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Dischargeability complaint

Posted: Thu May 26, 2016 6:58 pm
by Yahoo Bot

You have to seek a determination under Section 524(b) in good apple's
bankruptcy case. Using a saying in In re Kimmel, an attorney wrote an
article on this -- note however, that you do not need to reopen a case to
enforce the discharge injunction - In re Menk:
Article of the WeekThe Devil Could Get a Discharge ... If He Were Married
to Snow White!by Marlene G. Weinstein
*In this day of Ponzi schemes and real estate fraud, creditors need to be
aware of the "community property discharge" provided to debtors who file
for protection under the Bankruptcy Code, as well as their spouses,
regardless of whether or not the wrong-doing spouse files bankruptcy.*
Consider the following scenario: Joe and Julie live high on the hog in a
3,000 square foot house in one of the nicest neighborhoods in the area.
Their two children attend private school. Julie doesn't work and so she
shops, lunches with her friends and works out at the country club. Joe is
an investment advisor and got himself in a little bit of trouble. He
started out honest enough when money was flowing and everyone was making
money. Unfortunately, over time, his investments went sour (not uncommon).
He needed money to support the life style he and Julie had become
accustomed to. He started using the money that his clients were investing
with him to pay his other clients their interest. At some point, it all
crashed and fell down around him. His investors wanted their money back,
and when they found out it no longer existed, they started suing Joe in
state court for fraud, conversion, breach of his fiduciary duty and various
other claims that could survive notwithstanding if Joe filed a bankruptcy
to discharge his debts ... as long as the creditors took action against Joe
in his bankruptcy case by filing a complaint either excepting their
specific debt from discharge under 11 U.S.C. 5231 , or objecting to Joe
receiving a discharge of any of his debts under 727. But instead of Joe
filing bankruptcy, Julie does. Julie never did anything wrong, and so when
she files her bankruptcy case, none of Joe's creditors file complaints
against her or against Joe under either 523 or 727, and her bankruptcy
case proceeds smoothly with Julie receiving a discharge of all of her debts.
Notwithstanding Julie's bankruptcy, Joe's creditors continue to litigate in
state court and get judgments against Joe. However, when they seek to
enforce their judgments by garnishing Joe's wages, (he now has a
high-earning job), levying Joe and Julie's bank accounts, or filing an
abstract of judgment against Joe and Julie's home to which title has always
been held in community property, they are thwarted. Since Joe and Julie are
still married, Julie files a motion to reopen her bankruptcy case in order
to file motions against Joe's creditors for violating the discharge
injunction
Enter 524(a)(3) and the community property discharge which, with certain
limitations, permanently enjoins any action to collect a pre-petition debt
for which the community property would otherwise be liable from the
community property acquired by either the debtor or his/her spouse
subsequent to the debtor receiving a discharge. "... According to Section
524(a)(3), after-acquired community property is protected by injunctions
against collection efforts by those creditors who held allowable community
claims at the time of filing. This is so even if the creditor claim is
against only the nonbankruptcy spouse; ..." *In re Kimmel*, 378 B.R. 630,
636 (9th Cir.BAP 2007), citing *Burman v. Homan (In re Homan)*, 112 B.R.
356, 360 (9th Cir. BAP 1989).
It all comes down to the fact that at the time of Julie's bankruptcy
filing, Joe's creditors were "creditors" who held "community claims" under
the Bankruptcy Code. A "creditor" as defined by 101(10) means, "(A) entity
that has a claim against the debtor that arose at the time of or before the
order for relief concerning the debtor; ... or (C) entity that has a
community claim." A "community claim," for bankruptcy purposes, is a
pre-petition claim for which the community property of the debtor and the
debtor's spouse is liable, whether or not such claim has proceeded to
judgment or is otherwise liquidated as of the filing of the bankruptcy
case, and whether or not there is any such property at the time the
bankruptcy case is filed. See 101(7) and 541(a)(2).
Since virtually all property acquired by a married person during the
marriage is community property (see California Family Code 7602), and
since F.C. 910 generally provides that all community property is liable
for debts incurred before or during marriage by either spouse, all of the
community property belonging to both Julie and Joe was included in Julie's
bankruptcy estate and subject to the administration of the Bankruptcy
Court. See Section 541(a)(2).
In order for Joe's creditors to be able to enforce their judgments against
Joe against the community property acquired by either Joe and/or Julie
following Julie's receipt of her Chapter 7 discharge, including but not
limited to Joe's wages, they would have had to have filed a lawsuit against
Joe in Julie's bankruptcy case.3
If a debt on a community claim would be excepted from discharge in a
bankruptcy case filed by the nondebtor spouse, a nondischargeability action
or an objection to discharge action directed at the nondebtor spouse can be
initiated to establish an exception to the allowable community claims that
are discharged. In addition, if the court would not grant the nondebtor
spouse a discharge in a hypothetical case filed by the nondebtor spouse, or
if the nondebtor spouse has been denied a discharge within the preceding
