In interviews with the Wall Street Journal, more than 50 current and former bankruptcy judges, frustrated at seeing borrowers leave federal courtrooms with six-figure debts, say they or their colleagues are more open to chipping away at the decades-old guidelines that determine how such debt is treated. “If the law’s not going to be improved by Congress, we have to help these young people who are drowning in student loan debt,” said U.S. Bankruptcy Court Judge John Waites in South Carolina. Outright cancellations remain rare, but judges said they have other tools at their disposal, including encouraging lawyers to represent borrowers for nothing. The lawsuits can cost $3,000 to $10,000 and take years. Other judges are embracing debt-relief techniques that don’t fully erase student loans but make repayment more affordable by, for instance, canceling future related tax bills. The popularity of these relief strategies could get a boost from a panel of professors, judges and advocates who are studying failures in consumer bankruptcy law and plan to release a report next year. Nearly 45 million people carry student debt in the U.S.—the total amount has more than doubled over the past decade to $1.4 trillion—most backed by the federal government. It has eclipsed credit cards as the largest source of consumer debt after mortgages. Almost every other type can be extinguished in bankruptcy, but legal standards made college debt largely untouchable. Borrowers typically must repay student loans over their lifetime, even those facing extreme financial hardship.In March, Federal Reserve chairman Jerome Powell said he would be “at a loss to explain” why student loans can’t be cancelled like other debt. The Trump administration is considering whether to fight cancellation requests less aggressively.Consumer bankruptcy lawyers are starting to notice that judges are being more flexible. One Las Vegas law firm recently filed the first cancellation request in its 14-year history after hearing a judge at a conference voice concern over student loans. Other lawyers said growing sympathy among judges is making lenders more willing to reach resolutions out of court.“I’m getting really good results with settlements these days,” said Chicago lawyer David Leibowitz. “I’m not the only one.”Rules governing how student debt is handled in bankruptcy are made by Congress and by judges who issue influential rulings. Several bills in Congress that would erase student-loan debt in bankruptcy have stalled in recent years.Last year in Philadelphia, U.S. Bankruptcy Court Judge Eric Frank cancelled a single mother’s $30,000 in student loans. Opposing lawyers from the U.S. Department of Education said the borrower needed to prove her hardship would persist 25 years, the length of some repayment plans. Judge Frank ruled that the relevant window was five years.An appeals court overturned his ruling, but his decision inspired Judge Mary Jo Heston in Tacoma, Wash., in December to cancel a portion of another borrower’s loans.Such rulings are rare because few troubled borrowers attempt to cancel their student loans, because of the historically slim chances of victory. Last year, only 473 people of the millions repaying student loans sought relief using bankruptcy, according to a Wall Street Journal analysis.No one tracks outcomes of student-loan cancellation cases, and only a handful advance to the point where a judge rules. In one examination of cases in 2017, judges ruled on student-loan debt 16 times, according to lawyer Austin Smith who analyzed WestLaw’s database of key decisions.In those decisions, judges preserved student-loan debt in 12 cases, and canceled it in three. One borrower got partial relief.Some bankruptcy judges criticize their colleagues for re-interpreting well-settled law on student loans. “My view is, if the law is clear, follow it,” said retired California judge Peter Bowie.The push to rethink the legal standard on student-loan debt is bipartisan. Judges interviewed by the Wall Street Journal were appointed during both Republican and Democratic administrations, though bankruptcy judges are appointed by appeals court judges, not the president.Disagreements among judges on student-loan debt expose philosophical differences, said Cornell Law School professor Jeffrey Rachlinski. Some judges want to maintain predictability by sticking to past law. Others see their roles as fixing flaws in the legal system, he said. “There are people who like to change the institution in which they work.”Before 1976, laws allowed borrowers to do away with student-loan debt in bankruptcy. Congress, out of concern that new graduates would take too much advantage of that option, made a new rule: Borrowers could cancel student loan debt after only five years of payments. Judges could grant exceptions if borrowers showed that repaying would cause “undue hardship.”Congress didn’t define “undue hardship” so the task of doing so fell to federal judges. When Marie Brunner, a 1982 graduate of a master’s program in social work, tried to cancel her loans in bankruptcy, a New York judge