Because I practice bankruptcy law everyday, it is sometimes nice to take a momentary diversion from Chapter 7, Chapter 13, debt, creditors, consumers, etc... This blog is going to veer away from bankruptcy, but, fear not, it will still be law related.
By now, I am sure that many of you have heard that the reality show star and celebrity, Kim Kardashian, is suing Gap Corporation for the use of a Kim K. lookalike in it's "Super Cute" Old Navy commercial. When I first heard this, I thought the claim was pretty far fetched and just another way for the "celebrity" to get her name in the spotlight. Upon further reading of some very interesting cases, I have changed my stance a little.
I cannot find a public copy of Miss K's initial complaint against Gap, but based on the newspaper articles and cases I have read, I can imagine that her claims will fall under the common law right of publicity and Section 43(a) of The Lanham Act, 15 U.S.C. Sec. 1125(a). The right of publicity basically states that a individual (most likely a celebrity or someone in the public eye) has a property right in his/her likeness and should have the sole right to exploit that interest. No other entity should be allowed to appropriate the celebrity's likeness for purposes of pecuniary or commercial gain without the celebrity's consent. Section 43(a) of The Lanham Act addresses, more specifically, false advertising. A Lanham Act claim will allege that a celebrity's likeness has been used in a manner that would confuse the public, perhaps confusing the public into believing the celebrity endorses that product. Initially, Section 43(a) claims dealt mostly with the use of trademarks, but case law has adapted this so that a celebrity's "mark" is viewed as his/her identity.
I found two cases relevant to Miss Kardashian's case that I would advise her to look at if I were her attorney (and wouldn't that be great if I was?). The first is White v. Samsung Electronics America, Inc., 971 F.2d 1395 (9th Cir. 1992). Essentially, Vanna White sued Samsung for using a robot in it's commercial that was stylized to look like Vanna White and was placed on a set that resembled Wheel of Fortune. White initially lost on summary judgment, but the United States Court of Appeals for the Ninth Circuit reversed the lower court on both Ms. White's right of publicity and Lanham Act claims. The most significant aspect of this case for Kardashian is the Court's determination that the appropriation does not have to be just of the celebrity's likeness, image, or signature. It can also be of their overall identity. Here, although Samsung used a robot and not a picture of White, the Court found that sum of all the elements in the commercial pointed to the identity of White and left no doubt as to who the figure was supposed to represent. Impersonation was enough for the Ninth Circuit to determine that a jury should hear this case.
The second case is Rosa Parks v. LaFace Records, et al, 2003 FED App. 0137P (6th Cir. 2003). The Sixth Circuit in this case examined the lawsuit of Rosa Parks against the music group, OutKast, over their song titled Rosa Parks. The Sixth Circuit focused mainly on the Lanham Act claim, and OutKast's proposed defense that their use of Ms. Parks' identity was protected by their First Amendment right to freedom of speech. The Court looked at whether there was any artistic relevance between the title of the song and the underlying work. If there was any artistic relevance, the Court would then determine if there was an explicit misrepresentation between the title of the song and the content of the work. The Sixth Circuit could not find any artistic relevance between the persona of Rosa Parks and the words of the OutKast song. Thus, the group did not have a defense to Ms. Parks' claims. What is significant in this case for Ms. Kardashian is that purely commercial speech, such as the Old Navy ad, is granted even lower consideration in the free speech spectrum.
Will Kim win her lawsuit? The typical lawyer answer is, "it depends." I think she has a chance based on both of the cases I have read. Although, Old Navy isn't using a clip of the actual Kim without her permission, her assertion is that they are using an impersonator, or are appropriating her identity. I think it's a claim that would withstand summary judgment and could go to trial. However, I don't know if a jury would necessarily find that the connection between the "fake Kim" and the "real Kim" is so strong that Old Navy is either infringing on her property right in her own identity or confusing the public that Kim Kardashian endorses the Old Navy brand. But, for someone who has capitalized on being famous for just her image, it is an important battle to wage. Which brings me to perhaps my favorite statement by a judge, "the law protects the celebrity's sole right to exploit this value (celebrity value) whether the celebrity has achieved her fame out of rare ability, dumb luck, or a combination thereof." White, 971 F.2d 1395 at 1399.
