St. Nicholas, patron saint of pawn brokers

By doug | Published: December 6, 2013

stnickPerhaps no other figure in the history of organized religion has had the capacity to spawn legends like Saint Nicholas, whose actual feast day is not Christmas Eve, but December 6th.

The historical prelate, a bishop in what would be the modern nation of Turkey, died in the year 342.

But he has been making legends long before 1822, when Clement Clark Moore switched his appearance from December 6th to Christmas Eve, and spawned the modern Santa Claus in the process.

One or the origins of St. Nick’s extraordinary generosity is the story of how he helped a poor family on the verge of selling their three daughters into prostitution. dressed in full episcopal garb, he snuck up to the girl’s house at night and threw in a bag of gold, repeating the secret gift on three consecutive nights, thereby giving the girls their dowry and their freedom.

Pawnbroker's_signFrom this account, the saint has usually been represented with three pouches of gold, which eventually became the international symbol of pawnbrokers (sometimes represented as three golden balls), and Nicholas their patron saint.

On December 6, 2018, U.S. pawn brokers will celebrate their annual Gift Day, where they “donate to community organizations that benefit those who need it most.” In 2018, pawn brokers are asked to donate financial contributions to Operation Homefront. Operation Homefront’s mission is to build strong, stable and secure military families so they can thrive – not simply struggle to get by – in the communities they worked so hard to protect.

If you’re deep in debt, my office lowers the legal fees right before Christmas. That’s even a better deal than a pawn shop will give you!

St. Nicholas, pray for us!

By Doug Beaton

Posted in Just for fun | Comments closed

A bankruptcy lawyer is not your mother

By doug | Published: December 4, 2013

scoldingWhen you are looking to file for bankruptcy, you are likely to get bombarded with advice, some well-meaning, and some self-serving.

Like “It’s way too hard to do yourself. You definitely need to get a lawyer.”

Or “It’s easy — if you hire me as your lawyer.”

That last one is a little problematic, because no matter who you bankruptcy lawyer is, some cases aren’t easy.

But some people make it hard on themselves. You have to be realistic about what a lawyer can do for you and what you need to do for yourself. As South Carolina attorney Dana Wilkinson cleverly put it, don’t expect your bankruptcy lawyer to be your mother.

Case in point: just recently one of my clients had their case dismissed because they didn’t take the debtor education course required to get a discharge. Not that I didn’t try to get a hold of her and warn her, but of course she moved, and also forgot to contact us with a new address or number.

The damage: well, all the creditors who were notified at the beginning of the case not to call and bother her will be notified again that the case has cratered. They will undoubtedly take this as an open invitation to call and bother all over again. So a bankruptcy that was all over will come to naught.

Is there any way out at this late date? Sure, a $260 court fee to reopen the case, plus extra fees to me to write up a motion to reopen the case will do the trick. Not very fun — almost like the days Mom made you drink the cod liver oil!

By Doug Beaton

Posted in Practical tips | Comments closed

Watch for the home upkeep trap on the new schedule J

By doug | Published: December 3, 2013

home_depot_logoSchedule J of the official bankruptcy forms is critical for consumer debtors, because it is where they report all their household expenses, from mortgage payments to mousetraps. This, in turn, determines if there is anything left over after the end of the month (don’t laugh), when then decides if you qualify for Chapter 7 or 13, and for the latter, how much you pay the trustee every month. Pretty critical stuff.

So when Schedule J changed a couple of days ago, I decided to look it over for what lawyers love to call “traps for the unwary.”

(The New Schedule J)

Here’s a little one: there are two lines (4c and 20d) asking about home upkeep expenses. Don’t get caught double-dipping, or a trustee might threaten to throw you out of Chapter 7 and have you make Chapter 13 payments instead!

To be fair to the form writers, the instructions for line 20 tells you to exclude “real property expenses included on lines 4 or 5,” but in practice it will probably be an easy enough mistake to make (even for a bankruptcy law firm!) in the heat of battle.