in 1985 said she had to show three things: she struggled financially, her struggles would continue and that she had made a good faith effort to repay. She lost.That list still serves as a baseline for hardship in circuit courts that control the rules in most states.Some appeals courts set even higher benchmarks, with one, for instance, saying borrowers must face a “certainty of hopelessness.”In 1998 Congress said any borrower trying to cancel any federal student loans must prove “undue hardship,” like Ms. Brunner. Congress gave private student loans the same protection in 2005.Some of the country’s bankruptcy judges are starting to argue that the prevailing legal standard is unintentionally harsh and wasn’t meant for adults still on the hook for student-loan debt years after college.Judge Frank Bailey in Boston made that argument in an April ruling wiping out $50,000 in student loans for a 39-year-old man whose health ailments prevent him from working.Frustrated judges are more likely to “look for wiggle room and try to find solutions that will allow them to sleep at night, ”said Terry Maroney, a Vanderbilt Law School professor who studies judicial decision-making.Some judges, including U.S. Bankruptcy Court Judge Michael Kaplan in Trenton, N.J., said they are looking for ways to be more forgiving after seeing their own adult children borrow heavily for their education. Other judges grew concerned after talking to their law clerks. The typical law-school student takes out $119,000 in loans, according to the legal-education watchdog group Law School Transparency.Two judges said they regret their rulings against borrowers more than a decade ago. One Florida judge said that if the case was filed today, the borrower would win.Kansas judge Dale Somers said he worked particularly hard to justify the reasoning in a December 2016 ruling that cancelled more than $230,000 in interest that built up on a couple’s student loans from the 1980s. They left bankruptcy owing the original amount: $78,000.Alabama judge William Sawyer declared that student loans had become “a life sentence” in a 2015 decision cancelling a $112,000 student loan debt for high school science teacher Alexandra Conniff, a single mother of two teen boys whose yearly income is $59,400.She took out loans for several degrees, including a Ph.D. in special education, a discipline she also taught. Repaying them over 15 years would cost $843 a month.Ms. Conniff testified she has been unable to land higher-paying jobs and keeps costs down. Federally contracted lawyers argued she could cut retirement savings, life insurance payments and $100 in monthly landline-phone costs. The case is under appeal and was sent back to Judge Sawyer to re-rule.Copyright ©2018 Dow Jones & Company, Inc. All Rights Reserved.

By Will BreddermanWho speaks for Uber drivers?As market saturation and driver suicides wrack the taxi and black-car industry, and the city gears up for another street fight with ride-hail apps, three powerhouse unions are in an equally heated drag race to represent car operators working under Uber, Lyft and their competitors. All call themselves the definitive voice of tens of thousands of drivers and claim the others are frauds.One twist in this union fight is that Uber and Lyft drivers are independent contractors, not employees, and thus cannot bargain collectively. That has become one of the biggest disputes among the combatants: the Independent Drivers Guild (an offshoot of the International Association of Machinists), the New York Taxi Workers Alliance (aligned with and partly staffed by building workers union 32BJ SEIU) and the Amalgamated Transit Union.As proof of its legitimacy, the Taxi Workers Alliance, a volunteer organization founded in 1998 to organize drivers of yellow cabs, cites its lawsuits to get app-dispatch drivers recognized as employees of the tech giants. One of those suits won unemployment benefits for some Uber drivers; another, accusing the company of misclassifying its entire workforce, found the company skimming its hacks' fares.Battling Uber, 'opportunists'The alliance contrasts itself from the IDG, which came into existence in 2016 after the Machinists reached an accord with Uber. In exchange for the company's recognizing the Guild as the representative of Uber drivers and helping fund the organization's internal operations, the Machinists agreed not to push for employee status."It's not defending workers' rights when you decide that workers who don't have the ability to set the price of their labor are contractors," said Eugenio Villasantes, a spokesman for Taxi Workers Alliance benefactor 32BJ."We not only had to fight the company that had become the highest valuated company on earth," said the alliance's executive director, Bharivai Desai, "we also had to fight opportunists in the labor movement that were trying to be the first to make a deal with Uber."The IDG denied Desai's accusation that it is a "company union." Noting that Desai's husband is a taxi medallion owner, the Guild insinuates that her group's push for regulations on apps—notably