Check out the commercial on YouTube to make your determination.
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, http://www.perezlawgroup.com/.
Friday, July 29, 2011
Friday, June 10, 2011
A Tale of Two Mortgages
The tale of two mortgages begins something like this: the real estate market is booming and property values are soaring. A clever homeowner decides to take out a second mortgage or home equity line of credit (HELOC) on his/her home to pay some credit cards, purchase a boat, or buy an investment property. It's easy enough to do and looks like a surefire idea. This is a happy tale. Flash forward about three years, and things begin to look a little grim. House values have fallen, and now that second loan is sopping up any chance at equity the home had. The homeowner is now burdened with two house payments and desperately wants to get out and recoup whatever value in his/her home. Is this a tale with no happy ending? Not quite...
We see this tale many times as bankruptcy attorneys, and there is some relief we can offer. A burdened homeowner does have the possibility of getting out from that second mortgage or HELOC through a Chapter 13 bankruptcy. If you are not familiar with bankruptcy, a Chapter 13 is kind of like a super debt consolidation plan. Debts are consolidated and broken into different priorities of debts. The lowest priority, general unsecured debts (i.e. credit cards) are usually paid a small portion of what is owed, and the remainder is discharged. It's a super debt consolidation because it is done through the bankruptcy court and under all the protections of the bankruptcy laws. The repayment period lasts anywhere from three to five years, depending on the debtor's income.
A Chapter 13 can be the hero of the tale of two mortgages because of something called the "cram down" or "strip off" provision. Interpreted from sections 506(a) and 1322(b)(2) of the bankruptcy code, the "strip off" provision allows a completely unsecured junior lien on a residence to be treated as a general unsecured debt in the Chapter 13. Which means, in a Chapter 13 you can, potentially, get rid of the burdening second or third mortgage(s) and have the lien released upon completion of the Chapter 13. However, the junior lien(s) must be completely unsecured, meaning that house must be valued lower than what is owed on the senior lien so that there is not even $1.00 of equity in the junior liens. If you can prove this, you can get rid of those extra mortgages and free up equity in your home, which is a pretty good ending to this tale.
Is this happy ending only available in a Chapter 13? For the time being it looks like the answer is yes. Several courts have addressed whether a debtor can strip off a second mortgage in a Chapter 7. In April of this year, the United States District Court for the Eastern District of Wisconsin determined that the provision is not available in a Chapter 7 bankruptcy, but is available in a Chapter 13 where a debtor would not be eligible for a Chapter 13 discharge, as long as the bankruptcy was filed in good faith. But, a bankruptcy judge in the Eastern District of New York has said otherwise and determined the lien could be stripped in Chapter 7. Bottom line, we do not really know if a "strip off" would be allowed in a Chapter 7. In which case, I advise only try it through a Chapter 13.
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, http://www.perezlawgroup.com/.
We see this tale many times as bankruptcy attorneys, and there is some relief we can offer. A burdened homeowner does have the possibility of getting out from that second mortgage or HELOC through a Chapter 13 bankruptcy. If you are not familiar with bankruptcy, a Chapter 13 is kind of like a super debt consolidation plan. Debts are consolidated and broken into different priorities of debts. The lowest priority, general unsecured debts (i.e. credit cards) are usually paid a small portion of what is owed, and the remainder is discharged. It's a super debt consolidation because it is done through the bankruptcy court and under all the protections of the bankruptcy laws. The repayment period lasts anywhere from three to five years, depending on the debtor's income.