As an aside, I find among my clients that home repairs and even ordinary maintenance expenses are woefully under-estimated. Even renters have lots of legitimate ones! Think before you file on all that you have to spend on a home and a yard, and even an apartment, and you can save big if you have to go to bankruptcy court.

 

By Doug Beaton

Posted in Practical tips | Comments closed

The new bankruptcy forms are here!

By doug | Published: November 29, 2013

Its hard to get as excited as Steve Martin did about phone books in The Jerk, but as of December 1st, 2013, several new bankruptcy forms will go into use.

By far the most important for most consumer cases are the the new Schedule I, on which debtors report their income, and the new Schedule J, where monthly expenses are reported.

You can click below to get copies of the new forms:

New Schedule I

New Schedule J

For experienced bankruptcy lawyers, the most glaring change is not the content of the forms, but the snazzy new typography. Might this be a harbinger of a complete overhaul to what a stack of bankruptcy papers look like?

As for the changes themselves, the new forms include a lot more helpful information about what to include — possibly this is an attempt to get pro se bankruptcy filers, as well as neophyte bankruptcy attorneys on the right track as to what information is expected by the courts.

Will this lead to an increase in pro se filings? Maybe not — the forms still seem pretty fearsome as compared to say a 1040EZ tax form, and plenty of folks seek professional help even for preparing those.

There are also a few new features that seem designed to help out bankruptcy trustees. For example, each debtor on Schedule I now has the option of checking “not employed,” which should help trustees avoid having to divine that status from a lack of information.

As for expenses, the line on Schedule J for “food” now reads “food and housekeeping expenses.” A clarification, but how many people keep accurate separate tabs on these expenses and will combine them properly?

The new Schedule J also gives two concrete examples of what might cause an increase or a decrease in expenses in the coming year: paying off a car loan or getting a mortgage modification. Good examples, but by listing them, the bankruptcy courts may actually narrow people’s imagination to these two items alone.

 

By Doug Beaton

Posted in Bankruptcy News, Practical tips | Comments closed

Would the IRS be happy if you filed for bankruptcy in December?

By doug | Published: November 26, 2013

calendar-pages-flying-away-11622050As the tail end of the year rolls around, perennial questions spook bankruptcy lawyers about the advisability of filing a year-end bankruptcy case for a client who owes taxes to the IRS or Mass. DOR, or both.

Northern California consumer bankruptcy maven Cathy Moran has posted some the essentials on her site, which gives inquiring minds the basic grasp of the issues they need to begin an analysis.

Moran outlines the fundamental rule at stake, which is well-hidden from most normal taxpayers, and probably most of the experts and gurus as well:

Taxes for the year technically become due on January 1st following the conclusion of the year.

So your 2013 taxes are not due in December of 2013. But they will become due on New Year’s Day of 2014, despite the fact that your return isn’t due until April 15th, and that there is no practical way for you to file a return until somewhere around the start of February.

So what does this mean if you owe a lot of back taxes and have been thinking about filing a bankruptcy case?

As attorney Moran points out, if your taxes are the kind that can be discharged in bankruptcy, filing NOW in December could help you get your refund next April, as it would be illegal for IRS or Mass. DOR to set-off you old debts against new ones after the BK case is filed. Taxpayers in this situation want to file now, so that the 2013 debt and refund is not an “old” one as well when it “comes due” at New Years.

On the other hand, debtors who know (or suspect) that they are going to OWE a whopping amount on their 2013 taxes, would be well advised to wait until after the start of the year to file a bankruptcy.

This is because by filing in December they would forfeit the ability to include the 2013 tax bill in a Chapter 13 plan, which could be paid off over five years with no additional interest accruing.

So be careful if you are behind to the tax man and think bankruptcy could be a way out: in these cases, timing is literally everything!

