All posts in Chapter 7

How far can we push Law v. Siegel?

I was casually reading a couple of bankruptcy cases and I came across a case where the debtor reopens his case to amend his exemptions. The trustee objects to the exemption based on an argument that when the case was closed, the Debtors lost their ability to amend their exemptions as a matter of course under Rule 1009(a) of the Federal Rules of Bankruptcy Procedure. When you read Rule 1009(a), it says (in part),

“A voluntary petition, list, schedule, or statement may be amended by the debtor as a matter of course at any time before the case is closed.”

But, what happened to Law v. Siegel? In that case, the U.S. Supreme Court said that the debtor may amend his exemptions at any time. Not only that, but the

Read more…

Interesting Tidbits from the Last cdcbaa Meeting: Meet the Chapter 7 Trustees

The last cdcbaa meeting was a blast – Chapter 7 Trustees Amy Goldman, David Goodrich, Jason Rund, Jeff Golden and Wes Avery shared a ton of interesting “insider” information to our membership.

Here are some highlights:

  • The trustees routinely review the schedules and statements filed in prior cases
  • The trustees routinely check the ownership history for the property where the debtor currently resides
  • If your case has issues, do not ask for a continued Meeting of Creditors — big red flag!
  • Trustees routinely ask for the underwriting file from a lender to see what was disclosed by the debtor then versus in the schedules and statements
  • Do not put “unknown” for a value — better to be low/high than unknown — and $0 does not equal unknown
  • If the debtor does not know the value of their pending litigation claim, request the statement of damages filed in the state court
  • If you know there are issues in the case, call or email the trustee — the first taste of the case they get should not be from an angry creditor!
  • Asset cases are only 2% district wide Read more…

Tricky Tax Issues / You have an extra day to file federal tax returns

If a client of mine wants to file for bankruptcy, for the purpose of discharging income tax debt, I will wait as long as I can to be sure the three year rule is satisfied. I will make sure there are no prior bankruptcies, and I will make sure no extension was requested.

Most of the time, our clients cannot wait, and will want the bankruptcy filed asap. So when are those taxes dischargeable for this year?

I thought to myself, simple:

April 15 is a Sunday.
April 16 is Emancipation Day.

So, taxes are due on April 17!

WRONG Read more…

Class-action lawsuit against student loan giant brings hope to borrowers in bankruptcy

A recent article from Jillian Berman about a pending student loan class action in Texas.  This will have consequences for consumer debtors.  To read the MarketWatch article, follow the link here.



What to do with Timeshares! Is the Debt Discharged? Yes! But What About Postpetition or Post Discharge Use of the Property?

Below is from the California Bankruptcy Specialists List serve.  Debtor’s obligations under a timeshare agreement are discharged.  But what about postpetition and/or post discharge obligations?  If the obligation arises under the contract, I say it’s gone.  But what about when the debtor uses the timeshare postpetition?  He or she certainly cannot use it for free?  The value of the postpetition use would be, I assume, presumed to be the contract price, and that would be a postpetition debt.  But what does it mean that the debtor “used” the timeshare – postpetition?

From the listserve:

Renay Rodriguez posted:

During recent research I found:

cdcbaa Program on Student Loan Dischargeability on Saturday, March 17 at Southwestern Law School

This should be good.   The program is at Southwestern Law School, Westmoreland Building – 3rd Floor, 3050 Wilshire Boulevard, Los Angeles, CA 90010.  

Speakers are


  • Leigh E. Ferrin, Esq. – Public Law Center
  • Christine E. Kingston, Esq.
  • Austin C. Smith, Esq.

Information on this exceptional panel follows: Read more…

Can a Trucker Use “Homestead” To Exempt His 18-Wheeler with a Sleeping Compartment?

Yes — in Wisconsin anyhow.  In a Wisconsin case, debtor had a semi truck with a cab and he wanted to exempt it under that state’s homestead exemption.   He sleeps in the cabin, has a bunk bend, refrigerator, radio, heater and a/c but no bathroom or kitchen.   Read more…

Debtor’s Inherited IRA Not protected

Your client tells you “yes, I also have an IRA retirement account.”   Don’t stop there — ask them “is this your IRA that you created or you inherited from another person (i.e. spouse or parent)?”   If the latter — then be careful!  Inherited IRA’s can be taken by the trustee.  Why?  Because Justice Sotomayor, on behalf of the entire bench, said so in Clark v. Rameker (2014). Read more…

Raise Fraud in State Court Or Else “Waived” Later for 523?

Are you barred from re-litigating fraud in bk court just because you did not do so in your state court matter even though the facts were there and you could have done so?  In Brown v. Felsen, 442 U.S. 127 (1979), the plaintiff sued defendant for breach of contract in state court (which was based on fraud).  Plaintiff obtained a quick default judgment but did not seek a finding of fraud even though he could have “easily” done so based on the facts and time permitted.  Defendant filed bankruptcy and when plaintiff filed his 523 complaint the debtor screamed “motion to dismiss for res judicata — you should have done that in state court!”  Will the court grant the motion to dismiss?  No.

Res judicata holds that a party is barred from re-litigating grounds for a cause of action that was available to that party in a prior lawsuit.  The motion will be denied because in Brown the Supreme Court said that it would be wrong to force plaintiffs to litigate all of the issues that might later bear on nondischargeability in the future just in case defendant files bankruptcy.  See 422 U.S. 138 (1969).

But does collateral estoppel apply?  Yes, see Grogan v. Garner.

Notifying the State Court of the Automatic Stay

More stuff I didn’t know.  A person on the California Bankruptcy Specialists listserve complained that the Superior Court in Orange wanted him to pay a first appearance fee in order to file a Notice of Automatic Stay.  A tip of the hat to Frank X. Ruggier for his response, ”If you haven’t appeared, it is the other parties responsibility to file Notice of Stay.”

Rule 3.650(a) of the California Rules of Court requires the party who requested or caused a stay of the proceedings to notify the court of its existence, unless that party has not appeared or is not subject to the jurisdiction of the court, in which case the plaintiff in the pending action must immediately notify the court of the stay.  Therefore, if you or your assignee commenced a civil action to recover attorney’s fees and/or costs from the client, and the clients has not appeared in the action, it is the responsibility of you or your assignee to notify the court of the automatic stay.  Judicial Council Form CM-180 has been adopted for mandatory use in giving notice of a stay of proceedings, and a copy is attached for your use.