A Chapter 13 can be the hero of the tale of two mortgages because of something called the "cram down" or "strip off" provision. Interpreted from sections 506(a) and 1322(b)(2) of the bankruptcy code, the "strip off" provision allows a completely unsecured junior lien on a residence to be treated as a general unsecured debt in the Chapter 13. Which means, in a Chapter 13 you can, potentially, get rid of the burdening second or third mortgage(s) and have the lien released upon completion of the Chapter 13. However, the junior lien(s) must be completely unsecured, meaning that house must be valued lower than what is owed on the senior lien so that there is not even $1.00 of equity in the junior liens. If you can prove this, you can get rid of those extra mortgages and free up equity in your home, which is a pretty good ending to this tale.
Is this happy ending only available in a Chapter 13? For the time being it looks like the answer is yes. Several courts have addressed whether a debtor can strip off a second mortgage in a Chapter 7. In April of this year, the United States District Court for the Eastern District of Wisconsin determined that the provision is not available in a Chapter 7 bankruptcy, but is available in a Chapter 13 where a debtor would not be eligible for a Chapter 13 discharge, as long as the bankruptcy was filed in good faith. But, a bankruptcy judge in the Eastern District of New York has said otherwise and determined the lien could be stripped in Chapter 7. Bottom line, we do not really know if a "strip off" would be allowed in a Chapter 7. In which case, I advise only try it through a Chapter 13.
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, http://www.perezlawgroup.com/.
Wednesday, May 11, 2011
Real Bankruptcy Stories of Jersey
What does this lovely lady have to do with bankruptcy and my bankruptcy blog? Mostly it is just reality show curiosity, but there is also a cautionary bankruptcy tale present here.
If you are not a reality show junkie like some of us, you may not recognize this woman. She is Theresa Giudice of the Real Housewives of New Jersey. If you do follow these shows (and it's ok to admit it), you probably know that she and her husband filed Chapter 7 bankruptcy in 2009. As I was doing some fun bankruptcy searching on the internet, I came across several articles about the current status of this bankruptcy. It appears that the trustee in the Giudice's case has filed an objection to their Chapter 7 discharge claiming that they should not be allowed a discharge because they have misled the bankruptcy court and knowingly hid some of their assets.
If you will recall, a Chapter 7 bankruptcy is a liquidation bankruptcy. Meaning that the bankruptcy trustee assigned to your case has the right and the duty to look for assets that can be liquidated for distribution to your creditors and payment towards your debts. These are assets that are not protected by what are known as your state's exemption laws. If you do not disclose all of your assets to your bankruptcy trustee, the trustee is not going to be very happy. And if the trustee is not happy, no one is happy. What can result is the case of this Real Housewife; denial of the bankruptcy discharge, which is the whole reason you filed bankruptcy in the first place. If a reality show "star" is not above the bankruptcy laws, then you probably aren't either. This is why we bankruptcy lawyers get frustrated when you "forget" to tell us about that extra bank account or parcel of land you just remembered you have in your name. We want you to have a successful bankruptcy, and we can only ensure that happens when we are fully informed of all of the assets you have.
Oh yeah, what assets did Mrs. Giudice allegedly forget to mention? Nothing big...just a bank account, a book royalty, and a fashion line.
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, http://www.perezlawgroup.com/.
 |
| http://www.buzztab.com/ entertainment/teresa-giudice-nephew -makes-things-worst/ |
If you are not a reality show junkie like some of us, you may not recognize this woman. She is Theresa Giudice of the Real Housewives of New Jersey. If you do follow these shows (and it's ok to admit it), you probably know that she and her husband filed Chapter 7 bankruptcy in 2009. As I was doing some fun bankruptcy searching on the internet, I came across several articles about the current status of this bankruptcy. It appears that the trustee in the Giudice's case has filed an objection to their Chapter 7 discharge claiming that they should not be allowed a discharge because they have misled the bankruptcy court and knowingly hid some of their assets.
