In an application of the law of unintended consequences, the Republican plan to eliminate the deduction for student loan interest may render private student loans subject to discharge in bankruptcy.   In 2005, Congress amended 11 U.S.C. Sec. 507(8) to add the following category of non-dischargeable debts:any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individualA "qualified education loan" is one where the interest is tax deductible.  The amendment had the effect of making private student loans non-dischargeable if the interest could be deductible. If Congress repeals the definition of  "qualified education loan" as part of the process of eliminating the deduction for student loan interest,   there would be no corresponding provision in the tax code for Sec. 507(a)(8)(B) to refer to.  In that case, Courts could find that the language added in 2005 does not refer to anything and is a null set.   Of course, Court could try to apply Congressional intent and apply the non-existent provision of the tax code as though it were still there.   If this passes, it will raise some interesting issues. 

U S Senate Votes to Override Bill of Rights Last night, the United States Senate blocked an effort to restore a neglected part of America’s Bill of Rights: The Seventh Amendment to the Constitution. The Seventh Amendment grantees a jury in civil cases; cases where people are suing other people, or corporations. (The better known […] The post U S Senate Ignores The Seventh Amendment by Robert Weed appeared first on Robert Weed.

U S Senate Votes to Override Bill of Rights Last night, the United States Senate blocked an effort to restore a neglected part of America’s Bill of Rights: The Seventh Amendment to the Constitution. The Seventh Amendment grantees a jury in civil cases; cases where people are suing other people, or corporations. (The better known […]The post U S Senate Ignores The Seventh Amendment by Robert Weed appeared first on Robert Weed.

  An investment professional with $3,800,000 debt to the IRS debt from the 2001 taxes lost a §521(a)(1)(C) proceeding when he made over $22 million income following the 2001 tax year and lived a lavish lifestyle.  In re: MATTHEW L. FESHBACH & KATHLEEN M. FESHBACH, Debtors. MATTHEW L. FESHBACH & KATHLEEN M. FESHBACH, Plaintiffs, v. UNITED STATES DEPARTMENT OF TREASURY & INTERNAL REVENUE SERVICE, Defendants., No. 08:11-AP-00803-CPM, 2017 WL 4694180 (Bankr. M.D. Fla. Oct. 17, 2017).  The Mr. Feshbach had been using an investment strategy that deferred tax liability, but a law change and bankruptcy of a company he invested in caused his gains to be realized resulting in a tax liability of over $3 million for the 2001 tax year.      The Feshbachs then made a number of offers of compromise for the taxes which were withdrawn before determination or rejected by the IRS.  They also entered into an installment agreement, which they complied with for slightly over 2 years, but the debtor's declining health caused them to default on such agreement.  The IRS rejected the offers on their belief that the Feshbachs had the ability to pay the debt in full.  The Feshbachs made another offer of compromise, which was again rejected.  Upon denial of the appeal on this rejection the debtor filed for relief under chapter 7 in 2011.  The Feshbacks filed an adversary proceeding to determine that the taxes were dischargeable which was contested by the IRS.   The IRS concluded that the Feshbachs had made over $13 million in the nine years prior to filing the chapter 7, and had spent $8.5 million on household expenses and charitable contributions during approximately the same time period.  These expenses included over $721,000 in personal travel, over $500,000 on clothing, a rented house in Aspen, and a personal chef.   The Court concluded that the expenses established that the Feshbachs led a lavish lifestyle.  11 U.S.C. § 523(a)(1)(C) provides that a discharge does not discharge a debtor “for a tax ... with respect to which the debtor ... willfully attempted in any manner to evade or defeat.”  The IRS must show more than mere nonpayment of taxes to deny discharge of the debt.  Rather, the government must show, by a preponderance of the evidence, that the debtor engaged in affirmative acts constituting a willful attempt to evade or defeat payment of taxes.  Griffith v. United States (In re Griffith), 206 F.3d 1389, 1395-96 (11th Cir. 2000) (en banc). There are two prongs required to determine nondischargeability of §523(a)(1)(C) taxes.  The creditor must show  that the debtor "attempted in any manner to evade or defeat” a tax.  