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non-consumer debt & (no) means test
Yes. List every debt with an explanation of the business use.
Dennis McGoldrick
350 S. Crenshaw Bl., #A207B
Torrance, CA 90503
On May 5, 2010, at 8:17 PM, "Jovan A. Johnson" wrote:
Thank you Kenneth for the quick response. Do you find the trustee / UST usually wants the documents to support the claim of non-consumer debt?
Jovan A. Johnson, Esq.
Borowitz & Clark
100 N. Barranca Avenue, Suite 250
West Covina, CA 91791-1600
Office: (626) 332-8600
Fax: (626) 332-8644
Privileged/Confidential Information may be contained in this message. If you are not the addressee indicated in this message (or responsible for delivery of the message to such person), you may not copy or deliver this message to anyone. In such case, you should destroy this message and kindly notify the sender by reply email. Please advise immediately if you or your employer does not consent to Internet email for messages of this kind. Opinions, conclusions and other information in this message that do not relate to the official business of my firm shall be understood as neither given nor endorsed by it.
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Jeff's e-mail makes lots of excellent points. Remember that mortgages on rental or investment property are "non-consumer debt". I have filed two cases in the last month for above-median income debtors where we rushed to get the case filed before a rental property was foreclosed to ensure that the non-consumer debt exceeded the consumer debt (which included the debtors' residence). If we had waited until the rental property was foreclosed, the debtors would have been ineligible to file.
Also, the point raised by Jim King leads back to the oft-asked question as to whether the UST can (and will) file a Motion to Dismiss "for cause" under 707(a) if a non-consumer debtor has a large surplus of income over expenses. I remember Peter Anderson at a CDCBAA seminar several years ago saying that his office would consider filing such a Motion in an appropriate (i.e. egregious?) case. My review of the limited 707(a) cases says he'd lose, and I've yet to hear of any such Motion filed in this District.
Jim
James R. Selth
Weintraub & Selth, APC
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Your last point is well taken and I certainly don't disagree. I too,
have filed numerous non-consumer cases and I also agree you must make it
very clear in the schedules and not just on the B22 that it is a
non-consumer case. I have seen cases where there is surplus income that
would tank a consumer case and there is nothing available to the OUST in
707(b) to challenge the filing.
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Jovan:
Yes, and I agree with Ken that it happens all the time. I think that many practitioners overlook this important method of avoiding the means test altogether. I have had several clients come to me after being told that they did not qualify for a CH7 who clearly were non-consumer debtors.
Ken Lau of the OUST spoke at last year's means test CDCBAA event and pointed out that when you claim a debtor is non-consumer, you need to make it easy for the OUST to look at the case and see how you come to that conclusion. It is a "red flag" for the OUST analyst if you say a case os non-consumer but there is no mention of business activity in the petition + schedules and particularly questions 18+++ in the SFA.
My practice, when filing a non-consumer case is to make the initial filing OOZE "business". Be verbose in your explinations of how and when debt was incurred on schedule F. "Credit card used primarily for purchases related to debtors XYZ business from June 2002 to September 2009 when business failed", for instance. Of course, it has to be true, to withstand a challenge, but ask the right questions and really have clients dig into their records and you might be surprised what debts are justifiable as not incurred "primarily for a personal family or household purpose".
Finally, as Ken mentioned, don't forget that taxes have been determined, by judicial opinions, to be non-consumer, and POSSIBLY some or all student loans. The student loan case, whose name I cannot recall, said that to the extent a st loan was used to pay for room and board, its a consumer debt. By implication, as read that case, to the extent the loan was used to pay for tuition and books it is not consumer. The key is vigorously quiz the clients on what they used the money for and make them do the best to break it out, then explain your facts clearly on the schedules.
I have filed dozens of non-consumer cases using these strategies, and have yet to have an OUST challenge, or even a follow up inquiry, and a couple of those cases would have been VERY close calls if challenged.
Last note on this subject, as I read 707(b) if you prove you have a non consumer debtor, I don't know that the OUST can challenge your CH7 based on traditional (non BAPCEPA) substantial abuse grounds. I could be wrong on this but the code, 707(b) seems to say just that. Does anyone disagree with me on this last point?
Hope this helps.
-Jeffrey B. Smith**
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular
jsmith@cgsattys.com
www.expertbk.com
**Certified By The State Bar
Of California As A Specialist
In Bankruptcy Law
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Yes. See me.
Nancy Clark
Borowitz & Clark, LLP
100 N. Barranca Avenue, Suite 250
West Covina, CA 91791
Office: (626) 332-8600
Fax: (626) 332-8644
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________________________________
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Yes, I have done it several times without issues.
Jonathan Leventhal
My Card
Jonathan D. Leventhal, Esq.
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No.
Kenneth Jay Schwartz, Esq.
LAW OFFICE OF KENNETH JAY SCHWARTZ
21031 Ventura Boulevard, 12th Floor
Woodland Hills, California
91364-2203
Telephone: (818)226-1205
Email: kennethjschwartz@yahoo.com
Sent from my iPhone
On May 5, 2010, at 8:17 PM, "Jovan A. Johnson" wrote:
Thank you Kenneth for the quick response. Do you find the trustee / UST usually wants the documents to support the claim of non-consumer debt?
Jovan A. Johnson, Esq.
