Law Offices of Nicholas Gebelt

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Arguments On SFRs Before The Ninth Circuit

I have written several times about discharging income tax debt in bankruptcy.  My most recent post on this topic dealt with the question of whether a return filed after a substitute for return is a return for bankruptcy discharge purposes.  I reported that the question hasn’t been addressed by the Ninth Circuit Court of Appeals.  That is about to change. In a society with a government class and a nongovernment class, the government class will naturally protect itself against the nongovernment class.  I hope the Ninth Circuit will break from that mindset and do the right thing in the Martin… Read More →

Zombie Debt Redux

In today’s LA Times, Sean Pyles wrote a nice summary of the problem of zombie debt. He began with the observation that when the statute of limitations has passed on debt collection actions, creditors are estopped from suing you to collect.  However, I suspect that in the interest of saving columnar space, he elided over some of the details.  One of my previous posts fills in the lacuna: According to Cal. Civ. Proc. Code § 337, the statute of limitations for most debt collection lawsuits in California is four years.  Therefore, if you receive a summons telling you that you… Read More →

The Ninth Circuit’s Martin Decision

I have written several times about discharging income tax debt in bankruptcy.  Some time ago I wrote a post that dealt with the question of whether a return filed after a substitute for return is a return for bankruptcy discharge purposes.  At the time, I reported that the question hadn’t been addressed by the Ninth Circuit Court of Appeals.  That statement is no longer correct.   Martin Smith v. IRS   I watched the oral arguments in Martin Smith v. IRS case that took place on May 12 at 9:00 a.m. The Court sided with the IRS in this case,… Read More →

Harvey Weinstein, et al., and Bankruptcy

For those of you who have been living in a cave without access to any news of the day, I would bring you up to speed on the ever expanding sex abuse/sexual harassment scandal that implicates many famous Hollywood types, politicians, religious leaders, big business execs, . . . , and the list just keeps on growing; but if you’re still living in your cave, you probably won’t read this post. For those of you who aren’t living in a cave, but haven’t been paying attention to the salacious details, here’s the classic comic book version.  Many famous and powerful… Read More →

Drunk Driving Debt: Dischargeable If Debtor Was The Injured Person?

Suppose you’re driving home from a New Year’s Eve celebration.  At the party you had one too many glasses of Krug Champagne.  Suddenly a light pole leaps in front of you and you hit it.  You’re badly injured.  You get fine treatment at the hospital, and later receive a bill for $100,000 for the care.  You can’t pay it, so you file for bankruptcy protection.  Is the medical debt dischargeable? Notice that the party who was physically injured in the accident is the bankrupt debtor ― not some third party.  But is the hospital a party that was also injured as… Read More →

Bankruptcy vs Debt Settlement

In a recent issue of the L.A. Times, Liz Weston compared bankruptcy and debt settlement as ways to deal with overwhelming debt.  Her column was good, but given the limited space she had, it was a bit brief.  In this post I will expand on her discussion.   I.  Debt Settlement   The idea behind debt settlement is pretty simple:  You ask the creditor to accept less than you owe in full satisfaction of the debt.  You can do the negotiation yourself, or you can hire someone to negotiate on your behalf. If the creditor agrees to lower the balance, you… Read More →

The Fight Against An Alarming Trend: Section 706(b) Motions – Part 1

There is an alarming trend facing us, and it is not the latest teen-age fashions. It is the filing of motions pursuant to 11 U.S.C. § 706(b), to convert individual nonconsumer Chapter 7 cases to Chapter 11. Because the topic of § 706(b) motions is a bit complicated, and requires some background information to understand it, my discussion will span a multi-part series of posts. In this first post I’ll set the stage by beginning with the more commonly seen terrain of 11 U.S.C. § 707 motions to dismiss. I. Section 707 – Dismissal Of An Individual Chapter 7 Case… Read More →

The Fight Against An Alarming Trend: Section 706(b) Motions – Part 2

In my last post I began to set the stage for a discussion of § 706(b) motions to convert a Chapter 7 bankruptcy case to one under Chapter 11 by considering § 707 motions to dismiss. I noted that § 707(b)(2) only applies to individual cases in which the debtor’s debts are primarily consumer debts. In today’s post I’ll focus on the question of what kinds of debts are nonconsumer debts because in determining whether a Chapter 7 case should be dismissed, there can be a battle over which debts are nonconsumer and which are consumer. II. Nonconsumer Debts A.… Read More →

The Fight Against An Alarming Trend: Section 706(b) Motions – Part 3

III. Dealing With A Motion To Convert Pursuant To Section 706(b) This post assumes familiarity with my last two posts (Part 1 and Part 2) of this multi-part series. Thus, while you can certainly read this post without reading those previous ones, you’ll get more out of it if you read those posts first. A. Oppose Any Motion To Extend The Time To Enter A Discharge If the Court has already granted a nonconsumer debtor a Chapter 7 discharge, the judge will probably not entertain a motion to convert the Chapter 7 case to one under Chapter 11, pursuant to… Read More →

The Fight Against An Alarming Trend: Section 706(b) Motions – Part 4

IV. The Constitutional Problem With A § 706(b) Motion I thank Daniel Press, an attorney practicing in Virginia, Washington, DC, and Maryland, for giving me his notes, which served as an afflatus for some of today’s post. A. Historical Background  1. The Chapter 13 Context When Chapter 13 was enacted in 1978, it provided that only an individual could be a Chapter 13 debtor (11 U.S.C. § 109(e)), imposed limitations on the amount of debt a Chapter 13 debtor could have (11 U.S.C. § 109(e)), and — most important for today’s discussion — included postpetition earnings in the bankruptcy estate… Read More →

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