Mayor Bill de Blasio's failed 2015 plan to cap their growth—are really attempts to drive the new tech companies out of the market.IDG steward Sohail Rana defended his organization's acceptance of Uber funding, saying it has paid for legal assistance, classes and organizing space for drivers. He said IDG petitions had compelled Uber and Lyft to introduce in-app tipping, and the IDG is now lobbying the Taxi and Limousine Commission to mandate minimum pay for drivers."These other organizations, they were not there," said Rana. "IDG is the only union that really helps drivers in real time."The ATU, which has long represented bus drivers, argues that it is the most natural fit for the industry and claims it has gotten 16,000 drivers to sign union cards since 2016. The ATU's competition dismissed this as a stunt because the drivers are classified as contractors and cannot join the union. But the ATU deemed it "an experiment" that could lead to something dramatic."All organizing is to prepare for a strike," Chris Townsend, director of field mobilization for ATU Local 1181, told Crain's. Townsend demurred on whether such an action was imminent and said his union focuses on getting legal assistance for aggrieved drivers.De Blasio and the City Council recently reopened discussion of passing legislation to contain the sector's astronomical growth, though a consensus has yet to emerge on how. The Taxi Workers Alliance has revived its calls to limit the number of new vehicles the Taxi and Limousine Commission can approve; the IDG has demanded a cap on the number of new drivers. Uber and Lyft, meanwhile, appear to be revving their engines for another fight.Meera Joshi, chairwoman of the TLC, told Crain's its 180,000 licensed drivers would continue to be a target for union organizing. But she warned that the labor groups' disunity and self-interest could hobble efforts to curb the tech giants. "Because there is this hostility of 'who's going to own this space?,' it could end up being counterproductive," she said. "There's a question of, will any regulation come out at all? Why don't you focus on that, instead of fighting each other?"© 2018 Crain Communications Inc.  All rights reserved.

All of my clients want to know how quickly they can recover their credit score and so here is the answer. If you are proactive you can have a six eighty or six 90 credit score. Two years after we file the bankruptcy petition the way that you do that is you obtain a credit card immediately after we file. You start using the card responsibly and you only charge 50 percent of the limit on the card and you pay that off every single month. If you do that for two years you're going to have a 680 credit score in two years. The post Am I Eligible to File Bankruptcy? appeared first on Tucson Bankruptcy Attorney.

  In In re: TODD J. MCNALLY, Debtor. MICHAEL CARNS, Appellant, v. TODD J. MCNALLY, Appellee., No. 17-1367, 2018 WL 2974411 (10th Cir. June 13, 2018) the 10th Circuit affirmed a bankruptcy finding of sufficient notice to a creditor who had brought a §523(a)(3)(B) action asserting it was not noticed of the bankruptcy, and that the debt should have been nondischargeable.  The Debtor had sent the notice to the address of the creditor's attorney, who had taken Debtor's deposition 4 years earlier rather than to the creditor's address as shown on a judgment against the creditor.  The bankruptcy case was discharged without objection, but the creditor sought to reopen the case and deny the discharge and dischargeability of his debt after a collection agency notified him that the debtor had filed bankruptcy.  The bankruptcy court denied the creditors request for a non-dischargeability judgment finding that there was no evidence that the address of the attorney was incorrect or that mail was returned from the attorney.   After affirmance by the B.A.P., the creditor appealed to the 10th Circuit.      The 10th Circuit quoted the relevant staute: "[a] Chapter 7 debtor cannot discharge a fraud debt that is “neither listed nor scheduled ... in time to permit ... [a creditor’s] timely filing of a proof of claim and timely request for a determination of dischargeability of such debt ... unless [the] creditor had notice or actual knowledge of the case in time for such timely filing and request.” 11 U.S.C. § 523(a)(3)(B)."  Id. at 2.    In bankruptcy,  “[n]otice requires that a debtor use reasonable diligence under the circumstances to inform a creditor of the bankruptcy petition, but a bankrupt is not required to exhaust every possible avenue of information in ascertaining a creditor’s address." 1  Notice to a creditor's attorney may be imputed to the creditor. 2  The 10th Circuit followed this reasoning, noting no evidence that the attorneys representation had ceased, nor any intervening event that should have caused the debtor to question the use of the attorney's address to notify the creditor.  Finding that the factual conclusions by the bankruptcy court as to notice were not clearly erroneous, it affirmed the lower court's findings.   