The second requirement is that the conduct avoiding the tax was done voluntarily, consciously or knowingly, and intentionally.    The Court looked to prior precedent on the issues.  In the Griffith case the 11th Circuit found that a debtor attempted to evade the IRS by transferring substantial assets to himself and his new wife by tenancy by the entireties and transferring other assets to a new corporation of which his wife was the sole shareholder.  Other Florida decisions have ruled that spending money on expenses other than the IRS debt does not automatically constitute an attempt to evade the IRS, United States (In re Pisko), 364 B.R. 107 (Bankr. M.D. Fla. 2007), Kight v. IRS (In re Kight), 460 B.R. 555 (Bankr. M.D. Fla. 2011), the court must look to the facts of each case.     The Feshbach's argued that they were required to spend on dinner parties and the lifestyle in order to create an environment to add value to his business relationships in order to earn money to repay the IRS.  The Feshbachs produced no evidence (other than his own testimony) of a relationship between a money manager's spending on household and personal expenses and the confidence clients put in him.   The Court also rejected their argument that on one at the IRS told them tor reduce their expenses.  While denying that was accurate, the Court also noted that unless the IRS had approved the debtors' budget the IRS would not be liable for something their officers did not say.  There was also no explanation of how the over $500,000 in charitable contributions would have aided their repayment of the IRS debt. Finally, the $233,000 spent on the Aspen vacation rental was not adequately explained.  The second prong finding debtor's such conduct was intentional requires the IRS to show 1) that the debtor had a duty to file and pay taxes, 2) that he was aware of such duty, and 3) that he knowingly and intentionally violated that duty.  No fraudulent intent is required to be shown.  While the debtors admit the first two requirements, they contest that they knowingly and intentionally failed to pay the IRS.  To support this argument, they point to their efforts to resolve the taxes with the IRS.  The IRS argues that their efforts were an attempt to delay collection and avoid full payment of the debt. The Court found that during the period they were making offers to the IRS, they were continuing lavish spending and could either have retired the debt or set aside sufficient funds to insure they could continue the installment payment arrangement.    The debtor's argument that they relied on a professional as to the amounts to offer in the offers of compromise was not accepted by the Court.  While reasonable reliance on a professional's advice can be a defense to a willful evasion charge,  Zimmerman v. United States (In re Zimmerman), 204 B.R. 84, 88 (Bankr. M.D. Fla. 1996), as amended, (Dec. 11, 1996), Mr. Feshback was a financial professional with substantial knowledge of the tax laws.  Further they should have realized that the IRS would not have accepted the repayment offers made.   The debtor's argument that there was no showing that they could afford a lump sum payment to pay the debt in full at any time was likewise misplaced.  It is not required that debtor's be able to pay the debt in full at one time, and the Feshbach's could have reduced expenses and been able to repay the debt over time.  They also argue that the IRS did not establish any badges of fraud.  However, since fraud is not required under a §521(a)(1)(C) action, this argument also must fail.  The final issue examined by the Court is whether a partial discharge of the debt would be warranted.  The Court concluded that this is not an option under §521(a)(1)(C).  The statute itself refers to the debt as a whole, thereby preventing a splitting of the debt into a portion dischargeable and a portion nondischargeable.  §105 does not assist the debtor in that cannot use such equitable powers to contravene the language of a statute.    Thus the Court ruled the entire debt at issue to be nondischargeable.Michael Barnett www.tampabankruptcy.com      

Everything You Need to Know About Divorce and Bankruptcy   You have probably heard the commonly-cited statistic that about half of all marriages end in divorce. A sizable number of those whom have experienced divorce will also find themselves in need of bankruptcy protection. Family law and bankruptcy law intertwine in several ways. This post […] The post Everything You Need to Know About Divorce and Bankruptcy appeared first on Tucson Bankruptcy Attorney.

