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As a Sacramento Bankruptcy Attorney I must often explain to my clients that domestic support obligations, such as spousal support and child support, are not dischargeable in Chapter 7 bankruptcy. This concept frustrates many individuals trying to clean up his or her economic profile. I must also remind these individuals to keep in mind that child and spousal support are not the only domestic support obligations to come out of a family court that could survive the bankruptcy. A recent case stemming from the New Hampshire Supreme Court, In re Mason, demonstrates a perfect example of a non-dischargeable domestic support obligation.

Mrs. Mason filed for bankruptcy in 2010 after having received a divorce from the state of New Hampshire in 2007. The parties’ divorce decree held that both parties would be liable to pay one half of their 2006 tax burden. However, Mrs. Mason listed Mr. Mason as a co-debtor on their tax lien and a creditor in her Chapter 7 petition and attempted to discharge her half of the parties’ 2006 income tax bill. Ms. Mason received her automatic discharge in the Chapter 7. Each party later attempted to assert relief from the 2006 taxes under the “innocent spouse” doctrine. The IRS granted Mrs. Mason’s request and denied the request of Mr. Mason. Mr. Mason moved to hold Ms. Mason in contempt of the family court for not paying her share of the tax bill and for an order directing her to pay one half of the tax bill. The circuit court denied Mr. Mason’s request. They found that since the IRS had granted her petition for relief under the “innocent spouse” doctrine, that it changed the nature of the taxes from a debt to the IRS to a personal debt to Mr. Martin and since Mr. Mason failed to fight the discharge in bankruptcy court that he would lose. They also denied his request for attorney’s fees.

On appeal, the New Hampshire Supreme Court reversed the lower court and held that the modifications of the bankruptcy code in 2005 mean that the domestic support obligations are not discharged automatically. The question turned on whether the taxes were automatically non-dischargeable because they were a part of the divorce decree, such as child support, or whether Mr. Martin would have to fight the discharge in the bankruptcy court. In their decision, the New Hampshire Supreme Court compared the modified bankruptcy code with the older version. They found that the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA “) removed the previous ability to pay tests that the law previously required regarding the dischargeability of a debt. This courts interpretation of the law found the BAPCPA directs that any debts falling within particular categories are automatically non-dischargeable. Specifically, they held that a debt created by a divorce decree is one of the automatically non-dischargeable debts. Since the 2007 divorce decree required Mrs. Mason to pay one half of the 2006 tax bill the court found that her debt was automatically non-dischargeable and she lost.

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Sacramento Mayor Kevin Johnson released his endorsement for local attorney Matthew D. Roy for the Sacramento City Charter Commission.

The Charter Commission will be charged with reviewing the Sacramento City Charter and determining if revisions are needed. If revisions are proposed by the Commission, such revisions will be in the form of a ballot question(s) that will be presented to the voters at a future primary or general municipal election. The Commission will serve a term of two (2) years and then disband. It is anticipated that the Commission will meet two (2) times per month, or on whatever schedule is deemed appropriate by the Commission to ensure that decisions are made in time for placement of questions on a future primary or general election ballot. This is an unpaid position.

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All Sacramento area residents have been hit hard by the economic downturn of the last several years. Unfortunately, this downturn has begun to disproportionately affect senior citizens and people leaving the workforce. In the early 90’s people over 55 accounted for approximately 2 percent of bankruptcy filings. Today, seniors account for roughly 22 percent of all bankruptcy filings.

The main reason seniors have been subject to Chapter 7 and Chapter 13 in recent years is due to the rising costs of medical care and their reliance on expensive medications. According to a recent study, 70 percent of seniors who live in poverty have suffered from a major medical condition. Only 50 percent of seniors living above the poverty line have faced these maladies that range from cancer, heart disease, high blood pressure, etc . to name a few.

Seniors therefore face a unique set of challenges when confronting economic turbulence. This is due, in large part, to the fact that elderly people tend to have limited incomes and there exists a lower probability of increasing income or earning additional income from employment opportunities as the individual continues to age. These real limitations have a direct impact on the individual’s decision of whether to file a Chapter 13 or a Chapter 7 bankruptcy.