Borowitz & Clark
100 N. Barranca Avenue, Suite 250
West Covina, CA 91791-1600
Office: (626) 332-8600
Fax: (626) 332-8644
Privileged/Confidential Information may be contained in this message. If you are not the addressee indicated in this message (or responsible for delivery of the message to such person), you may not copy or deliver this message to anyone. In such case, you should destroy this message and kindly notify the sender by reply email. Please advise immediately if you or your employer does not consent to Internet email for messages of this kind. Opinions, conclusions and other information in this message that do not relate to the official business of my firm shall be understood as neither given nor endorsed by it.
IRS Circular 230 Disclosure: To ensure compliance with Treasury Department Regulations, we advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions or (ii) promoting, marketing or recommending to another party any tax-related matter addressed herein.
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Thank you Kenneth for the quick response. Do you find the trustee / UST
usually wants the documents to support the claim of non-consumer debt?
Jovan A. Johnson, Esq.
Borowitz & Clark
100 N. Barranca Avenue, Suite 250
West Covina, CA 91791-1600
Office: (626) 332-8600
Fax: (626) 332-8644
Privileged/Confidential Information may be contained in this message. If
you are not the addressee indicated in this message (or responsible for
delivery of the message to such person), you may not copy or deliver
this message to anyone. In such case, you should destroy this message
and kindly notify the sender by reply email. Please advise immediately
if you or your employer does not consent to Internet email for messages
of this kind. Opinions, conclusions and other information in this
message that do not relate to the official business of my firm shall be
understood as neither given nor endorsed by it.
IRS Circular 230 Disclosure: To ensure compliance with Treasury
Department Regulations, we advise you that, unless otherwise expressly
indicated, any federal tax advice contained in this communication was
not intended or written to be used, and cannot be used, for the purpose
of (i) avoiding tax-related penalties under the Internal Revenue Code or
applicable state or local tax law provisions or (ii) promoting,
marketing or recommending to another party any tax-related matter
addressed herein.
________________________________
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Of course. It happens quite often, especially where the client has huge tax liabilities or has guaranteed large amounts of corporate. The Form 22 has a box near the top to certify that the debts are primarily non-consumer, then skip to the last page for your client's signature.
Kenneth Jay Schwartz, Esq.
LAW OFFICE OF KENNETH JAY SCHWARTZ
21031 Ventura Boulevard, 12th Floor
Woodland Hills, California
91364-2203
Telephone: (818)226-1205
Email: kennethjschwartz@yahoo.com
Sent from my iPhone
On May 5, 2010, at 7:51 PM, "Jovan A. Johnson" wrote:
Has anyone had experience / success filing individual chapter 7 cases with a majority non-consumer debt such that the means test doesnt apply?
Jovan A. Johnson, Esq.
Borowitz & Clark
100 N. Barranca Avenue, Suite 250
West Covina, CA 91791-1600
Office: (626) 332-8600
Fax: (626) 332-8644
Privileged/Confidential Information may be contained in this message. If you are not the addressee indicated in this message (or responsible for delivery of the message to such person), you may not copy or deliver this message to anyone. In such case, you should destroy this message and kindly notify the sender by reply email. Please advise immediately if you or your employer does not consent to Internet email for messages of this kind. Opinions, conclusions and other information in this message that do not relate to the official business of my firm shall be understood as neither given nor endorsed by it.
IRS Circular 230 Disclosure: To ensure compliance with Treasury Department Regulations, we advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions or (ii) promoting, marketing or recommending to another party any tax-related matter addressed herein.
Of course. It happens quite often, especially where the client has huge tax liabilities or has guaranteed large amounts of corporate. The Form 22 has a box near the top to certify that the debts are primarily non-consumer, then skip to the last page for your client's signature. Kenneth Jay Schwartz, Esq.LAW OFFICE OF KENNETH JAY SCHWARTZ21031 Ventura Boulevard, 12th
FloorWoodland Hills, California 91364-2203Telephone: (818)226-1205Email:
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Has anyone had experience / success filing individual chapter 7 cases
with a majority non-consumer debt such that the means test doesn't
apply?
Jovan A. Johnson, Esq.
Borowitz & Clark
100 N. Barranca Avenue, Suite 250
West Covina, CA 91791-1600
Office: (626) 332-8600
Fax: (626) 332-8644
Privileged/Confidential Information may be contained in this message. If
you are not the addressee indicated in this message (or responsible for
delivery of the message to such person), you may not copy or deliver
this message to anyone. In such case, you should destroy this message
and kindly notify the sender by reply email. Please advise immediately
if you or your employer does not consent to Internet email for messages
of this kind. Opinions, conclusions and other information in this
message that do not relate to the official business of my firm shall be
understood as neither given nor endorsed by it.
IRS Circular 230 Disclosure: To ensure compliance with Treasury
Department Regulations, we advise you that, unless otherwise expressly
indicated, any federal tax advice contained in this communication was
not intended or written to be used, and cannot be used, for the purpose
of (i) avoiding tax-related penalties under the Internal Revenue Code or
applicable state or local tax law provisions or (ii) promoting,
marketing or recommending to another party any tax-related matter
addressed herein.
non-consumer debt & (no) means test
Has anyone had experience / success filing individual chapter 7 cases with a majority non-consumer debt such that the means test doesn’t apply?
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