Here at Shenwick & Associates, we’re paying close attention to the travails of “underwater” holders of New York City Taxi and Limousine Commission medallions and practical solutions to their plight.  In a recent blog post, we reviewed a New York City Council Committee on Transportation hearing last month on the issue.  Earlier this month, Committee on Transportation Chair Ydanis Rodriguez introduced a proposed local law, Int. 1740-2017,  which would create a new nontransferable taxicab license to allow current taxicab owners to operate one additional vehicle under a single existing medallion license. Presumably, under this proposal, the medallion owners would have an additional stream of revenues, and thus, theoretically, make taxi medallions a more attractive investment.In an amN Ystory about the proposal, reactions were mixed.  Bhairavi Desai, the executive director of the New York Taxi Worker’s Alliance, which represents 19,000 drivers, called the bill a “starting point” but wouldn’t support it in its current form. “My concern would be what’s going to happen to the drivers on the road because this wouldn’t save the drivers who are in a race to the bottom,” said Desai. “In order to be hailed you have to been seen and this could help address that issue and help the industry, but to really protect drivers there should be a commission-like system with a guaranteed income and a cap on black cars.”I’m not sure that this proposal would assist medallion owners who own overleveraged medallions for at least two reasons: 1. Based on the laws of supply and demand, if the number of medallion operators increase, the value of each existing medallion will decrease; and 2. My clients indicate that there are already too many taxis, Uber, Via and Lyft cars on the road and this proposal would increase or double the number of medallions and increase competition for medallion owners. My clients indicate that they are presently working 20-30% longer hours each week for 20% lower earnings. For more information on taxi medallions, debtor and creditor relations and bankruptcy, please contact Jim Shenwick.

Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the laws governing filing for bankruptcy were changed to make it more difficult for consumers to have their debts discharged under Chapter 7 of the Bankruptcy Code. Now, when you file your Chapter 7 bankruptcy petition, you must also file along with it a “Statement of Current Monthly Income and Means Test Calculation.” You also must include a schedule of current income and another schedule of current expenses. If your income is more than the median income of Ohio residents, you must pass a means test to “determine whether the chapter 7 filing is presumptively abusive.” Presumption of Abuse: The Means Test and Median Income The median income for Ohio residents as of April 1, 2017, depends on the number of members in the household. The median income for a one-person household is $3,854 monthly or $46,442 annually.  The median income increases by increments up to a household of 10 which has a median monthly income of $11,120 or an annual median income of $133,440. Your income is determined by averaging your income over the six-month period of time prior to the filing of your bankruptcy petition. If your income is more than the median, you must then overcome the presumption of abuse by passing the means test or proving to the court that special circumstances exist such that your case should not be dismissed or not be converted to a Chapter 13 bankruptcy. Overcoming the Presumption of Abuse If your income for the previous six months is more than the median income of Ohio, you may still qualify for Chapter 7 depending on whether or not you have a certain amount of expendable income after subtracting allowable expenses from your income. Allowable expenses are the same as those articulated in the Collection Financial Standards of the Internal Revenue Service (IRS). These allowable expenses include certain amounts for: Housing. Food. Housekeeping supplies. Apparel and services. Personal care products and services. Cost of health and disability insurance. Certain miscellaneous expenses. Possibly extra justifiable expenses for minor children when those expenses are not covered by any other provision. Reasonable and necessary expenses to support the care of an elderly, chronically ill or disabled family member. Additional amounts for home energy or food and clothing above the allowable amount if documentation is provided to justify the extra expense. The allowable amounts depend on where you live. Payments for secured debts are not considered allowable expenses, but are taken into consideration when the court determines the amount of disposable income. If, after deducting all allowable expenses from the total income, your disposable income is less than the amount described by the Bankruptcy Code, your petition will not be considered abusive. If it exceeds the described amount, your petition will be presumed abusive. If the presumption of abuse exists, the Trustee will notify the creditors of this. Within 10 days after the first creditors meeting, the trustee must file a statement that the petition is presumed to be abusive, that a presumption of abuse does not exist or that the petitioner has failed to provide documentation to complete the means test. This statement will be provided to the creditors. Exceptional Circumstance Justifying Exception to Presumption of Abuse Even if your disposable income is too high for Chapter 7, you may still overcome the presumption of abuse if you can prove exceptional circumstances exist. One example commonly given is that the debtor incurred debt during a time of receiving overtime pay. The overtime work is no longer available, decreasing the income. Other examples of exceptional circumstances may be unexpected high medical bills, a surprise increase in rent, recent unemployment or being called to active military duty. Trustees’ Response to Presumption of Abuse Finally, if a presumption of abuse exists, the Trustee must file one of the following: A motion to dismiss the petition based on the presumption of abuse. A motion to convert the petition to a Chapter 11 or 13 bankruptcy. A motion finding that exceptional circumstances exist and that the Chapter 7 petition may proceed. A statement explaining why no motion will be filed. If you are considering filing for Chapter 7 bankruptcy, you have filed and you are concerned about the means test, or the court has notified your creditors that your filing is presumed to be abusive, you need the assistance of a qualified and experienced bankruptcy attorney. Contact the Chris Wesner Law Office, LLC, for a free consultation. The post Presumption of Abuse in Bankruptcy appeared first on Chris Wesner Law Office.