The creditor also sought to revoke the discharge on the basis that the debtor did not disclose his interest in two books he wrote, a currency trading account, and a former business, as well as a couple of transfers.  The 10th Circuit initially agreed with the bankruptcy court's determination that the creditor failed to exercise due diligence in seeking to deny the discharge before the discharge was entered.  It also found that the creditor failed to challenge the lower court's finding of no material intent to defraud, instead only challenging the finding of materiality.   Even as to materiality, the court agreed with the bankruptcy court.  Materiality requires a showing that the relevant information was something that creditors and the trustee reasonably would have regarded as significant in identifying the assets of the estate that could be liquidated and used to satisfy claims.  As no such showing was made, the bankruptcy court's finding was not clearly erroneous.1 In re Herman, 737 F.3d 449, 453 (7th Cir. 2013)↩2 Id. at 454.↩Michael Barnett www.hillsboroughbankruptcy.com

By John Aidan ByrneNew York City’s struggling yellow cabbies are facing the auction block. A record 139 taxi medallions will be offered for sale in bankruptcy auction this month — the latest sign that a deluge of ride-sharing apps like Uber are squeezing cabbies out of business and deeper into debt, as well as pinching the incomes of for-hire drivers, according to analysts. The medallions will be auctioned for a fraction of their original value — some likely having cost their owners as much as $1 million or more apiece. A minimum of 20 will be sold, the auctioneers say. The collection is part of the 13,587 licensed medallions required to operate New York City’s fleet of iconic yellow cabs. Back in 2013, a medallion fetched a whopping $1.3 million.Today, prices have plunged to between $160,000 to $250,000 each, as a wave of ride-sharing vehicles floods the market. Last year, 46 medallions were reportedly sold at an auction in Queens for an average price of $186,000, snatched up by Connecticut-based MGPE, a hedge fund presumably seeking yield on a distressed asset. For-hire vehicles on New York’s congested streets have surged from 50,000 in 2011, when Uber entered the New York market, to about 130,000 today. Not surprisingly, earnings for yellow cabbies have fallen off the cliff — full-time average annual earnings, before taxes, are down from $45,000 as recently as 2013, to as low as $29,000 today, according to some estimates. Uber drivers, who number about 60,000 on New York’s streets at any given time, are also taking a hit from increasing competition. Their estimated average annual earnings, pre-tax, today hover between $30,000 and $34,000. Many individual for-hire drivers earn less than an hourly worker at McDonald’s. “Uber has worked hard to grow the transportation pie, ensuring that all New Yorkers can get a ride in minutes, particularly in neighborhoods outside of Manhattan that have been long ignored by yellow taxis and underserved by public transit,” said Uber in a statement. “The majority of our trips are happening in the Bronx, Staten Island, Queens and Brooklyn.”© 2018 NYP Holdings, Inc. All Rights Reserved.

  In Internal Revenue Serv. v. Murphy, No. 17-1601, 2018 WL 2730764, (1st Cir. June 7, 2018) two of the three judges on a panel of the First Circuit (including Justice Souter, sitting by designation) affirmed lower court rulings finding that an IRS employee willfully violated the discharge injunction by issuing levies against insurance companies with which the debtor did business.  The debtor had filed a chapter 7 bankruptcy listing $546,161.61 in tax obligations for the years 1993-2003.  The discharge was entered in February 2006.  No objection to discharge or dischargeability was filed.     The IRS took the position that the taxes were nondischargeable under 11 U.S.C. 523(a)(1)(C) asserting debtor had willfully attempted to evade the taxes.  After notifying debtor of it's claim, in February 2009 the IRS issued levies against several insurance companies with which debtor did business.  In August 2009 debtor commenced an adversary proceeding to determine that the taxes through 2001 had been discharged.  The bankruptcy court granted summary judgment to debtor (the IRS having submitted no admissible evidence to the contrary) declaring the taxes to have been discharged.   In February 2011 debtor filed a complaint against the IRS asserting a claim under 26 U.S.C. 7433(e) for civil damages for unauthorized collection actions for the IRS willfully violating the discharge injunction by its earlier actions against the insurance companies.  The bankruptcy court also granted summary judgment for debtor on this claim.  In rejecting the IRS's claim that it reasonable believed the debts were nondischargeable under §523(a)(1)(C), the court found that the earlier ruling collaterally estopped the IRS from asserting that the debt was nondischargeable, whether it knew the debts were discharged, and whether it took actions which violated the discharge injunction.  