Video Overview of New Forms

The Bankruptcy Court for the Central District of California has prepared a video overview of the new forms that are effective December 1, 2015 and it is available on our court’s website under the News and Announcements section.

Thank you,

U.S. Bankruptcy Court, NDC
Information Technology Division

Eligibility of Trusts to File Bankruptcy

Judge Tighe did a great analysis on eligibility of trusts to file bankruptcy.  Her tentative is below In re: The Shahla Dowlati 2005 Living Trust. 

UST moves to dismiss this chapter 11 case because the Shahla Doowlati 2005 Living Trust (the “Trust“) was created for estate planning purposes, and thus is ineligible to be a debtor. Section 109(a) establishes that “only a person that resides or has a domicile, a place of business, or property in the United States, or a municipality, may be a debtor under this title.” Section 101(41) defines “person” to include any “individual, partnership, and corporation.” It does not include governmental units or trusts. See 11 U.S.C. § 101(41).

Read more…

Random Thoughts for the Week

The bar exam results came out on Friday.  The headlines say that the success rate is the lowest ever.  One article is here.  My students’ view is “They’re making it harder and harder.”  They don’t believe me when I say I don’t think that is true.  Success is a function of effort.   You can’t learn law with one eye on your cell phone.  We had a study session Saturday at the law school.  I volunteered to meet with students and answer questions.  Out of 62 students, 6-7 showed up. Read more…

Word: Tautological

As I read BAP cases, I have to look up some interesting word choices.  I will try to put one up a week.


Judge Markell, said “Although it is tautological that liens securing payment obligations can be satisfied by paying the money owed, it does not necessarily follow that such liens can be satisfied by paying any sum, however large or small.”   In re PW, LLC (Clear Channel Outdoor).

Tautological, in rhetoric, is a method of argument where the person simply repeats the same arguments using different phrases or words while trying to cover up the lack of evidence or valid reasoning supporting the conclusion. Read more…

One Action Rule

Be careful Banks – in California you get one bite at the apple in collecting a deficiency judgment against a homeowner (or possible debtor in bankruptcy).

For creditor attorneys - make sure you’ve complied with the ‘one action rule,’ or you waive your client’s right in a deficiency judgment against the former homeowner.

For debtor attorneys -  if the creditor has violated the ‘one action rule,’ and are seeking to recoup against your debtor-client now, make sure to object to their proof of claim under §502(b)(1), such that the claim is unenforceable against the debtor under state law. Read more…

RDM’s Roundup

Starting December 1, we all have to use the new national forms. Although you can hypothetically e-file a case using the old forms and get a case number (and automatic stay…) you will immediately be hit with a case deficiency notice requiring the uploading of the correct/missing forms within seventy-two hours or the case will be dismissed.

The general vibe I get is that attorneys are not that worried about the new forms as the BK software “we” (all!?) use will just spit them out organized correctly, after “we” have input the info the way we always have. Read more…



*TUESDAY, NOVEMBER 24, 2015* 12:00 p.m. to 1:30 p.m.
(*Changed from previous meeting date of Thursday, 11-19-15*) Read more…

Trustee Sues USC For Fraudulent Transfer On Behalf of Debtors (Parents) Who Paid $180k For Kids Education

These Trojans have more to ‘fight on.”

This adversary fascinated me.   Mom and Dad paid $180,000 for their two kids to go to USC.   They graduated.  Two years later, Mom and Dad filed for Chapter 7 bankruptcy.  Trustee Geoffrey Richards was appointed.

Trustee sued USC demanding the school return the $180,000 the parents (debtors) paid to USC as a fraudulent transfer under §548 arguing the parents got no value from the school.   Wow!  (as a UCLA alum, I giggle). Read more…

Sometimes the State Court Gets it Right!

Instead of delving into the actual facts of In re Marriage of Walker, I will use similar facts as they will be easier to understand. You can find the actual case here.

House is worth $350,000 with a $150,000 1st priority lien. In a divorce proceeding, a judge will order the sale of the property with proceeds split evenly. Assuming no cost of sale, taxes, etc., this would mean husband is paid $100,000 and wife is paid $100,000.

The result should not be different if there was an intervening bankruptcy, or should it!?

Read more…

Comparison of Chapter 13 Plan Forms in the SD, CD and ND

Jon’s post here got me thinking about the attorney in the Southern District, who to me at least, seems to have committed malpractice by filing a bad Chapter 13 Plan.

The facts in the In re Schleger case, which you can read here, are dumb-bed down as follows: Chapter 13 Plan is filed where Debtors say they will pay 48% of unsecured claims. They know that they are about to void a 150k lien but they do not amend their plan to reduce the 48% or really do anything to deal with the claim. Five years passes and they want a discharge despite not paying anywhere close to 48% or amending their plan. That’s just a ridiculous position to take! But was it his fault or the system’s fault? This  case was an appeal from the Southern District which we will see has a confusing form.