  A finding that a transfer of funds from a joint account to the wife's account created an avoidable fraudulent transfer was reversed and remanded in  In Re: KEITH A. YERIAN, Debtor. SUN Y PAK, Appellant, v. RICHARD BLACKSTONE WEBBER, II, as TRUSTEE, Appellee., No. 6:15-BK-1720-KSJ, 2017 WL 4654538 (M.D. Fla. Oct. 17, 2017).  The case involved an E-Trade account containing $257,000 which was transferred in February 2012 by Mr. Yerian to his spouse four months after he was sued by his ex-spouse for debts relating to a business venture.  The E-Trade account was jointly owned by Debtor and Pac, titled 'JTWROS' (Joint Tenancy with Right of Survivorship).  Mr. Yerian then filed for relief under chapter 7 of the bankruptcy code in 2015.  The chapter 7 trustee sued Yeridian and his spouse, Pac, seeking to avoid the transfer as a fraudulent transfer under 11 U.S.C. 544, 548, and 550 of the Bankruptcy Code.   Pac defended the suit arguing alternatively that 1) the account was her individual funds; and 2) that the account was exempt by funds held in Tenancy by the Entireties.  The Bankruptcy Court rejected the initial argument, finding her testimony not credible as to ownership, and ruled in favor of the trustee, but did not address the Tenancy by Entireties argument.   When a bankruptcy is filed, a bankruptcy estate is created encompassing all of the debtor's legal and equitable interests in property, except those specifically excluded.  11 U.S.C. 541(a).  Among the interests excluded from the bankruptcy estate is any interest in property the debtor held as tenancy by the entireties (TBE) or joint tenant to the extent such interest is exempt under applicable non-bankruptcy law.  11 U.S.C. 522(b)(3)(B).  Florida law exempts tenancy by the entireties property so long as only one spouse files bankruptcy.  Beal Bank, SSB v. Almand & Assocs., 780 So.2d 45, 52–53 (Fla. 2001).  Such property is exempt from the creditors of an individual spouse if the debt is not joint.  Such exemption extends to transfers of TBE property under the Florida Uniform Fraudulent Transfer Act, even if the circumstances of the transfer indicate fraud.  See Fla. Stat. § 726.102(2)(c) (defining as exempt “an interest in property held in [TBE] to the extent it is not subject to process by a creditor holding a claim against only one tenant”); see also, e.g., In re Anderson, 561 B.R. 230, 240 (Bankr M.D. Fla. 2016) (under FUFTA and the Bankruptcy Code, “a transfer of property that is exempt from creditors may not be the subject of an action to avoid a fraudulent transfer”).  Joint Tenancy accounts are not accorded the same protection under Florida law.  The Beal case listed the requirements for TBE property: marriage, possession, interest, title, time, and survivorship.   Beal Bank, 780 So.2d at 52. Since Joint Tenancy accounts can have the same characteristics, to clarify the matter Beal announced a presumption that property jointly held by married couples is held TBE.  Id. at 58.  This was then codified in §655.79 of the Florida Statutes.   The steps in determining whether the TBE presumption applies are 1) the property must meet the six requirements (marriage, possession, interest, title, time and survivorship).  Second, the Court must inquire whether there was an express disclaimer of TBE ownership.   If there was an actual choice in creating the account, that choice will determine the issue.  However, if the writing merely stated that the account was joint tenancy without offering TBE, then the presumption applies and the account is presumed to be TBE.  When the presumption applies, the creditor has the burden of proof to show by the preponderance of the evidence that the property is not TBE.   This could be done by showing that the parties fraudulently created the TBE property, by showing, among other things, actual intent to hinder, delay, or defraud when the property was created.  Also, the presumption does not apply if the financial institution does not offer TBE accounts, or expressly precludes TBE ownership.  The bankruptcy court erred by not applying the TBE exemption once it was determined that the E-Trade account was jointly owned, despite titled joint tenancy with right of survivorship, and that the parties were married when the account was opened.  The court should have then gone on to examine the circumstances when the account was opened, ie whether E-Trade offerred TBE accounts and whether the couple expressly disclaimed it.    The trustee's position that the account lacked the unity of possession and interest failed, because both of these are required for joint tenancy accounts as well.    The case was remanded to determine if the trustee could overcome the presumption of Tenancy by the Entireties.Michael Barnett www.hillsboroughbankruptcy.com