On appeal the district court reversed, finding that the bankruptcy court should have considered a mental impairment subsequently discovered as to the Assistant U.S. Attorney in the case, but agreed with the bankruptcy court that a creditor's good faith belief as to a right to property was not relevant to a determination of whether a violation was willful.  On remand the parties agreed to $175,000 damages conditioned upon the IRS losing subsequent appeals as to the willfulness issue.  The district court affirmed the decision of the bankruptcy court on remand, and the IRS appealed to the 1st Circuit.  The 1st Circuit first examined the terms of 26 U.S.C. 7433(e).If, in connection with any collection of Federal tax with respect to a taxpayer, any officer or employee of the Internal Revenue Service willfully violates any provision of section 362 (relating to automatic stay) or 524 (relating to effect of discharge) of title 11, United States Code (or any successor provision), ... such taxpayer may petition the bankruptcy court to recover damages against the United States. (emphasis added).The section directly links willfully to §362 on the automatic stay, and §523 on discharges.    The automatic stay is one of the fundamental protections of the bankruptcy law.  §362(h) was enacted to give debtors a private cause of action to an individual injured by a willful violation of the stay.  This set a less stringent standard than the prior caselaw requiring maliciousness or bad faith.  Prior to enactment of §7433 the great majority of courts held a party commits a willful violation under §362(h) when it knows of the automatic stay and takes an intentional action that violates the stay. The cases and treatises show this was the standard meaning at the time §7433(e) was enacted.    A discharge order under §524(a) generally relieves a debtor of all prepetition debts, and permanently enjoins creditor actions to collect discharged debts.  By 1998 the courts were using §105 to enforce the discharge injunction, and were generally applying the same standard as in §362 to determine whether discharge violations were willful.  While there are fewer cases defining the willfulness standard under §524, the court found that in enacting §7433 Congress intended to apply the same standard for stay violations and discharge injunction violations.  The court also noted that IRS manual presumes the same standard for discharge and stay violations.  Finally, the court rejected the argument that as §7433(e) constitutes a waiver of sovereign immunity, it must be more narrowly construed.  Willful violation had an established meaning at the time of the enactment of the statute.  By 1998 the tax code permitted the IRS allowed the IRS to raise the good faith belief not as a defense to liability, but as a means to limit the recovery to actual damages.  While this decision does not require the IRS to seek a determination as to the dischargeability of a debt, if it's determination is rejected by the court it will face the consequences of its actions.Michael Barnett www.tampabankruptcy.com  

Call it the Uber effect: A record 139 New York City taxi medallions will be up for sale in bankruptcy auction this month as cab drivers continue to struggle to compete with ridesharing apps. According to The New York Post, bidders will be able to snag some of the medallions for a fraction of their original value — some might have cost their owners as much as $1 million or more apiece. Back in 2013, a medallion went for $1.3 million. Today, however, prices have dropped to between $160,000 to $250,000 each due to increasing competition from ridesharing apps such as Uber and Lyft. Last year, 46 medallions were reportedly sold at an auction in Queens for an average price of $186,000, bought by Connecticut-based hedge fund MGPE. This month, a minimum of 20 will be sold. Rideshare vehicles in New York have risen from 50,000 in 2011, when Uber first entered the New York market, to currently about 130,000. As a result, earnings for yellow cabbies have dropped, with full-time average annual earnings, before taxes, down from $45,000 as recently as 2013, to as low as $29,000 today. Earlier this year, a report revealed that Uber and Lyft have become more popular than yellow and green cabs in NYC. Analysis of data from the Taxi and Limousine Commission from blogger Todd Schneider found that in February 2017, ride-hailing services made 65 percent more pickups than taxis did. And the two companies combined now make more pickups per month than taxis did in any month since the data began being analyzed in 2009. “Over the past 4 years, ride-hailing apps have grown from 0 to 15 million trips per month, while taxi usage has only declined by around 5 million trips per month,” wrote Schneider. The data also shows that ridesharing services have been utilized more than taxis in the outer boroughs since the beginning of 2016 — and that gap has dramatically widened in recent months. In fact, Uber and Lyft are ten times more popular than yellow and green taxis combined in the outer boroughs. © 2018 What’s Next Media and Analytics.  All rights reserved.