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Attorney Matthew D. Roy has decided to run for a local position within the City of Sacramento in the upcoming November election. Matthew Roy started the Law Offices of Matthew D. Roy in 2010 that resolves personal and financial problems for Sacramento area residents.

Mr. Roy is a graduate of California State University Sacramento and the McGeorge school of law. As a volunteer attorney with W.E.A.V.E he has helped numerous victims of domestic violence obtain restraining orders against their abusers. Additionally, he regularly facilitates workshops at the William R. Ridgeway Family Relations Courthouse on behalf of the Family Law Facilitator’s Office to conduct their domestic violence prevention series.

Mr. Roy supports growth in Sacramento. He believes the City Charter should be updated since it was first established in 1920. “We are not a small town anymore,” says Roy. “We need to allow this city to evolve and grow with the modern times.” “By updating the Charter we will allow our city officials to meet the present needs of the city and prepare for the future.”

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As a Chapter 7 and Chapter 13 bankruptcy attorney in Sacramento I frequently receive calls from people who consider bankruptcy because they have oppressive student loan debt. Student loans are a major issue for many bankruptcy filers. I predict these issues will continue to increase and the laws will ultimately need revision as the problems surmount; students, have been denied the opportunity to discharge their debt even when the amounts are astronomical and the student has little means to make payments.

In what can be considered a victory for individuals with student loans, the Sixth U.S. Circuit Court of Appeals decided in In re Gourlay that Sallie Mae, the student loan organization, could not set a default judgment aside that had been obtained by debtor Kristin Gourlay. Sallie Mae failed to respond to adversary proceeding filed by Gourlay which attempted to find the debt dischargeable. The Sixth Circuit found that the bankruptcy court was within its rights to find that the failure was not excusable neglect, the court said; service was proper and the appropriate person simply failed to respond.

Kristin Gourlay filed for Chapter 7. During the case she filed an adversary proceeding seeking to determine the dischargeability of her student loans owed to Sallie Mae. She owed Sallie Mae approximately $25,500. Her bankruptcy attorney sent Sallie Mae a timely summons by certified mail, and the return card was signed by someone believed to be a part time employee at the company’s Virginia headquarters. The deadline for a response came and went without a response from Sallie Mae. Gourlay filed for a default judgment about a week later. The Bankruptcy Court intitially rejected her motion due to improper service. However, Gourlay served the summons again. When there was still no response, the bankruptcy court granted her second motion for default judgment. Eighteen days after the default judgment became final, Sallie Mae moved to set it aside for excusable neglect. The Bankruptcy Court ultimately rejected this, finding that internal breakdowns are not excusable neglect, and Sallie Mae appealed.

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As a practicing bankrtuptcy attorney in Sacramento I have followed the states progress in the “robo-signing” settlement talks with great interest. Attorney General Kamala Harris has recently made headlines by refusing to sign on to the national settlement, calling it inadequate to compensate Californians for the many losses they incurred in the housing crash. The California Attorney General’s Office has launched independent investigations, including some in cooperation with Nevada. According to the LA Times in an article written Jan. 25, 2012, titled, California calls $25-billion mortgage settlement ‘inadequate,’ Harris and her deputies were invited back to the negotiating table by further concessions from lenders, but ultimately rejected all offers because they were insufficient. However, A spokesperson for Harris told the media that the settlement would prevent her and other AGs from pursuing further independent investigations.

Despite nearly 16 months of investigations and on going negotiation, and the original participation of AGs from all 50 states and Washington, D.C., no deal has been reached. The investigation has been plagued by politics, with conservative AG’s arguing that the settlement is too aggressive and liberal ones countering that it doesn’t go far enough. Particularly, AGs in New York, Delaware, California, Nevada and elsewhere have opted out of the settlement or threatened to and started their own investigations into lending practices. Harris said in late September that the settlement offer at that time did not include enough remedies from the five major lenders for the foreclosure crisis. She and the other breakaway AGs said they’d prefer to see efforts to stop foreclosures and their negative effects, going beyond addressing the fallout from robo-signing itself. A AG’s office spokesperson said: “The current deal still is not transparent enough or sufficient to address Californians’ needs.”

