Nebraska Debt and Bankruptcy Blog

Nebraska Debt and Bankruptcy Blog

Riding Through the Chapter 7 Backdoor: A Story of Car Loans in Bankruptcy

Posted in Chapter 7, Reaffirmation Agreement

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There is a lot of chatter going on among Nebraska bankruptcy attorneys about reports of court hearings where debtors are being told they can keep a car even if they choose not to reaffirm the car loan as long as payments are kept current.

That’s news to me and many of my colleagues.  The Bankruptcy Reform Act of 2005 was supposed to end the Ride-Through option.  A “ride-through” is where a lender cannot legally repossess a vehicle even if the debtor does not sign a formal Reaffirmation Agreement as long as the loan was paid current.

A reaffirmation agreement is an agreement to pay a debt (typically a home or auto loan) listed in a bankruptcy case.  Reaffirmations basically pull a debt out of the bankruptcy and makes a debtor liable again for the payment.  Secured debts tend to be reaffirmed in Chapter 7 and unsecured debts almost never.  Clients

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Bankruptcy Attorney Sanctioned for Using DocuSign

Posted in Uncategorized

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A bankruptcy judge for the Eastern District of California sanctioned attorney Pauldeep Bains for filing a bankruptcy petition signed with digital signatures.  (See In re Mayfield, Case #16-22134).

The attorney sent completed bankruptcy documents to the debtor to sign via a digital signature service called  DocuSign.  Bankruptcy judge Robert Bardwil imposed sanctions for violations of bankruptcy rule 9004-1(c)(1)C) & (D).  Those rules state the following:

(C) The Use of “/s/ Name” or a Software Generated-Electronic Signature.  The use of “/s/ Name” or a software-generated electronic signature on documents constitutes the registered user’s representation that an originally signed copy of the document exists and is in the registered user’s possession at the time of filing.

(D) Retention Requirements When “/s/ Name” or a Software-Generated Electronic Signature Is Used.  When “/s/ Name” or a software-generated electronic signature is used in an electronically filed document

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Digital Signatures in Bankruptcy Cases

Posted in Chapter 13, Chapter 7

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Nebraska is the 16th biggest state in the USA, but we rank 43rd in population density.  In fact, Nebraska has more cows than people by a ratio of 3 to 1.

Bankruptcy is a specialized area of laws these days, especially after enactment of the Bankruptcy Reform Act of 2005.  Attorneys in sparsely populated areas of the state generally do not handle bankruptcy cases, so our firm is routinely hired by clients throughout our big state.  (This is actually a wonderful aspect of practicing bankruptcy law since we get to know folks in every square inch of the state and learn about their communities.)

One challenge we face in a state that stretches 430 miles across is getting documents signed and returned in a timely fashion.  This is especially critical in bankruptcy cases since we must provide the court with a precise “snapshot” of a debtor’s financial situation on the

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Discrimination Claim Lost when Bankruptcy Schedules Not Amended

Posted in Chapter 13, Chapter 7, Exempt Property

A few weeks ago I wrote an article to warn plaintiff attorneys to be careful to ensure that their clients who have previously filed bankruptcy to ensure that all claims they have against third parties are reported on the bankruptcy schedules.  (Plaintiff’s Attorneys Beware: Your Client’s Bankruptcy Case is About to Sock You Right Between the Eyes)  Well,  . . .  it just happened to a lady in Minnesota. (See Cover v J.C. Penny Corporation, Civ No 15-515, District of Minnesota).

The significant aspect of this case is that the debtor, April Cover, failed to report a discrimination claim on her bankruptcy schedules but she did verbally tell the bankruptcy trustee about the claim.

Not good enough says the Minnesota court.  Actual verbal notice of a claim is not enough.  Audio recordings of the court meeting between the trustee and the debtor disclose that the discrimination claim was reported to the trustee.  There

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Am I Responsible for the Debts of my Spouse?

Posted in Divorce, Exempt Property, Garnishment, Medical Bankruptcy

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As a general rule, you are not responsible for the debts of your spouse. Also, if you marry someone you do not become obligated to pay the debts they incurred prior to the marriage.

But there is one major exception to these rules. You are liable for medical debts of your spouse under a legal theory called the Doctrine of Necessities. The necessities rule is not limited to medical bills. It could apply to utilities, rent, food, clothing and any other necessities, but the most common lawsuit utilizing this legal concept is in the collection of medical debts.

In Nebraska, when you marry someone you also marry their future medical debts.