The Supreme Court resolves about eighty cases each year, ranging from major constitutional issues to smallish questions of statutory interpretation. The three bankruptcy cases decided this term fall into the latter category, answering narrow statutory questions.Supreme Court Sinks Safe HarborThe first case decided was Merit Management Group, LP v. FTI Consulting. Inc., Case No. 16-784 (2/27/18). This case asked whether a shareholder of a business could be protected from a fraudulent transfer action where the funds passed through a third-party escrow agent which happened to be a bank. Section 546(e) of the Bankruptcy Code exempts from recovery "a transfer made by or to (or for the benefit of) … a financial institution...in connection with a securities contract...." In this case, the funds to purchase the stock flowed from the purchaser through two financial institutions to the stock seller. The statutory issue was whether the payment was protected where it flowed through two financial institutions that were merely intermediaries and did not receive the funds for their own benefit.Writing for a unanimous court, Justice Sotomayor held that the relevant transfer to consider was the one that the Trustee sought to avoid. Since neither the buyer nor the seller was a financial institution, the safe harbor did not apply.   This decision prevents parties from insulating themselves from potential liability for a fraudulent transfer by routing the proceeds through a financial institution which does not have an interest in the transaction.How Do You Review a Non-Statutory Insider?Next, the Supreme Court weighed in on the narrow issue of the proper burden of proof when deciding whether a transferee was a non-statutory insider under 11 U.S.C. § 101(31).  U.S. Bank, N.A. v. Village at Lakeridge, LLC, No. 15-1509 (3/5/18).  In order to achieve a cram-down of a chapter 11 plan, a debtor must obtain the consent of a least one impaired class of creditors without counting votes of insiders. The class that accepted the plan consisted of a claim held by the debtor's sole owner, clearly an insider. One of the directors of the insider creditor  (Bartlett) offered to sell the claim to a retired surgeon (Rabkin) with whom she had a romantic relationship (more on this later). Rabkin agreed to purchase the $2.76 million claim for $5,000.00 and agreed to accept the plan. The list of defined insiders does not include a person in a romantic relationship with a director of an insider. However, the definition of "insider" states that the term "includes" the defined categories, meaning that the list is not exhaustive. U.S. Bank, which objected to the plan, argued that the romantic doctor was a non-statutory insider. The Bankruptcy Court found that the doctor was not an insider because he purchased the claim as a speculative investment after conducting due diligence. The Ninth Circuit affirmed applying a test that looked at (1) the closeness of the relationship and (2) whether the transaction was negotiated at less than arms-length. The Circuit found that the Bankruptcy Court's determination that the transaction was negotiated at arms-length was not clearly erroneous and affirmed.The Supreme Court accepted the case, not on the question of the correct legal test to apply, but whether the Court of Appeals had applied the proper standard of review. Factual determinations must be upheld unless they are clearly erroneous while legal conclusions are reviewed on a de novo basis.Justice Kagan, again writing for a unanimous court, found that it took a three step process to answer the question.    The first step was purely legal, to determine the appropriate legal test to apply.   The second step was purely factual, to determine the “basic” or “historical” facts relevant to the legal test.   The final step was to apply the historical facts to the legal test.   If factual issues predominated, the final step would be reviewed on the clear error standard, while de novo review would apply if legal issues dominated.The Supreme Court denied cert on whether the Ninth Circuit applied the right legal test, which was the more interesting question.   While applying the historic facts to the legal test is a mixed question of law and fact, it ultimately depends on its component parts—the legal test and the facts.   Since the legal test was not at issue, what remained was the Bankruptcy Court’s fact-finding which is reviewed for clear error.   The Ninth Circuit’s clear error review may have been assisted by the following testimony from Bartlett, the party offering the claim for sale:Q:        Okay.  I think the term has been a romantic relationship—you have a romantic relationship?A:        I guess.Q.        Why do you say I guess?A.        Well, no—yes.Justice Kagan observed that “One hopes Rabkin was not listening.”It is not clear why the Supreme Court accepted this case and this question since the answer was rather obvious.   Justice Sotomayor, joined by Justices Kennedy, Thomas and Gorsuch, had the same concern.   Justice Sotomayor said that “if that test is not the right one, our holding regarding the standard of review may be for naught.”  Because the Court did not accept the legal standard question, Justice Sotomayor did not provide an answer either.   However, she did suggest that the lower courts might want to spend some time thinking about what the legal test should be.   Justice Kennedy, in his own concurrence, went further.   