New Hampshire Lawyers Blog - Liberty Legal Services

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In the common Chapter 13 case, a client owns a house with 2 mortgages.  The house is worth less than the first mortgage securing the property and therefore the property is underwater.  The bankruptcy code allows a debtor to strip off a second mortgage when that mortgage has no equity in the property. The actual stripping off and discharge occurs at the confirmation of the plan and when the debtor is discharged.  But what happens when the debtor is not entitled to a discharge because of a previous bankruptcy?

Unfortunately, there are no cases on point in the First Circuit; however, other Circuits have taken a negative view. In re Victorio, 2011 Bankr. LEXIS 2704 at *15 (Bankr. S.D. Cal. July 8, 2011), comes out of the Ninth Circuit.  The court held in this case that if a second mortgage secures a primary residence then pursuant to 1322(b)(2) a creditor's rights cannot be modified.  A strip off would amount to a de facto discharge.  Only a discharge would make the lien strip off effective and since the debtor is not entitled to one, the second mortgage cannot be stripped off. 

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These are the new filing fees as of November 1, 2011. 

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Posted by on in Criminal Defense

Testimonial Immunity exempts the priviledge against self-incrimination.  Immunity allows a witness to testify without the fear of implicating themselves in a crime.  Once immunity is granted, the compelled testimony cannot be used against that witness.

In New Hampshire, the county attorney is the only one that can grant immunity to a witness

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Posted by on in Bankruptcy

Another divorce and bankruptcy blog post is ahead.  Let's say a married couple divorces and they have a credit card with a 20k balance.  Both spouses are on the card and the court orders Spouse A to pay the entire debt, thereby freeing Spouse B from that obligation.  After this order, Spouse A files bankruptcy.  Spouse A receives a discharge and is no longer legally liable on that credit card balance.  Does the discharge relieve Spouse A's obligation to pay the credit card?

No.  Even though Spouse A is no longer liable for the credit card debt, Spouse A still has to pay the bill on behalf of Spouse B.  Spouse A's discharge does not affect Spouse B's liability to the credit card company.  B is still liable.  The court order acts to, in a sense, indemnify Spouse B.  In conclusion, Spouse A still must pay. 

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Divorce and bankruptcy intersect quite frequently.  One issue that pops up is attorney's fees.  Here's the scenerio: Spouse A brings Spouse B to court over support payments.  Spouse B loses and the court awards attorney's fees to Spouse A.  Spouse B filed bankruptcy and includes the court awarded attorney's fees.  Are these fees dischargeable?

No.  In this case, the attorney's fees are not dischargeable.  They can be thought of as part of the support obligations, and support obligations are not dischargeable. 

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Here's a scenrio:  A and B marry.  A has significant credit card debt that he accrued before marrying B.  A now wants to file Chapter 7 Bankruptcy but B is not supportive. What happens?

A has every right to file a solo bankruptcy.  However, A will have to include B's income on his bankruptcy petition. Let's say that B earns significant income and because of of B's income A fails the means test.  A could be forced to convert to a Chapter 13 Bankruptcy.

This scenrio is more common than you'd think.  If you are married and contemplating a solo bankruptcy, consult an attorney.  There are many missteps and pitfuls that can be avoided. 

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Posted by on in Bankruptcy

A good way to think about a 2004 Exam is that it supplements the 341 Creditor's Meeting.  The 341 provides an initial investigation into the debtor's estate. The Trustee will review the debtor's petition and verify the accuracy of the information.  The Trustee's line of questioning typically quashes any suspicions of the debtor's estate.  However, if further investigation is required, this is where the 2004 Exam comes into play.  

Since it occurs before any pre-trial investigation (this is because it comes before any adversarial proceedings) it is inquisitive in nature and not accusatory.  An interested party can examine any acts or conduct by the debtor that relate to financial matters, liabilities, financial condition of the debtor that may affect the administration of the debtor's estate. 

One example of this is a transfer of an asset without reasonable value before the filing of the bankruptcy. 

