June Filing Holding Steady Again

June filings in the central district were slightly lower than last month as well as June of last year.

2018 2017 2016 2015 2014
Jan 2,741 2,839 2,872 3,364 4,704
Feb 2,708 2,795 3,299 3,829 4,574
March 3,363 3,782 3,923 4,496 5,430
April 3,277 3,209 3,584 4,486 5,364
May 3,226 3,384 3,484 3,971 5,500
June 2,981 3,252 3,545 3,966 4,386
July 2,953 3,239 3,731 4,701
Aug 3,387 3,543 3,544 4,540
Sept 3,071 3,168 3,493 4,317
Oct 3,170 3,235 3,751 4,554
Nov 3,004 3,025 3,531 3,642
Dec 2,416 2,902 2,718 3,733
Total 18,296 37,262 39,819 44,880 55,445

Year to date totals by chapter are:

Non-Commercial Commercial Chapter 7 Chapter 13 Chapter 11
16,828 1,474 14,120 3,959 220
92% 8% 77% 22% 1%


Pay off Taxes on a Credit Card Then File Bankruptcy To Wipe Out the Credit Card…will it work?

I paid my car registration fee on my credit card tonight and it got me thinking.   A lot of government sites allow you to pay their debts with a credit card.  Can you charge these on a credit card and then file bankruptcy to discharge the debt?  What about taxes?   Of course not.  Conceptually it makes sense but do you know the two Code sections that say this?  See below.

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Reasonable versus Promptly Standard

Arrears can be cured over a reasonable time (i.e. over 5 years).  Did you know there is a different standard for curing leases?  Promptly!

Section 1322(b)(5) says the debtor’s plan may provide for the curing of any default within a reasonable time….

Section 365(b) says the debtor will promptly cure such lease default… and Webster definition of promptly is “with little or no delay; immediately.”

What If 3rd Party Ignores Your Subpoena For Documents?

You are in an adversary and need documents from a third person (not a party to the lawsuit).  You issue upon him a subpoena with the discovery request for documents (subpoena duces tecum).  He ignores it.  What do you need to do?  If your knee-jerk reaction was “…I’d file a motion to compel!” then you’d be wrong.  The answer is ….

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Burden of Proof – Preponderance v. Clear and Convincing

I had coffee with an evidence professor and after we finished discussing my wife’s homemade burrata, we moved onto burden of proof.   He reminded me, there are 2 parts the plaintiff has to establish — (a) burden of production and (b) burden of proof.

The first goes towards whether the plaintiff is able to show evidence to prove their case (i.e. did you put forth any documents, witnesses, tangible items?).  The second goes towards whether what you put forth reaches the level of persuasion necessary to convince the court you should win (see below).  A good way the professor summarized it is the first part is “what did plaintiff actually show?” and the latter is “was it enough?” Albeit it looks obvious, he said most plaintiff’s do not meet the first burden which should automatically preclude them from meeting the second.

In adversary proceedings re: 523/727, plaintiff must persuade the court by preponderance of the evidence which asks “is it more likely than not that what plaintiff says to be true or not?”  (~51%).  Clear and convincing standard is higher and asks “is it substantially likely that what plaintiff says to be true or not?) (~70%).

I had essayist Chris Hitchen’s quote written in my law school notebook — “what can be asserted without evidence can be dismissed without evidence.”  This has come to be called Hitchens’s Razor (like Ockham’s razor).

Personal Liability for Business Sales Tax – What Was The Point Of Having Corporation?

You can be held personally liable for the unpaid sales or use tax of your corporate business.   Bankruptcy does not solve this.

For instance, you own a retail business and get audited by the state.  The Board of Equalization says “your business owes $100,000 in sales tax that you failed to send to us.”  You decide to close the business and walk away because you cannot pay that.  The state can assess that $100,000 liability against you personally!  You will then complain to me “…but I had a corporation, isn’t a corporation supposed to protect me?  what was the point of having a corporation?!”

Then you calm down and say “….ok, I will file chapter 7 bankruptcy.”  The state can hold the “responsible person” personally liable.  The definition of “responsible person” is broad and can include the business’s CPA!  The standard is if the “responsible person” willfully fails to pay the tax.

Let’s take a look at the law and break it down….

Here is the California law on this… (I parsed it out). Read more…

California Lawyers Association Annual Meeting – September 12-15, 2018 in San Diego

This meeting previously was the California Bar Assn annual meeting.  The MCLE arm of the state bar however separated from the state bar effective the beginning of this year calling itself the California Lawyers Association.  The CLA education programs this year can be found here.  No bankruptcy programs but there are several programs that look interesting including several ethics programs.

The purpose of this letter … is to provide notice of a current crisis [In the Eastern District]

Since not all of us are members of the Eastern District, I wanted to share a letter signed by all nine sitting district court judges in the Eastern District. I have attached a copy to this blog. Judgeship+Letter+June+2018

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What did you spend $140,000 on? “Wine, Women, and Song”

Section 727(a)(5) says you can be denied a discharge if you (debtor) cannot explain how you lost your assets.  One court in Connecticut denied a 70+ year old debtor a discharge when he said he spent $140,000 on “wine, women and song” and carried all that money in rolled up one hundred dollar bills.  The court said that is dubious.  Regardless, I would like to meet this gigolo!

“Notice” per Rule 2002 versus “Service” per Rule 7004

Some practitioners give “notice” of their contested motion on a corporation when they have to “serve” it.  What’s the difference?  Let’s take a look….

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