If you will recall, a Chapter 7 bankruptcy is a liquidation bankruptcy. Meaning that the bankruptcy trustee assigned to your case has the right and the duty to look for assets that can be liquidated for distribution to your creditors and payment towards your debts. These are assets that are not protected by what are known as your state's exemption laws. If you do not disclose all of your assets to your bankruptcy trustee, the trustee is not going to be very happy. And if the trustee is not happy, no one is happy. What can result is the case of this Real Housewife; denial of the bankruptcy discharge, which is the whole reason you filed bankruptcy in the first place. If a reality show "star" is not above the bankruptcy laws, then you probably aren't either. This is why we bankruptcy lawyers get frustrated when you "forget" to tell us about that extra bank account or parcel of land you just remembered you have in your name. We want you to have a successful bankruptcy, and we can only ensure that happens when we are fully informed of all of the assets you have.
Oh yeah, what assets did Mrs. Giudice allegedly forget to mention? Nothing big...just a bank account, a book royalty, and a fashion line.
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, http://www.perezlawgroup.com/.
The Means Test Just Got Meaner
If you have done any preliminary research on bankruptcy, you have most likely run into or seen mention of something called the Means Test. The Means Test was formulated in 2005, when the bankruptcy laws were changed, in order to prevent abuse of Chapter 7 bankruptcy. Prior to 2005, almost anyone could qualify for Chapter 7 bankruptcy, whether they had the means to pay their creditors or not. By 2005, Congress had enough and decided to create the Means Test to prevent those who have the ability to repay some of their debt from filing Chapter 7 and avoiding Chapter 13 bankruptcy.
As bankruptcy practitioners we are just as scared of the means test as you are, and we try our hardest to get clients to "pass" the Means Test. Unfortunately, passing the Means Test may no longer be enough. The situation just got meaner as the United States Court of Appeals for the Fourth Circuit recently ruled on a case (Calhoun v. United States Trustee) in which the Debtors "passed" the Means Test but were determined to still have the ability to repay their creditors. When we say someone "passes" the Means Test, we say that the person has so little disposable income that there is no presumption that they are abusing the bankruptcy process if he/she files a Chapter 7 bankruptcy. This rule is outlined in the bankruptcy code section 707(b)(2). However, there is another relevant code section that we often forget. This is section 707(b)(3), which states that a case can be dismissed for abuse if the Debtor is found to have filed in bad faith or if the totality of the circumstances would show abuse (i.e. despite the Means Test result, the Debtor can actually repay some of his/her debt). The Court in Calhoun cited another case in which the factors of abuse were outlined. These included 1) the reason for the bankruptcy filing; 2) whether the family budget and expenses would be considered reasonable; 3) whether the Debtor took cash advances or incurred new consumer debt prior to filing and in amount beyond his ability to repay; 4) whether the filed bankruptcy schedules accurately reflect the Debtor's income and true financial condition; and 5) whether the petition was filed in good faith (In re Crink, 402 B.R. 159 (Bankr. M.D.N.C. 2009)). In Calhoun, the Court of Appeals affirmed a finding of abuse because Mr. Calhoun had significant income from both retirement and social security. While social security income is not counted in the Means Test it is present, and it gave the Calhouns a monthly income of nearly $8,000.00 for their household of two. Additionally, the Court looked heavily at the Calhoun's monthly budget and found some of their expenses to be extravagant.
So, as we review our clients' bankruptcy cases, we must keep in mind that the Means Test is not the only test out there. There is a potentially meaner test that the bankruptcy court can apply that looks at all of the circumstances in a case. While Calhoun is not a case in the Arizona Circuit, we should not overlook 707(b)(3) when we analyze our cases. It is a warning that there are limits to what we can do for our clients. This also means that a potential client should not expect that his/her attorney will file a Chapter 7 bankruptcy when it is not legitimate because it is likely to now be scrutinized under 707(b)(2) and 707(b)(3).
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, http://www.perezlawgroup.com/.