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To start with there is a 90 day look back period when you file bankruptcy.  A potential filer shouldn't have any problems buying groceries or there necessary items, however, he should not buy any luxury goods as that purchase can be considered fraudulent.  Furthermore, the credit card company or trustee may assert that the purchase is non-dischargeable.  Basically, you should not purchase any luxury items on a credit card if you are thinking about filing for bankruptcy relief.

Once you file, do not use any of  your credit cards.  Those accounts will be terminated unless you decide to reaffirm the debt.  Additionally, if you file for Chapter 13 Bankruptcy you may receive credit card offers in the mail.  You must obtain Trustee approval before accepting any of the credit card offers.

This can be a difficult and confusing area of law and it is best to consult an experienced bankruptcy attorney. 

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Posted by on in Bankruptcy

What is a proof of claim? A proof of claim is an offical form filed by a creditor during bankruptcy in order to get paid by the Trustee.  Essentially it details the creditor's claim against the debtor and determines how much of the assets it receives from the Trustee.  If a creditor does not file a proof of claim it does not get paid.

Now just because a creditor files a proof of claim does not mean that it is accruate.  The debtor has the right to object to any proof of claim filed. However, the debtor will have the initial burden of proof to show why the claim is incorrect. 

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Posted by on in Bankruptcy

In general, the answer is no.  However, it is not that simple for many people.  Individuals that work in a field such as finance can be negatively affected by a Chapter 7 or Chapter 13 Bankruptcy filing. If you are a registered financial representative, you are required to report a bankruptcy on form U-4.   

If you work in finance, consult with an experienced attorney to explore all of your options.  A repayment schedule or debt settlement may be a better option for you. 

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Posted by on in Criminal Defense

What is "Good Time?"

In NH, an individual incarcerated in jail can have his sentence reduced by 1/3.  For example, if you are sentenced to 100 days but remain out of trouble while in jail you are eligible for 33 days of good time.  So if your sentence is 100 days you can get out after 67.

In prison, however, there is no good time.  You will typically be senetenced to a range of years, say 3.5-5.  The earliest you can get out is 3.5 years. 

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Posted by on in Bankruptcy

In a previous post, I discussed discharging tax debts.  In general these criteria must be met:

1. Income Tax

2. No fraud

3. Debt is at least three years old

4. Tax return filed at least 2 years ago

5. Pass IRS 240 day rule

However, if the IRS attached a tax lien prior to your bankruptcy filing that lien will survive the discharge.  You may not be personally liable on the debt, but the tax lien will remain attached.  It's somewhat of a pyrric victory (not exactly but I like the phrase)

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During year 1, 2, 3, whenver, your Chapter 13 Bankruptcy might just not be working.  Perhaps you are fed up with the payments, maybe you are just ready to let your house go.  You have the option to convert your Chapter 13 to a Chapter 7 for a small $25 fee.  You will just need to file a motion to convert.  You will receive a notice for a 341 Creditor's Meeting.  Yes, you have to go to another one.  You will also have the opportunity to add additional creditors.  One caveat to this, you still must be able to pass the Means Test.  Otherwise, a high income earner could simply file Chapter 13, convert to Chatper 7 Bankrutpcy and be on your way.

If you are currently in a Chapter 13 Bankruptcy and are thinking about converting, consult an experienced bankruptcy attorney. 

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Unfortunately, over the course of your Chapter 13 Bankruptcy you may be unable to make your monthly plan payments.  This can be the result of a job loss, family circumstances, health etc.  The first step is to call your attorney and have her call the Trustee.  Explain the situation and develop a strategy to make up the missed payments.  Many times the Trustee will be flexible, and allow a debtor to make 1.5 payments until all the missed payments are accounted for.  However, this may not be possible.

A second strategy is to have your attorney file a motion to suspend payments for a short period of time, say 3 months.  Although this must be granted by the bankruptcy judge, this can give a client breathing room to acquire the necessary funds.  The downside is the lump sum payment at the end of the 3 months.