He said, “The Court’s holding should not be read as indicating that the non-statutory insider test as formulated by the Court of Appeals is the proper or complete standard to use in determining insider status.”   He also suggested that the Bankruptcy Judge may have erred in concluding that the transaction was made on an arms-length basis since the claim was not shopped to other parties.Thus, what we have is a rather unnecessary explication of how to decide mixed questions of law and fact combined with a statement by four Justices encouraging the lower courts to look for a different standard than the one articulated by the Ninth Circuit.    As a result, this opinion is more interesting for what it didn’t decide than for what it did.Supreme Court Says Get It in Writing            Finally, in Lamar, Archer & Cofrin v. Appling, No. 16-1215 (6/4/18), the Court decided whether a false statement about a single asset constituted a statement of financial condition which must be in writing to form the basis for a non-dischargeable debt.  11 U.S.C. §523(a)(2)(B) carves out an exception from the general rule that debts arising from fraud are non-dischargeable.  It provides that a statement “regarding the debtor’s or an insider’s financial condition” must be in writing in order to give rise to a non-dischargeable debt.                The case involved a client who got behind on paying his lawyers.   When the lawyers threatened to withdraw, he told them that he was expecting to receive a tax refund of approximately $100,000 and would use those funds to bring the lawyers current and pay future fees.   The trusting lawyers accepted his promise and soldiered on.   However, it turned out that the tax refund was closer to $60,000 and the client spent the money on business expenses.            When the debtor filed bankruptcy, the unhappy law firm sued to prevent the debt from being discharged, claiming that the client made a false representation to gain their continued services.   The Bankruptcy Court ruled that a statement regarding a single asset, in this case, the tax refund, was not a statement regarding financial condition, and found the debt to be non-dischargeable.   The Eleventh Circuit disagreed.            Justice Sotomayor, writing once more for a unanimous court, found that a statement regarding a single asset qualified as regarding the debtor’s financial condition.   Relying on grammar, she found that the term “regarding” in the statute broadened the clause such that it referred to both the object, statements of financial condition, and items related to the object.   She also relied on the fact that cases interpreting similar language under the Bankruptcy Act had arrived at the same result.   Since Congress did not change the verbiage, it must have intended to adopt the prior jurisprudence.                The lesson here is that a verbal statement about a debtor’s assets is not worth the paper it isn’t written on.   If a creditor wants to rely on a statement about a debtor’s assets, it should get it in writing.   In the case of the law firm, a simple email asking the debtor to confirm that he was expecting to receive a $100,000 tax refund (as opposed to the paltry $60,000 refund), if acknowledged by the client would have sufficed.  

When faced with significant debt, one kind of response that people give is to deny the situation. They might not look closely at the numbers. They might leave their bills or other correspondence unopened and shoved to the side. Their spending habits might continue unchanged. Denial serves a temporary benefit, providing stress relief. But the debts still accumulate, bringing you closer to the time when you might have to face serious consequences, such as frozen bank accounts, garnished wages, and legal action. Furthermore, without a clear idea about the situation or your options, you might opt for debt solutions that put you in deeper trouble. Assessing your debt with open eyes A recent article from U.S. News & World Report offers some tips for paying  off more than $100,000 in debt. Even if your debt hasn’t reached this amount, the advice they offer in the article is still useful. One of the themes that emerges in the article is to assess your situation in a clear-eyed way. For example, the first step they advise you to take is to make a detailed, thorough account of all the debts you owe, and to whom. Include information such as interest rates and due dates. You then have to take a close look at your monthly budget and see what expenses you can cut. You have to also assess your spending habits. For example, if you make irresponsible use of credit cards, admit to the problem. Don’t deny it or try to downplay it. Similarly, make a frank assessment of every solution you’re considering. For example, if a creditor or a debt settlement company offers you terms that seem favorable, question it; look at the fine print and do background reading to help ensure you won’t get cheated (the article warns against debt settlement companies in particular). If you live in Ohio, don’t hesitate to contact an experienced Piqua, Ohio bankruptcy attorney. One of the benefits of working with an attorney is that you’ll receive advice on what to do and get a clear analysis of your financial and legal situation. The post Piqua, Ohio Bankruptcy Attorney Urges You To Assess Your Debt with Eyes Wide Open appeared first on Chris Wesner Law Office.