So many emotions and thoughts are running through your mind right after a car accident. You are worrying about the health of all those people who are involved in the accident. You want to contact your family and friends to let them know what happened. From talking to police and ambulance workers to inspecting your vehicle for damage and gathering insurance information, the number of things that are happening at that moment can be overwhelming. The last thing on your mind is the possibility that you may end up in dealing with debt. Ohio Car Accident Debt Is a Mounting Concern Car accident debt varies from person to person based on a range of different factors: How much car damage there is Who was at fault Whether both parties have car insurance What’s covered by each person’s individual policy Medical injuries Seeking alternative transportation Lost wages if you can’t return to work Most often, we think people who fall into car accident debt skipped out on obtaining car insurance or health insurance. However, this type of debt can happen to anyone even if you are covered. One of the stumbling blocks that you will encounter is coordinating your costs created by the car accident to what you believe the insurance company will pay when filing a claim. In this manner, you are trying to lower the amount of out-of-pocket expenses. Insurance Claims Downsides Sometimes insurance claims don’t go as smoothly as planned. It can take months for a claim to go through because it must be handled by multiple agents of the insurance agency, including the claims adjuster and the medical claims representative. By the time you receive compensation, it may be too late. If you needed medical procedures, the bill may not be paid because the insurance company is still going through the claim’s process. So the medical bill can be turned over for debt collection after the car accident. Even if the claim is accepted, you may not get as much compensation as you expected. This may cause even more stress as you still have mortgage or rent, food, and transportation expenses that you still have to pay from your own bank account. If you are unable to return to your job immediately, and you don’t have an emergency fund that can cover your costs for the next few weeks or even months, you end up in a tough situation. You may sit there trying to decide on which bills have to be paid immediately, and which ones will have to go into default since you just don’t have enough money to pay for everything. From having an insurance claim denied to not being paid properly or on time, a person who has experienced a car accident can end up waist-deep in debt. Dealing with Car Accident Debt The best way to deal with car accident debt is to start before the accident even occurs. Look over your insurance policy and get a clear picture of what will be covered for an accident. This strategy can help prepare you for what will happen during the claims process. Also, make sure you have an emergency fund in place so you can pay for medical bills and other expenses until you are compensated. If an accident does occur, you need to have a plan of action in place to get a claim out as soon as possible. You want to provide complete medical and insurance information to all parties that need it to lower your chances of having a claim denied due to providing incorrect information. Also consider getting in touch with legal representation, especially when there are doubts on who was involved with an accident. An experienced attorney can go over your insurance policy, claims and police reports to help you figure out your rights and what type of compensation you can obtain from the insurance company. During a time when so much is happening to you, you don’t want to come across any surprises that can force you to go into deeper debt. Don’t let car accident debt collection scare you or cause you undue stress. Contact the Chris Wesner Law Office, LLC today for a consultation so we can inform you about your rights and what options are available to you. The post Ohio Car Accidents Creating Massive Debt for Accident Victims appeared first on Chris Wesner Law Office.

