February 2009

28 Feb Appeals Court: Failure to File Section 521 Financial Disclosures Within 45 Days Need Not Result in Dismissal

The U.S. Court of Appeals, First Circuit, ruled recently that a chapter 7 bankruptcy debtor could not obtain dismissal of his case by citing his own failure to file payment advices, or other financial disclosure information required by section 521(a), in an effort to avoid losing an asset to the chapter 7 trustee. In re Acosta-Rivera, 2009 WL 400394 (1st Cir. Feb. 19, 2009), held that the automatic dismissal provisions of section 521(i)(1) granted authority to the bankruptcy court to waive dismissal where the required financial disclosures had become irrelevant or extraneous to the proceedings. The case involved a joint chapter 13 proceeding in which the debtors had failed to list in their schedules a valuable employment discrimination lawsuit owned by the husband. This lawsuit had been pending in the courts for years,
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28 Feb A Website Can Be A Bankruptcy Lawyer

A website offering help over the internet in the form of software used to complete a bankruptcy filing is practicing law. Unless the website is run by a lawyer, its owner is violating the law by practicing without a license. The 9th Circuit Court of Appeals in the case of In re Reynoso, 477 F.3d 1117 (9th Cir. 2007) upheld the lower courts and made it clear that it is unlawful for a non-lawyer to provide software that makes legal decisions for a fee. This case and others are explored in more detail by St. Johns University law student Thomas Szaniawski in an excellent recent article entitled "Can Software Be a Bankruptcy Petition Preparer?" The Reynoso decision is important to consumers in general and bankruptcy debtors in particular for two reasons. First, the matter was discovered because there were several errors in the bankruptcy schedules filed by the debtor Jayson Reynoso who used the "online bankruptcy engine" for a fee. Second, representations made by the website author were false and misleading.
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28 Feb Avoiding Judgment Liens in Bankruptcy – Too Little, Too Late?

Depending on the homestead exemption applicable in your state, the Bankruptcy Code allows a Debtor to void and nullify certain judicial liens against a residence if the lien interferes with the homestead exemption. While it is possible to reopen a closed case to avoid a lien, do not wait too long to do so or it may be too late. Even though the debt is discharged by the bankruptcy case, the lien will survive the case unless it is avoided under the Bankruptcy Code in the case.

It is a simple process to file a motion in a bankruptcy case to lift the lien on the home even if there is no equity in the home to cover the exemption. The lien must be a judicial lien, that is, a lien created by the entry of a judgment in court. Not all liens on a home may be judicial liens.Generally, the motion to avoid the lien is filed in the case while it is open, but court decisions are full of examples of cases being reopened for the sole purpose of avoiding an old lien.

Be careful not to wait too long.

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