California’s participation in the talks is considered important to any settlement due to the size of the state; California has the resources to bring large lawsuits on its own. According to the article, the latest proposal includes a $17 billion program that would reduce principal on loans that are “underwater,” or larger than the value of the home. Another $5 billion would be earmarked for people directly harmed by robo-signing and other bad servicing practices, and $3 billion would help underwater homeowners refinance at a rate of 5.25%. (Current rates for a 30-year prime mortgage are 4 to 4.5%.) In return, the AGs would agree to release lenders from actions for improper servicing or origination of mortgages — a provision that Harris and some colleagues believe would stop their existing investigations. Delaware has filed a lawsuit alleging MERS has engaged in deceptive practices; Massachusetts has sued five lenders, alleging they knowingly pursued illegal foreclosures.

As a Sacramento Bankruptcy Attorney I am pleased to see our state continue the fight and pursue a settlement that could provide meaningful help to people who were hurt in the housing crisis. That includes people who were directly harmed by robo-signing or other illegal and unethical behavior by lenders, as well as people who are suffering because housing prices have dropped through no fault of their own. Throughout the robo-signing scandal, lenders have downplayed their responsibility, arguing that there was likely no real harm from that particular kind of illegal behavior. This may or may not be true — instances of wrongful foreclosures have been reported — but there’s certainly widespread harm from, for example, their refusal to give meaningful consideration to loan modifications.
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Como un abogado de bancarrota de Sacramento, que haga tomar el caso de un cliente antes de que él o ella presenta la petición de bancarrota. Hago esto con el fin de ayudarle a preparar la petición ante la actual presentación del capítulo 7 o el Capítulo 13. Preparación para la bancarrota puede significar muchas cosas, incluyendo la toma de decisiones estratégicas con respecto a los activos que son importantes para un individuo. Entender el proceso de bancarrota y conocer las reglas complejas convertido en un aspecto importante de cualquier capítulo 7 o la presentación del capítulo 13 con el fin de eliminar o minimizar la exposición de una persona a sus acreedores.

Por desgracia, no representados los litigantes a menudo no logran comprender la complejidad de un caso y que parece ser lo que pasó con el deudor en In re Ruiz, un caso en el Panel de Apelación de Quiebras de la Décima Corte de Apelaciones de Circuito de los EE.UU.. En este caso, José Ruiz y Carrie escribió cheques para compras de las empresas, una donación de caridad y su pago mensual de la hipoteca antes de peticiones de bancarrota del capítulo 7. Los controles no se había aclarado aún el día de la petición, por lo que su administrador argumentó que técnicamente aún tenía el dinero y deberían estar obligados a darle la vuelta a la finca. Un tribunal de quiebras en Utah no estaba de acuerdo, pero el BAP se invierte, lo que requiere a su vez más de cerca de $ 3.700.

Los cheques de Ruiz fueron escritos entre el 29 de marzo y 23 de abril de 2010, que presentó su petición de quiebra por vía electrónica el 24 de abril. En sus horarios, el de Ruiz enumeró una cuenta de cheques con $ 10.02. Este fue el número que sería verdad una vez que los cheques compensados, sin embargo, la cuenta en realidad contenía $ 3,764.99. El último de los cuatro despejó el 28 de abril de 2010. En el artículo 341 la audiencia, el fiduciario Ruiz descubrió la discrepancia y se mudó a les obligan a entregar el resto del dinero. El tribunal de quiebras denegó la petición del administrador, y encontraron que el dinero en cuestión no eran de propiedad del deudor. Por el contrario, encontró que la cuenta corriente fue una deuda por el banco a la de Ruiz, y que la deuda era de propiedad de la finca, el banco tenía un control real y la posesión del dinero. El tribunal sostuvo además que el fiduciario, no la de Ruiz, tenía la obligación de cobrar esa deuda en nombre de la masa de la quiebra. El síndico apeló.

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As a Sacramento bankruptcy attorney, I typically take a client’s case before the he or she files the bankruptcy petition. I do this in order to help him or her prepare the petition before the actual filing Chapter 7 or Chapter 13. Preparation for bankruptcy can mean a lot of things, including making strategic decisions regarding which assets are important to an individual. Understanding the bankruptcy process and knowing the complex rules become an important aspect of any Chapter 7 or Chapter 13 filing in order to eliminate or minimize a person’s exposure to his or her creditors.