six years of the date of filing of the debtor's bankruptcy case, the
community property discharge does not apply. See 523(a), 524(a)(3) and
524(b)."
"The net result is that 524(a)(3) and 524(b)(2) combine to prevent a
wrongdoer from hiding behind an innocent spouse's discharge, ... These
provisions for nondischargeability and objection-to-discharge actions
directed at the nondebtor spouse are, however, subject to a diligent
creditor requirement. The failure by creditors to raise nondischargeability
and discharge objection issues in a timely manner in the case of the debtor
spouse will allow the community property discharge to be effected." *In re
Kimmel,*supra, at p. 637.
The strict time deadlines generally provide that a complaint filed pursuant
to 523(c) and/or 727(a) must be filed no later than sixty (60) days
following the first date set for the meeting of creditors. See Federal
Rules of Bankruptcy Procedure 4007(c) and 4004(a)4. Of course this presumes
that Joe's creditors were aware of Julie's bankruptcy filing.
In the event Joe's creditors had no knowledge of Julie's bankruptcy filing
in time to file a complaint with 60 days following the meeting of
creditors, they would have the right to file a motion to reopen Julie's
bankruptcy case in order to file a lawsuit against Joe and/or Julie based
upon 523(a)(3) and/or 727(d)(1). However, 523(a)(3) would not be
applicable if "such creditor had notice or actual knowledge of the case in
time" to file a complaint pursuant to 523(a), and 727(d)(1) is available
to a creditor only if the creditor "did not know of such fraud until after
the granting of the discharge." But creditors beware. A creditor does not
have to be listed by the debtor in the bankruptcy case, and it is not
necessary for the creditor to receive written notice of the bankruptcy
filing. Any notice that gives the creditor time to take action in the
bankruptcy case within the time limits provided by the Bankruptcy Code is
sufficient. As an example, the author of this article won an exception to
discharge case filed on behalf of a creditor under 523(a)(3) and
523(a)(2) when the Judge asked the debtor-defendant during trial, "When you
ran into the plaintiff at the Safeway, did you tell him that "you had"
filed bankruptcy, or that "you were going to" file bankruptcy?" When the
debtor answered, "that I was going to file bankruptcy" I knew I had won. My
client had never received actual notice of the bankruptcy filing.
But all is not lost. The community property discharge injunction does not
eliminate (or discharge) Joe's personal liability for his debts to his
creditors. His creditors are free to enforce their judgments against Joe
against his separate property (if he should have any). Although it is
likely that Joe will make sure that everything he acquires during his
marriage is community property so that it is protected from his creditors,
in the event Joe and Julie should ever divorce, any and all property
acquired by Joe in the divorce, as well as all income and assets acquired
subsequent to his separation from Julie, would be his separate property and
therefore, subject to enforcement by his creditors. All property would also
become Joe's separate property in the event of Julie's death.
As the court stated in *In re Kimmel,* supra, at p. 637, "If creditors are
not diligent, as one commentator has explained, "the Devil himself could
effectively receive a discharge in bankruptcy if her were married to Snow
White." Alan Pedlar, Community Property and the Bankruptcy Act of 1978, 11
ST. MARY'S L.J 349, 382 (1979); cf. *Gonzales v. Costanza (In re Costanza)*,
151 B.R. 588, 590 (Bankr.D.N.M. 1993) ("I would add: if [the Devil] does
not treat her better than his creditors, [Snow White] will, by divorcing
him, deny his discharge.").
*Marlene Weinstein's practice in Walnut Creek is devoted to Bankruptcy Law
representing debtors, creditors and Chapter 7 trustees. She has written
articles and given lectures to professional groups. She believes
pre-bankruptcy planning is important and that it can often be used as an
effective tool in negotiations between parties involved in non-bankruptcy
disputes. She often works with clients in conjunction with their family law
attorneys, tax professionals and other non-bankruptcy lawyers.*
1 Unless otherwise indicated, all references to section numbers refer to
sections of Title 11 of the United States Code, commonly referred to as
"the Bankruptcy Code.
2 Hereinafter all references to the California Family Code will be referred
to as "F.C."
3 Although the remainder of this article discusses the issues as they
relate to Chapter 7, similar rules apply in cases filed under Chapters, 11,
12 and 13 of the Bankruptcy Code.
4 Unless otherwise indicated, all references to rule numbers refer to the
Federal Rules of Bankruptcy Procedure.
Giovanni Orantes, Esq.*
Orantes Law Firm, P.C.
3435 Wilshire Blvd. Suite 2920
Los Angeles, CA 90010
Tel: (213) 389-4362
Fax: (877) 789-5776
e-mail: go@gobklaw.com
website: www.gobklaw.com
**Certified Bankruptcy Specialist, State Bar of California, Board of Legal
Specialization*
*Board Certified - Business Bankruptcy Law - American Board of Certification
*Board Certified - Consumer Bankruptcy Law - American Board of Certification
Commercial Litigation
Estate Planning
Outside General Counsel
WE ARE A "DEBT RELIEF AGENCY" AS DEFINED BY FEDERAL LAW.
SERVING BAKERSFIELD, LOS ANGELES, ORANGE COUNTY, RIVERSIDE, SAN BERNARDINO
AND SANTA BARBARA AND THE WORLD FOR CHAPTER 11 AND 15 CASES.
You have to seek a determination under Section 524(b) in good apple's bankruptcy case. Using a saying in In re Kimmel, an attorney wrote an article on this -- note however, that you do not need to reopen a case to enforce the discharge injunction - In re Menk:Article of the Week
The post was migrated from Yahoo.