Although there are variations on the above strategies, the bottom line is that a Chapter 13 Bankruptcy plan must be completed in 60 months. There are no time extensions.  Therefore, a final option is to convert to a Chapter 7 Bankruptcy and liquidate your assets and debts (remember you get exemptions though).  I'll cover the conversion in a later blog. 

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What is an Alford Plea?  Not to get into all the details, but it is essentially when a defendant pleads guilty even when he believes he's not.  The name is from State v. Alford.  Alfrod plead guilty to second degree murder because he was worried that if he plead not guilty to first degree murder and was found guilty he would have received the death penalty.

In our criminal justice system, defendants are required to make knowing and voluntary pleas.  An Alford plea is a way around that.  Many times a defendant professes his innocence but pleads guilty because of the risk of sentencing.

So who are the West Memphis Three, and why am I writing about them?  It is a case from 1993.  Three teenages were arrested and convicted of killing three small children in Arkansas.  They claimed the were innocent before, during, and after trial.  This was before DNA testing.  In 2007, the evidence was tested for DNA and it did not match any of the three teenagers.  Today the West Memphis Three were released.  They entered Alford pleas with the State.  The speculation is that the State wanted a guilty plea in exchange for their release to avoid possible liability.

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Posted by on in Bankruptcy

What happens when you total your car while you are in a Chapter 13 Bankruptcy?  In certain cases, your lender will object to you keeping the car and fixing it with the insurance proceeds.  While you are in bankruptcy, there is always a risk of loss to the lender.  You could stop making payments; you could surrender the vehicle.  The lender is acutely aware that a dollar today is worth more than a dollar tomorrow.  Because of this, lender's often go after the insurance proceeds from the accident.

Don't get bulled.  You have options.  First, always consult your bankruptcy attorney.  Second, after consulting with your bankruptcy attorney decide whether or not you want to keep the car.  The lender cannot force you to sign away the insurance proceeds. 

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Posted by on in Bankruptcy

I recent client asked me, "Do I included charged off debt?"  The answer is a resounding, yes. Charged off debt is simply an accounting term.  By charging off bad debt, the creditor gets to take a loss on your balance.  This does not, however, relieve you from liability.  If you want a discharge on that liability, you must include it on your bankruptcy schedule whether or not it has been charged off. 

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Let's say a client filed a Chapter 13 Bankruptcy 4 years ago and after the conclusion of their 3 year bankruptcy plan they received a discharge.  Now, however, they have fallen behind on the mortgage payments and need to stop a foreclosure.  Can they file and protected by the automatic stay? Yes, however, since the previous Chapter 13 Bankruptcy was filed only 4 years prior, they will not be eligible for a discharge.  That does not mean that they can't restructure secured debt.  Even though the debtor is not entitled to a discharge, they will be able to pay mortgage arrears through their Chapter 13 Plan and keep their house. 

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Self-employed clients create a few more hurdles to jump through when calculating the means test and schedules I and J in bankruptcy.  For most business owners, the difference between gross and net income is enormous.  The quick and "less refined" way is to simply look at the gross income and subtract the total expenses.  A better, and unfortunately, more time consuming way is to detail and itemize all the expenses.  By using specific numbers with specific expenses, the trustee is given a much more complete overview of the client's income.  

I find that working in conjunction with my client's accountant to be the easiest and most fruitful way to correctly itemize business expenses. 

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Many clients that I meet with are extremely concerned with the interplay between student loans and bankruptcy.  Under the bankruptcy code, 11 U.S.C. 525(c) prohibits someone from being denied a student loan due to a a bankruptcy filing.  If you are applying for a student loan, but you have a Chapter 7 Bankrutpcy filing on your record, Congress has specifically provided for you and you will NOT be denied because of your previous bankruptcy. 

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Manchester Office
212 Coolidge Ave.
Manchester, NH 03102
(603) 583-4444