As bankruptcy practitioners we are just as scared of the means test as you are, and we try our hardest to get clients to "pass" the Means Test. Unfortunately, passing the Means Test may no longer be enough. The situation just got meaner as the United States Court of Appeals for the Fourth Circuit recently ruled on a case (Calhoun v. United States Trustee) in which the Debtors "passed" the Means Test but were determined to still have the ability to repay their creditors. When we say someone "passes" the Means Test, we say that the person has so little disposable income that there is no presumption that they are abusing the bankruptcy process if he/she files a Chapter 7 bankruptcy. This rule is outlined in the bankruptcy code section 707(b)(2). However, there is another relevant code section that we often forget. This is section 707(b)(3), which states that a case can be dismissed for abuse if the Debtor is found to have filed in bad faith or if the totality of the circumstances would show abuse (i.e. despite the Means Test result, the Debtor can actually repay some of his/her debt). The Court in Calhoun cited another case in which the factors of abuse were outlined. These included 1) the reason for the bankruptcy filing; 2) whether the family budget and expenses would be considered reasonable; 3) whether the Debtor took cash advances or incurred new consumer debt prior to filing and in amount beyond his ability to repay; 4) whether the filed bankruptcy schedules accurately reflect the Debtor's income and true financial condition; and 5) whether the petition was filed in good faith (In re Crink, 402 B.R. 159 (Bankr. M.D.N.C. 2009)). In Calhoun, the Court of Appeals affirmed a finding of abuse because Mr. Calhoun had significant income from both retirement and social security. While social security income is not counted in the Means Test it is present, and it gave the Calhouns a monthly income of nearly $8,000.00 for their household of two. Additionally, the Court looked heavily at the Calhoun's monthly budget and found some of their expenses to be extravagant.
So, as we review our clients' bankruptcy cases, we must keep in mind that the Means Test is not the only test out there. There is a potentially meaner test that the bankruptcy court can apply that looks at all of the circumstances in a case. While Calhoun is not a case in the Arizona Circuit, we should not overlook 707(b)(3) when we analyze our cases. It is a warning that there are limits to what we can do for our clients. This also means that a potential client should not expect that his/her attorney will file a Chapter 7 bankruptcy when it is not legitimate because it is likely to now be scrutinized under 707(b)(2) and 707(b)(3).
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, http://www.perezlawgroup.com/.
Wednesday, May 4, 2011
Help Wanted
Contrary to the bankruptcy rumor mill and what you might have heard from your mother, brother, next door neighbor, or friend of a friend, personal bankruptcy filings in Arizona are not posted in the newspaper. I do believe that business filings are sometimes posted. Also, your employer will never get notification that you filed for bankruptcy. The only exceptions being if you have a writ of garnishment where you employer is the garnishee or if you have, for some reason, listed your employer as a creditor. The latter has happened. For example, we have had clients that work for American Express and also happen to have an American Express credit card. However, it is not a very common occurrence.
What if your employer does, by one way or another, discover that you filed bankruptcy? How can I be so certain that you will not get fired because of your bankruptcy filing? I am certain because the bankruptcy code says so, and no one wants to mess with the code. The specific section we are talking about is 11 U.S.C. Sec. 525(b). This section states that a private employer may not discriminate with respect to employment nor terminate the employment of an individual solely because that person filed for bankruptcy or did not pay a debt that was dischargeable. Plain meaning of this: your employer can't fire you or negatively affect your employment even if it is known that you filed for bankruptcy.
An important distinction in the code is the term private employer. The Government has different rules when it comes to discriminatory behavior based on the filing of bankruptcy. One of the important differences, as determined by the Fifth Circuit Court Appeals on March 4, is that the Government can also not deny employment because an individual has filed bankruptcy. The same does not apply to private employers, and the Fifth Circuit determined that there is nothing in the construction of the bankruptcy code that would prove that it would apply. The Fifth Circuit determined that if Congress felt a private employer should not be able to refuse to hire someone who has filed for bankruptcy, it would have expressly stated so in 11 U.S.C. Sec. 525(b). Therefore, if you file for bankruptcy relief and then apply for a job at financial institution (the most common example), that employer does have the right to consider your bankruptcy filing when deciding whether or not you will be hired. But, if you already work for that institution and then file, you can not be fired only because you sought bankruptcy relief. If this were the case, your employer would be violating the code and be subject to penalties. And that is why no one likes to mess with the bankruptcy code.
