 and that SLS had filed a response 'agreeing with the trustee's notice.'  The motion sought a declaration that the unpaid principal balance on the mortgage was $104,547.51.  SLS did not respond to the motion,  and on 23 August 2017 the bankruptcy court entered an order determining that the principal balance on the mortgage as of 25 April 2017 was $104,547.51.    The dispute arose when SLS issued a notice of default to the debtors on 24 October 2017 asserting that the debtors had missed their November 2017 payment.  Debtors then moved for sanctions asserting SLS failed to comply with the court's order determining the mortgage was current.  SLS then realized that the court's order included a finding as to the principal balance, and on 21 February 2018 it sought reconsideration of that finding; arguing that it was unaware that it needed to respond to the trustee's proposed balance in its notice.  SLS also argued that the trustee had intentionally applied interest and escrow payments to reduce the principal.  At a hearing on the motion to reconsider, SLS's witness testified it was not aware a payment history was requested, and it had confused the trustee's notice with the motion.  It also produced evidence showing the principal balance as of 25 April 2017 should have been $151,547.21.  The bankruptcy court denied the motion to reconsider finding that SLS failed to timely object to the motion despite proper service.  SLS timely appealed this decision.  The district court first looked to Rule 60 of the Fed. R. of Civ. Procedure.  This rule requires the moving party to demonstrate that its motion is timely, it has a meritorious claim or defense, that the nonmoving party will not suffer unfair prejudice from setting aside the judgment, and that exceptional circumstances justify relief.1  If the moving party satisfies these requirements, it must also satisfy one of the six enumerated grounds for relief under Rule 60b.    The appellate arguments focused on whether the debtors would suffer unfair prejudice, and whether extraordinary circumstances exist.  The appellate court found that the vacating of the court order after the debtors had relied on the court's decision can cause unfair prejudice, and that SLS presented no evidence at the bankruptcy hearing as to whether the debtors would suffer unfair prejudice.  The district court found it was not required to make a finding as to this issue.   The district court found that the extraordinary circumstances argument weighed in favor of the debtors.  In making an extraordinary circumstance determination courts must engage in the delicate balancing of the sanctity of final judgments, expressed in the doctrine of res judicata, and the incessant command of the court's conscience that justice be done in light of all the facts.2  Any loss to SLS arose because it failed to respond to the trustee's notice and motion.  Further, even if it had met the threshold requirements above, SLS is not entitled to relief under Rule 60(b). The bankruptcy court rejected it's arguments under Rule 60(b)(1) and 60(b)(6).  SLS now also seeks relief under Rule 60(b)(4).   Rule 60(b)(1) permits a court to relief a party from a judgment for mistake, inadvertence, surprise, or excusable neglect.  As SLS has not explained why it failed to object to the trustee's motion beyond its failure to know local bankruptcy procedure.  It is an experienced litigant in the court and actively engaged in litigation with the trustee, yet ignored the trustee's notice and motion.   This does not support a showing that SLS was not at fault justifying relief under Rule 60(b)(1).  The Fourth Circuit construes Rule 60(b)(4) narrowly, requiring a showing that the court lacked personal or subject matter jurisdiction or acted contrary to the process of law in order to void a judgment.3   The court rejected SLS's argument that the extent of a lien should be determined in an adversary proceeding, thereby divesting the court of subject matter jurisdiction.  However, as this was not raised in the bankruptcy court, the argument was not preserved for appeal.  Alternatively the trustee provided SLS with notice in bolded font that he calculated the principal balance to be $104,547.51, and served a copy of the motion on SLS before filing with the court.  Accordingly SLS was provided sufficient notice to satisfy due process.  As to the requirement of an adversary proceeding, such requirements are procedural and not jurisdictional.  The court also rejected the Rule 60(b)(6) argument that it would be unfair to deny relief to SLS in that the local rule authorizing the trustee to determine the principal balance is substantive, and conflicts with the Federal Rules of Bankruptcy Procedure if it lacks a good-faith element.  Again, the specific argument was not raised on appeal; but the court indicated it would still reject the argument.  The trustee computed the unpaid principal using available documents, contacted SLS twice for more documentation, and provided notice of the unpaid principal balance three times.  SLS acknowledges it failed to correct the principal balance or alert the court to the issue because its counsel lacked familiarity with local procedures and it did not know it needed to respond to that aspect of the trustee's notice.  This does not present circumstances of extreme and undue hardship in an unusual situation where principles of equity mandate relief.  The court found that the local rule requiring the setting forth of the amount due on the mortgage as of a specific date in Rule 3002.1(h) motions was proper.    The district court found that the local rule comports with the purpose and text of Rule 3002.1(h) because it sets for a procedure directed toward determining the amount necessary to cure the mortgage debt, ie the unpaid principal balance on the mortgage.  A rule is procedural when it governs the judicial process for enforcing rights and duties recognized by substantive law and for justly administering remedy and redress for disregard or infraction of them.4   The fact that some applications of the rule affect substantive rights in some circumstances does not make a rule substantive.1 Robinson v. Wix Filtrate Con,., 599 F .3d 403, 412 n.12 (4th Cir. 2010).↩2 United States v. Welsh, No. 5: 11-HC-2209-D, 2017 WL 7805581, at *10 (E.D.N.C. Mar. 16, 2017) (unpublished), aff'd, 879 F.3d 530 (4th Cir. 2018)↩3 Wells Fargo Bank, N.A. v AMH Roman Two NC, LLC. 859 F.3d 295, 299 (4th Cir. 2017).↩4  Hanna v. Plumer, 380 U.S. 460, 464 (1965)↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609www.hillsboroughbankruptcy.com

Are you struggling to pay business debts? Are you feeling the weight and stress of what feels like an endless amount of debt crushing you? Is your business failing to produce enough income to cover expenses? Could your business really benefit from being reorganized? If you are a business owner, filing bankruptcy probably is one of the last things you want to consider. Yet, according to the Small Business Administration (SBA) more than 50% of businesses fail within the first ten years. Unfortunately, filing business bankruptcy is something many business owners need to consider. Filing bankruptcy does not mean the death of your business. Actually, filing either Chapter 11 or Chapter 13 bankruptcy allows you to save your business by reorganizing your debt. Filing bankruptcy can bring much needed relief from financial stress and provide a way for you to give your business a fresh, financial start. The post How Filing Bankruptcy Affects Your Business appeared first on Tucson Bankruptcy Attorney.