If your spouse incurs medical debts during the marriage, you are liable for the debt.  Even if the bills only come in the name of your spouse.  Even if you did not sign

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Plaintiff’s Attorneys Beware: Your Client’s Bankruptcy Case is About to Sock You Right Between the Eyes

Posted in Chapter 13, Chapter 7, Exempt Property

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The more I think about the disastrous  consequences of two recent 8th Circuit Court of Appeals decisions regarding Judicial Estoppel the more alarmed I become.

This is a time bomb waiting to go off.  The 8th Circuit has ruled that debtors who fail to amend bankruptcy schedules to report claims against third parties that occur after the bankruptcy case was filed will not be able to recover damages in their future litigation.

Following the entry of a bankruptcy discharge, litigation related to unreported post-petition claims shall be subject to Summary Judgment dismissal under the legal theory of Judicial Estoppel.

Judicial estoppel is an equitable doctrine which “prevents a party from asserting a claim in a legal proceeding that is inconsistent with a claim taken by that party in a previous proceeding.” New Hampshire v. Maine, 532 U.S. 742, 749 (2001).

The 8th Circuit has ruled that a debtor’s failure

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Chapter 13 Debtors Lose Right to Recover On Unreported Claims

Posted in Chapter 13, Exempt Property

Bird on Fence

In two recent cases the 8th Circuit Court of Appeals has sustained summary judgments against debtors who failed to report claims against third parties that arose after the bankruptcy case was filed.

In the case of Jones v. Bob Evans Farms Inc., the debtor failed to disclose an employment discrimination claim that occurred 3 years after the bankruptcy case was filed.  The bankruptcy case was filed in 2009 and in 2012 the debtor quit his job and filed a discrimination case with the Missouri Equal Opportunity Commission.  The employer filed a motion for Summary Judgment claiming that the debtor was judicially estopped from pursuing his claim because he failed to report the claim in his bankruptcy schedules.

The 8th Circuit court agreed with the employer and declared that a debtor who intentionally hides a post-petition claim by failing to amend

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Does This Settlement Program Violate Nebraska’s Deceptive Trade Act?

Posted in Debt Settlement, Junk Debt

Working with clients who fall into debt traps has made me cautious about using credit cards. That’s an understatement. I’m paranoid when it comes to debt. I pay off all personal and business credit card debts in full and never carry a balance.  In fact, I pay the accounts weekly so I don’t carry a balance on my credit report.  (That actually helps boost a credit score.)

So, I was surprised when the folks at the Debt Reduction Center sent me this advertisement letter.

Debt Reduction Center Letter

How this company estimated that I might owe $25,000 of creditor balances is beyond me, but I’m sure it has something to do with what I could owe if I decided to maximize my lines of credit. However, as I said before, I don’t carry a balance and I never pay late, so it was surprising to get

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Student Loans Discharged for 56 Year Old Lawyer

Posted in Student Loans

In re Barrett, ND California 2016, lawyer debtor

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The United States Bankruptcy Court for the Northern District of California issued an interesting ruling that discharged over a quarter millions dollars of federal student loan debt for a 56-year-old securities law attorney (In re Barrett, Case No 14-43516).

Kevin Barrett is a single man who has been a licensed attorney since 1987.  He is in good health and has no dependents.  At one point he earned as much as $165,000 per year as a securities lawyer, but that income ended in 2007.  He earned very little for the next 4 years.  In 2011 he was hired for $98,000 per year by another firm until August of 2013 when he was terminated.  Since that time he has struggled to earn more than $10,000 per year in his own practice.

The debtor did not live

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Nebraska Legislature Considering Increase in Property Exemptions

Posted in Exempt Property, Garnishment

Sen Lyndia Brasch

Senator Lyndia Brasch has sponsored a bill in the Nebraska legislature to increase the amount of personal property protected in Nebraska bankruptcy cases.

According to Brasch it is necessary to update Nebraska property exemptions to keep pace with the higher cost of living.

The statute governing exemptions has not been updated in 17 years. Mandating a larger amount for exemptions allows individuals filing bankruptcy to get back on their feet.

Legislative Bill 757 would make the following changes to Nebraska personal property exemptions:

  • Wild Card Exemption: Increase the “Wild Card” exemption of 25.1552 from $2,500 per debtor to $5,000.  The wildcard exemption protects any type of personal property including bank account deposits, tax refunds, motor vehicles, etc.
  • Household Goods: Protection for household goods and furnishings increases from $1,500 per debtor to $3,000.
  • Tools of the Trade: Implements, tools or professional books or supplies protection

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