The moral here is that if you are considering bankruptcy and it is something that will help you get back on your feet, you should not let rumors of what can happen after you file affect your decision to seek the financial relief you need.
(On a side note, I do believe that, while the government can not discriminate with regards to employment, it can deny the granting of certain security access if a government employee files for bankruptcy).
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, http://www.perezlawgroup.com/.
Wednesday, April 27, 2011
Back in the Day Cafe
 |
| Picture from http://zapp3.staticworld.net/news/graphics/141867 -opener-old-1990s_slide.jpg |
I remember that one of the local radio stations used to have a segment called "Back in the Day Cafe" during which they would play "old school" hits from the 80's and 90's. Well, today we are going back in the bankruptcy day to 1994. This was a very different time in the bankruptcy world; a time when 341 hearings were not held at the bankruptcy courthouse on 1st Avenue and Van Buren but at the Firstar Metropolitan Bank & Trust building.
This was also a time of the "zero-down" bankruptcy epidemic. A few select bankruptcy firms in Arizona were offering zero-down bankruptcies, meaning a potential bankruptcy client only had to pay the bankruptcy filing fee up front. All attorney's fees would be paid after the bankruptcy was filed and on an installment plan. These firms would actually issue unsecured promissory notes for repayment. The notes would then be sold to collection agencies and pursued aggressively post-bankruptcy filing.
So, why do you have to pay your bankruptcy attorney all those fees before they can file your case? Because of the lesson that bankruptcy in the 1990s taught us: that attorneys should not be your existing creditors when you file a bankruptcy case. If an attorney is owed money at the time your bankruptcy case is filed, that money would be an antecedent and dischargeable debt. If the attorney attempted to collect from you, they would be in violation of the bankruptcy code. And besides all of that, attorneys want to get paid for the work they do, and you should pay them to ensure the work they complete is the high standard of work you expect. What happened in the 1990's is that the "zero-down" bankruptcy firms produced such shoddy work that the bankruptcy community became very concerned. The end result was that many of the zero-down attorneys were sanctioned and suspended from practicing law.
Additionally, there is a little bankruptcy rule found at 11 U.S.C. Sec 526(a)(4), which states that a debt relief agency (your bankruptcy attorney) can't advise you to incur more debt prior to filing for bankruptcy. What is a zero-down bankruptcy if not an incurring of more debt prior to filing?
If you do go for a bankruptcy consultation, and the attorney makes the statement that your case will not be filed until all fees are paid in full, please try to remember that this attorney is not greedy. Remember this little trip back to the wild bankruptcy days of the 90's and the lessons learned from zero-down bankruptcy law firms.
(The background for this blog was taken from a very interesting article in Phoenix NewTimes. If you wish to read the entire article, you can find it at http://www.phoenixnewtimes.com/1994-02-02/news/debt-in-the-water-zero-down-bankruptcy-firms-cost-their-clients-plenty/)
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, http://www.perezlawgroup.com/.
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, http://www.perezlawgroup.com/.
Wednesday, April 20, 2011
Name that Creditor
Having filed numerous bankruptcy cases, we have met a variety of people and seen the spectrum of situations. Sometimes we have clients with just three or four creditors, and sometimes we have clients with twenty or thirty creditors. Regardless of how many creditors they have, our clients often can't remember just who they owe money to, and this can cause problems when it comes time to receive the bankruptcy discharge.
Whether the quantity is large or small, it is important to make sure that each potential creditor is adequately identified and named in your bankruptcy petition. If you fail at playing Name that Creditor, you may give a creditor a loophole to claim non-dischargeability of a debt that would have otherwise been discharged in your bankruptcy.