Social Security Disability (SSD) is available through the Social Security Administration (SSA).  Similar to the benefits you can receive at retirement, SSD is available to help people with serious injuries continue to receive monthly payments to help support themselves and their families.  The SSA looks at a series of factors when deciding how you receive benefits, how much you receive, and whether you qualify as disabled.  The Pennsylvania and New Jersey disability lawyers at Young, Marr, and Associates explain these factors and how Social Security uses them to determine your disability benefits. Factors for Social Security Disability Programs The Social Security Administration has two different programs that fit under the umbrella of “disability.”  The first program is Social Security Disability Insurance (SSDI).  This is the primary program that people use when receiving disability and is usually the program people are referring to when they say “disability.”  Alternatively, Supplemental Security Income (SSI) is also available as a need-based program. SSDI is based on your prior work history.  If you have enough years of “work credits” from paying FICA taxes, you should be able to qualify for SSDI benefits.  Stay-at-home spouses who may not have a history of working can qualify through their spouse’s work record, and many disabled children can also qualify using their parents’ record.  Even if the working spouse or parent is deceased or you were recently divorced, Social Security may still give you benefits based on their work history. Talk to an attorney about whether you have sufficient work credits to qualify for disability.  If you don’t, you may still be able to get benefits through the other disability program or through private disability insurance. Factors for Calculating Disability Benefit Amounts When receiving SSDI, your disability benefits are calculated based on your previous income.  There is a complicated calculation involving multiple percentages, but it is important to get a glimpse of how the SSA calculates your benefits. First, they will calculate an “indexed” wage called the “average indexed monthly earnings” (AIME).  This means they will compare your wages from various years to the national wage index to account for the differences across various years to find your average monthly income.  Next, they will take a certain percentage of your wage and set that as your base benefit amount, called the “primary insurance amounts” (PIA).  Lastly, they will adjust this depending on the age at which you claim disability.  They may also cap you at the highest maximum benefit, which is $2,788 per month in 2018. Lastly, your benefits may be reduced if you receive other benefits for your disability.  One common “offset” that reduces your disability benefits comes from receiving state workers’ comp. benefits alongside disability.  Talk to an attorney about receiving other benefits that might lower your disability payments. Factors to Qualify for Disability The last set of factors that are vital in your disability claim are factors for qualifying as “disabled.”  The Social Security Administration considers you disabled if you suffer from a condition that prevents you from working.  The condition must also be long-term and significantly “severe.” To determine whether or not you are able to work, the SSA looks at whether you can earn enough money to support yourself by whether you can perform “substantial gainful activity” (SGA).  “[S]ignificant physical or mental activities” make the activity “substantial,” while “gainful” refers to your ability to make money with those activities.  In 2018, non-blind individuals are considered “gainfully” employed if they can make more than $1,180 per month, and blind individuals have a higher threshold of $1,970.  If your disability prevents you from making this much money, you might qualify as disabled. Your disability must also be a long-term issue to receive disability payments.  The SSA includes the length of the disability as part of its definition and requires that the disability you face is either expected to last for a year or more or end in your death.  Shorter disabilities may not qualify, but you should still talk to a disability attorney about your options. The severity of your disorder is also a vital factor.  The SSA has a list of conditions that they typically consider to be severe enough to qualify for disability.  However, this list is not the deciding factor.  Instead, your condition must be a severe instance of one of these conditions.  The factors that make a condition “severe” are usually included in the SSA’s definition of the disorder to help clarify what Social Security looks for in a disability.  If your condition is not on the list, you may still be able to get disability if your condition is as severe as another condition on the list. PA and NJ Disability Lawyers Offering Free Consultations on Social Security Cases If you or a loved one is unable to work because of a severe disability, consider discussing filing for disability with the help of one of our experienced disability attorneys.  The PA and NJ Social Security Disability lawyers at Young, Marr, and Associates represent disabled individuals and their families and work to get their disability applications approved, their denials reversed, and their benefits maximized.  For a free consultation, call our law offices today at (215) 515-2954 if you’re in PA or (609) 557-3081 if you’re in NJ. The post What Are the Factors Social Security Uses in Determining Disability? appeared first on .