Dischargeability complaint

Posted: Wed May 25, 2016 6:43 am
by Yahoo Bot

Steve,
In the specialist class taught by Dennis and Wes they talked about this
being a strategy for bad apples. I don't fully get it which is why I'm
looking for a sample. I think the idea is to discharge community property
debt. So presumably you need to file a dischargeability complaint to avoid
the discharge of community property debt.
On Tue, May 24, 2016 at 6:26 PM, 'Steven B. Lever' sblever@leverlaw.com
[cdcbaa] wrote:
>
>
> Hi Kirk:
>
>
>
> How can you sue someone, and why would you sue someone who didnt do any
> prohibited act under 11 U.S.C. 523?
>
>
>
> Steve Lever
>
>
>
> *From:* cdcbaa@yahoogroups.com [mailto:cdcbaa@yahoogroups.com]
> *Sent:* Tuesday, May 24, 2016 4:34 PM
> *To:* Cdcbaa Yahoo Listserv
> *Subject:* [cdcbaa] Dischargeability complaint
>
>
>
>
>
> Bad apple doesn't file bk. Spouse of bad apple files bk.
> Anyone willing to share a dischargeability complaint for such a scenario?
> Or case number?
>
> Thanks,
>
>
>
Kirk Brennan
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Steve,In the specialist class taught by Dennis and Wes they talked about this being a strategy for bad apples. I don't fully get it which is why I'm looking for a sample. I think the idea is to discharge community property debt. So presumably you need to file a dischargeability complaint to avoid the discharge of community property debt.
The post was migrated from Yahoo.

Dischargeability complaint

Posted: Tue May 24, 2016 4:33 pm
by Yahoo Bot

Bad apple doesn't file bk. Spouse of bad apple files bk.
Anyone willing to share a dischargeability complaint for such a scenario?
Or case number?
Thanks,
Bad apple doesn't file bk. Spouse of bad apple files bk.
Anyone willing to share a dischargeability complaint for such a scenario? Or case number?
Thanks,

The post was migrated from Yahoo.