The United States Bankruptcy Code, Section 523(a)(3) states that a debt may be non-dischargeable if is not listed or scheduled in the bankruptcy petition in such a way that a creditor would have notice of the case. Creditors must have notice of your bankruptcy filing in order to be able to file a claim for the money you owe them or to object to discharge. In bankruptcy, everything is processed through the mail. There is no physical service on parties in interest. Generally speaking, if you make your best attempt to list your creditors with correct addresses, and information regarding your bankruptcy filing is deposited in the mail, you will be deemed to have given notice to your creditor. However, an Arizona bankruptcy judge issued an opinion this year that tends to say that proof of mailing is not enough. The general facts must also show that the notice was adequately received by the creditor in question. The judge made a clear distinction between service and notice. Service is complete upon mailing, but notice may only be achieved if your creditor received the court paperwork and had knowledge of the bankruptcy filing.
Another important question in Name that Creditor is who is the proper party to serve and give notice to? Sometimes debts are passed around from collector to collector, and it is difficult to discern who is the actual owner of a debt. In the same case addressed above, the judge determined that the proper party would be whoever intends to enforce the debt after the bankruptcy is filed. This is important for those debtors that have been sued in state court prior to filing bankruptcy. Just because an attorney represented a creditor in a state court lawsuit against you, does not mean that they are now the interested party and agent for that creditor in your bankruptcy case. In this instance, it would be safer to have your attorney list both the attorney handling the lawsuit and the original creditor.
What all of this says to you as potential bankruptcy debtors is that a lackadaisical approach to completing your bankruptcy petition is not the best approach. You really want to identify each of your creditors for your bankruptcy attorney. This will ensure that you do not give any creditor an easy way to claim that they did not know you filed bankruptcy and therefore, assert that their debt is non-dischargeable.
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, http://www.perezlawgroup.com/.
Whether the quantity is large or small, it is important to make sure that each potential creditor is adequately identified and named in your bankruptcy petition. If you fail at playing Name that Creditor, you may give a creditor a loophole to claim non-dischargeability of a debt that would have otherwise been discharged in your bankruptcy.
The United States Bankruptcy Code, Section 523(a)(3) states that a debt may be non-dischargeable if is not listed or scheduled in the bankruptcy petition in such a way that a creditor would have notice of the case. Creditors must have notice of your bankruptcy filing in order to be able to file a claim for the money you owe them or to object to discharge. In bankruptcy, everything is processed through the mail. There is no physical service on parties in interest. Generally speaking, if you make your best attempt to list your creditors with correct addresses, and information regarding your bankruptcy filing is deposited in the mail, you will be deemed to have given notice to your creditor. However, an Arizona bankruptcy judge issued an opinion this year that tends to say that proof of mailing is not enough. The general facts must also show that the notice was adequately received by the creditor in question. The judge made a clear distinction between service and notice. Service is complete upon mailing, but notice may only be achieved if your creditor received the court paperwork and had knowledge of the bankruptcy filing.
Another important question in Name that Creditor is who is the proper party to serve and give notice to? Sometimes debts are passed around from collector to collector, and it is difficult to discern who is the actual owner of a debt. In the same case addressed above, the judge determined that the proper party would be whoever intends to enforce the debt after the bankruptcy is filed. This is important for those debtors that have been sued in state court prior to filing bankruptcy. Just because an attorney represented a creditor in a state court lawsuit against you, does not mean that they are now the interested party and agent for that creditor in your bankruptcy case. In this instance, it would be safer to have your attorney list both the attorney handling the lawsuit and the original creditor.
What all of this says to you as potential bankruptcy debtors is that a lackadaisical approach to completing your bankruptcy petition is not the best approach. You really want to identify each of your creditors for your bankruptcy attorney. This will ensure that you do not give any creditor an easy way to claim that they did not know you filed bankruptcy and therefore, assert that their debt is non-dischargeable.
This blog is for informational purposes only and is not to be construed as legal advice.
More information about Perez Law Group can be found on our website, http://www.perezlawgroup.com/.
Subscribe to:
Posts (Atom)