When you file your petition for bankruptcy under Chapter 13, you must also file your plan to repay the amount of your debt which is in arrears. You must show enough income to do that over a three to five-year period all the while keeping your all your debts current. The Notion of Automatic Stay On the date of your bankruptcy filing, an automatic stay is issued against all creditors. Under Chapter 13, the automatic stay is in force until the end of the repayment period. If the plan is complied with, there may be remaining debts that are discharged. The purpose of the automatic stay is threefold: to give the debtor relief from collection action; to allow the debtor time to comply with a proposed reorganization plan; and, to freeze the debtor’s assets so that all creditors will be treated fairly. The only way creditors can continue collection action is by a court order which they may get by filing a Motion to Lift the Automatic Stay with the bankruptcy court. For Chapter 13, such a motion is generally brought by the holder of a mortgage, automobile loan or other secured debt. There are ways you can fight this motion, but if you fail to respond within 14 days, the moving party may ask the court for an order lifting the stay based on your failure to respond. Chances are that the court will grant that request. It is important to respond and challenge the issues raised in the motion. You can also challenge the motion for not complying with the rules for filing such a motion. Procedural Problems with the Motion The first thing to do is to carefully analyze the moving papers to be sure that all the rules were followed. Some flaws that may defeat the motion completely, or at a minimum allow the debtor more time to confirm the plan, are: The moving party failed to properly serve the papers on the required parties, which includes the debtor, debtor’s attorney, trustee and any other party known to have an interest in the property at issue. The proper evidentiary documents were not attached. The moving party is required to attach details of the collateral for which it wants to collect including a description of the property and its current value. The amount of the original loan, the original monthly payment, the amount in arrears, and the current monthly payment according to the repayment plan must also be attached. The moving party has no standing. This is often a failure of a mortgage holder. It is common for mortgages to be bought and sold. The entity that brings the motion must attach proof that they are in fact the holder of the mortgage. There was inadequate notice of the hearing date. Substantive Objections to the Motion for Relief If the filing papers are in order, the grounds upon which the motion can be brought according to the Bankruptcy Code 11 U.S. Code § 362 (d) are that there is inadequate “protection of an interest in property” and that “(A) the debtor does not have equity in such property; and such property is not necessary to an effective reorganization.” You can rebut this in the following ways. Your reorganization plan is likely to be confirmed. If the creditor is, as it usually is, brought by a mortgage lender who is hoping to foreclose on your home, you can fight this by showing that you have filed a reorganization plan that has a reasonable possibility of being confirmed within a reasonable amount of time. An application for a loan modification is under consideration. A loan modification agreement is in effect which lowered the monthly payments from those that were on the original loan. The property in question is necessary for an effective reorganization. The property is provided for in the reorganization plan. All post-petition payments are current. The reorganization plan has been confirmed and it provides for all prepetition in arrears to be paid over the course of the plan. Relief from the stay cannot be based on facts that occurred prior to the confirmation of the reorganization plan. For all of your objections, you must attach documentation to support your claims. The party making the Motion for Relief from the Automatic Stay Chapter 13 has the “burden of proof on the issue of the debtor’s equity in the property,” but the burden on all other issues is on the debtor. If you need assistance in fighting a Motion to Lift the Automatic Stay in Chapter 13 Bankruptcy or have any other questions concerning bankruptcy, contact a qualified bankruptcy attorney at the Chris Wesner Law Office LLC today about your concerns. The post Fighting Motion to Lift Automatic Stay for Chapter 13 Bankruptcy appeared first on Chris Wesner Law Office.