 

By Doug Beaton

Posted in Taxes | Comments closed

Clarification on property value disputes in Massachusetts bankruptcy court

By doug | Published: November 20, 2013

tcb_airDisputes over real estate values are becoming a hot topic in bankruptcy court again, after years of dormancy due to the recession.

A recent Massachusetts case decided by bankruptcy judge Melvin Hoffman in the Worcester division of the court gives a behind-the scenes look at some of the problems that crop up when debtors and creditors argue over property values.

The case is the matter of Twin City Baptist Temple (November 12, 2013), and although it involves a Chapter 11 filing by a church, there is plenty in the opinion of interest to the average debtor or creditor.

At issue was the value of the temple’s complex in Lunenburg, consisting of a church, a school, and a gymnasium. The church said the property was worth $1.7 million, the mortgage holder said about $3.2 million.

The appraiser from the bank presented comparables mostly from buildings that had been used or were being sold as schools, meaning that he searched the state of Massachusetts for sales of large school buildings, and reported on sales as far apart as Boston and Granby in western Mass.

The appraiser for the church, however, did not restrict himself to school buildings for comparable sales, and so reported on a motley collection of large buildings, but they were all sales in the Route 2 corridor close to Lunenburg.

Judge Hoffman found the latter approach more reasonable, and adopted the church’s lower valuation, even though their appraiser had to make a lot more adjustments for the different uses involved.

The judge also tipped his fondness for one of the the three most common methods for proving the valuation of secured claims. Those would be 1) putting the burden of proof on the creditor always; 2) putting the burden on the challenger to a claim always; or 3) using a “burden-shifting” approach, which was what the judge went with.

Under the burden-shifting method, a secured claim is initially presumed to be correct. Any objecting party must provide “substantial evidence” of a different value with its objection. if they do, then the burden shifts back to the claim filer, and they must then counter with substantial evidence of their own.

Since the advantage under the burden shifting scheme rests with the filer of the claim, consumer bankruptcy attorneys might want to think about filing claims on behalf of creditors in cases where values are likely to be contested (like tax matters).

 

By Doug Beaton

Posted in Practical tips, Real estate, Secured loans | Leave a comment

Does Green Tree Servicing really hold your mortgage?

By doug | Published: November 14, 2013

green treeIn a Massachusetts bankruptcy case, a judge has been asked if Green Tree Servicing LLC can prove it really hold the mortgage it wants to foreclose on.

In the Martin case (October 9, 2013), the married debtors house was underwater, they hadn’t made a mortgage payment since 2011, and they were perfectly willing to let it go to foreclosure as long as they got bankruptcy protection. But in a surprise move, the trustee on the case (the enigmatic Janice Marsh) stepped in and filed her own objection to a foreclosure sale.

Quizzed by bankruptcy judge Melvin Hoffman as to why she would do such a thing if there was no equity in the property for the benefit of other creditors, the trustee intimated that she would be seeking to have Green Tree’s secured claim invalidated, because Green Tree had not produced either the actual note secured by the mortgage, or a substitute affidavit allowed by Massachusetts law.

Judge Hoffman wasn’t biting in this particular instance, and ruled that Green Tree could proceed with the foreclosure process, because Massachusetts law allows separate entities to hold the note and mortgage, and because the trustees’ right to file a lawsuit on this matter still available to her.

But the case highlights a couple of interesting points on the current state of bankruptcy law in the Bay State:

First, with case filings declining, trustees as a group are getting more and more aggressive in their tactics as they try to make money in the legal system.

Second, the alphabet soup type of roulette game Massachusetts mortgages have become is still the bane of any lawyer having anything to do with them. The Martin’s mortgage had already traveled from National City Mortgage (NCM) to PNC Bank, to Green Tree (as servicer) in its brief life, and the note itself had been endorsed in blank, meaning anyone who picks it up could claim to be the debt holder.

Trying to figure out who “owns” a Massachusetts mortgage? Good luck!