Unfortunately, unrepresented litigants often fail to understand the complexities involved in a case and that seems to be what happened with a debtor in In re Ruiz, a case from the Bankruptcy Appellate Panel of the Tenth U.S. Circuit Court of Appeals. In this case, Jose and Carrie Ruiz wrote checks for business purchases, a charitable donation and their monthly mortgage payment just before petitioning for Chapter 7 bankruptcy. The checks had not yet cleared on the day of the petition, so their trustee argued that they technically still had the money and should be required to turn it over to the estate. A bankruptcy court in Utah disagreed, but the BAP reversed it, requiring them to turn over about $3,700.

The Ruiz’s checks were written between March 29 and April 23 of 2010; they filed their bankruptcy petition electronically on April 24. On their schedules, the Ruiz’s listed a checking account with $10.02. This was the number that would be true once the checks cleared; however, the account actually contained $3,764.99. The last of the four cleared on April 28, 2010. During the section 341 hearing, the Ruiz’s trustee discovered the discrepancy and moved to require them to turn over the rest of the money. The bankruptcy court denied the Trustee’s motion and found that the disputed money was not debtor property. Rather, it found that the checking account was a debt owed by the bank to the Ruiz’s, and that debt was the estate’s property; the bank had actual control and possession of the money. The court further held that the trustee, not the Ruiz’s, had the obligation to collect that debt on behalf of the bankruptcy estate. The trustee appealed.

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As an attorney who protects my clients against foreclosure, I am very familiar with the concept of filing a Chapter 13 or Chapter 7 bankruptcy stop the foreclosure sale. Since the filing of a bankruptcy petition includes an automatic stay – a court order prohibiting all creditors from collecting against debts held by the debtor – the filing often results in providing the bankruptcy client with some temporary or even permanent relief.

The Chapter 7 or Chapter 13 bankruptcy can even help a debtor in the long run if the bankruptcy allows the debtor to catch up on any arrearages and reorganize their unsecured debts. This may also work in the event that a mortgage lender has a flawed claim on the property held by the debtor or has broken some sort of predatory lending law. However, as the Ninth Circuit Bankruptcy Appellate Panel ruled in Edwards v. Wells Fargo Bank, N.A., filing bankruptcy is not the right avenue to pursue for a debtor whose property has already been foreclosed against. In Edwards, the appellate Panel upheld the bankruptcy court’s decision to grant relief from stay to the bank.

Lupi Paulo Edwards, from Southern California, filed a Chapter 7 bankruptcy petition in August of 2010. Her home lender, Wells Fargo, moved the court for relief from stay shortly thereafter. Wells Fargo included a copy of the Trustee’s Deed whereby they purchased the property at a sale on May 17, 2010. Wells Fargo then began proceedings to eject Edwards from the property. Edwards attempted to oppose the bank and argued that Wells Fargo had no standing to request that the court allow it to begin the foreclosure proceedings.

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Sacramento area residents considering a Chapter 7 or Chapter 13 bankruptcy should be interested to learn about the recent United States Ninth Circuit Court of Appeals case: In re Brenda Marie Jones, which affects how a second bankruptcy filing affects a persons tax debts. The Ninth Circuit Court of Appeals governs all appeals made from Sacramento area federal courts, including bankruptcy matters.

Federal and State income taxes can typically be discharged if they were due more than three years ago. However, the three-year standard can be extended if the debt could not have been collected. This means that when an automatic stay is issued in a previous bankruptcy, the debt cannot be collected, which therefore extends the time period to which a debtor must wait before he or she can discharge that tax debt.

In the Brenda Marie Jones case, a California woman filing for a Chapter 7 bankruptcy owed a debt, more than three years old, to the California Franchise Tax Board (CFTB). Ms. Jones attempted to discharge that debt in her new bankruptcy but the CFTB argued that because Jones had previously filed for bankruptcy, they were prevented from collecting the tax debt and it was therefore improper for her to discharge the debt in the recently filed case.

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