 

By Doug Beaton

Posted in Foreclosure, Secured loans | Comments closed

Loans stripped in Chapter 13 may not be means test deduction in Massachusetts

By doug | Published: November 7, 2013

man in barellBankruptcy debtors who are looking at Chapter 13 as a way to get rid of an unwanted second (or third) mortgage may have an additional obstacle to overcome if their case lands in Judge Melvin Hoffman’s courtroom.

In an opinion released in the Garrepy case (November 6, 2013), Judge Hoffman said that if the married debtors did intend to strip off the second mortgage as part of the bankruptcy, they could not also take the $147 monthly payment as a deduction on their Form 22C Chapter 13 means test. The result: add $147 to the debtor’s required monthly Chapter 13 payment.

(For a primer on stripping off loans, you can click here).

Judge Hoffman, sitting in Worcester, based his reasoning on an earlier case decided the same way by Judge Frank Bailey in the bankruptcy court’s Boston division. So while these opinions aren’t binding on the remaining bankruptcy judges in Massachusetts, their opinions are indicative of the general view of this issue in the Bay State.

Slick (or perhaps even sleazy) bankruptcy counsel might ask if it is worth it to announce up front in a voluntary petition whether the debtor intends to strip second mortgages or not. While all filings must be in good faith, a “change of mind” midway through the case is certainly common enough that it might offer a workaround if the proposed monthly increase in payments to the trustee is large enough

 

By Doug Beaton

Posted in Chapter 13, Real estate, Secured loans | Comments closed

Longtime Massachusetts bankruptcy lawyer Joseph Braunstein has died

By doug | Published: November 6, 2013

BraunsteinJosAccording to an article by Michele Richinick in the Boston Globe, Joseph Braunstein, who was a bankruptcy attorney in Massachusetts for 55 years has died.

Attorney Braunstein died in Florida in September, 2013 of a heart attack. He was 84 years old.

In recent years, he was best known as a bankruptcy trustee handling cases in the Boston courthouse. But over his long career, he had taken on almost every type of bankruptcy work, except being a judge, and had even practiced in Essex County decades ago before moving his firm into Boston.

“He had that talent of remembering what everyone’s interest was and had such a nice, open and friendly way about him that he always connected with people,” said Stanley Riemer, a managing partner at Mr. Braunstein’s firm who knew him for four decades or more.

Mr. Braunstein never retired. He served as a court-appointed bankruptcy trustee and was affiliated with the American Bar Association, the American Bankruptcy Institute, and the Massachusetts Bar Association.

He was elected to the American College of Bankruptcy, for which he was a member of the pro bono committee.

“He was praised by judges for being incredibly deferential to anybody,” his son said. “He treated everyone with caring, kindness, [and] thoughtfulness.”

And he will be missed by many people in the close knit community of bankruptcy practice.

 

By Doug Beaton

Posted in Bankruptcy News | Comments closed

Will Obama care affect bankruptcy filings?

By doug | Published: October 9, 2013

obamacareNow that October 2013 has rolled around, the start-up of Obamacare, or more formally the ACA, is imminent.

Or is it? As of this writing, the federal government is in shut-down mode, as budgets have not been passed, and threats to stalemate the health care changes are thick as thieves.

New Orleans bankruptcy attorney Kevin Gipson recently wrote an article suggesting that bankruptcy filings might indeed go lower if the new system does in fact reduce the amount of uninsured medical bills at the nations hospitals and doctors offices.

On the other hand, the lawyers that I work with here in North Andover keep telling me that I am on the verge of incredible riches, as Obamacare fully implemented is sure to cause waves of business failures, with people lining up for bankruptcy like triage at an accident site.

Personally, I have no clue as to what is going to play out. Probably somewhere in the middle. But stay tuned and I’ll keep you posted.

 

By Doug Beaton

Posted in Bankruptcy News | Comments closed
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