Recently, the US Court of Appeals for the Third Circuit reminded us why bankruptcy laws are not always fair… especially to those current and former bankruptcy debtors who are looking for employment. In the December 15, 2010 decision of REA v. Federated Investors, the court affirmed a US District Court ruling that the Bankruptcy Code does not create a cause of action against private employers who refuse to hire employees because of a prior bankruptcy filing.
Posts Tagged ‘discharge’
Yet Another Reason to Avoid the Rip-Off of Debt Settlement
Thursday, August 19th, 2010
I was recently retained by a client who – like many people struggling nowadays – tried to tackle their mounting financial problems by going to a debt settlement company. I’ve said it once, and I’ll say it again: debt settlement companies are a rip-off. The proof is in how empty my client’s wallet is now, and where my client is now.
Costly Bankruptcy Preparation Mistakes
Monday, November 5th, 2007
An interesting case out of the 9th Circuit last week should serve as a reminder to Bankruptcy Attorneys to check and double check documents. It should also serve as a warning to debtors who may be inclined to avoid doing the same thing.
The case involved an $18,000 tax debt that the debtor owed to the Franchise Tax Board in California. The debtor filed a Chapter 13 bankruptcy in 1994 and completed the plan in two years. He received a discharge. The FTB did not file a proof of claim – and because they did not file a proof of claim, they did not get paid through the Chapter 13 plan. When the FTB tried to collect the debt after the bankruptcy discharge entered, the debtor brought an Adversary Proceeding arguing that FTB was violating the discharge injunction.
The debtor argued that FTB received notice of the bankruptcy. FTB did not deny that, but FTB argued that the debtor’s social security number on the notice of creditors meeting (which is sent to creditors notifying them of the meeting held under Section 341 of the Bankruptcy Code) was incorrect. In fact, the last number of the social security number was not correct.
Woulda, Shoulda, Coulda: A Creditor Loses Big in the Bankruptcy Court
Monday, November 5th, 2007
Just because you have an arbitration award, doesn’t mean you’re going to win in the end according to a recent ruling by the US Bankruptcy Court in Boston. The case involved a party (the plaintiff) who obtained an arbitration award in the state of California. The plaintiff then took their arbitration award to the California state court where a judgment in the amount awarded in the arbitration was then obtained. After that, the respondent in the arbitration (the debtor) filed for bankruptcy protection.
The plaintiff brought an Adversary Proceeding seeking a determination that the judgment was non-dischargeable on the basis that it was incurred through fraud as well as by a willful and malicious injury. Under the Bankruptcy Code, debts incurred through fraud as well as those caused by willful and malicious injuries are not dischargeable. The plaintiff relied on the doctrine of collateral estoppel: arguing that the judgment in the California court precluded the relitigation of the same factual issues in the Bankruptcy court.
For collateral estoppel to apply, the plaintiff had to prove that “(a) the issues sought to be precluded in [the Bankruptcy Court] are identical to those decided in the Arbitration Proceeding; (b) those issues were actually litigated there; (c) those issues were necessarily decided there; (d) the decision there was final and on the merits; and (e) the party against whom preclusion is sought was the same as or in privity with the party there.” The plaintiff’s complaint alleged fraud and deceit as well as conversion (an intentional tort). The complaint also alleged negligent misrepresentation and breach of contract. The plaintiff argued that it raised the issues in its complaint and the issues were determined by the arbitrator.
Bankruptcy Court Teaches Boston University a Lesson
Monday, November 28th, 2005
In a November 17, 2005 decision, the US Bankruptcy Court in Boston found that Boston University violated the automatic stay of the Bankruptcy Code when it refused to permit a bankruptcy debtor to register for classes because the debtor owed money to BU.
The case involved a debtor who enrolled at BU in the autumn of 1999. While she received substantial financial aid during her first three years, she did not receive any aid for her senior year which was spent entirety in the African country of Niger. The costs of tuition and her air fare to Niger were paid for by BU. During that fall semester, BU sent three notices to debtor and her family but was nevertheless allowed to return to Niger in the spring because the tuition and costs had already been paid in full.
Upon her return, the debtor had one class to complete but as this class was offered only during the spring semester, she applied for and was permitted a leave of absence for the fall 2003 semester. When she attempted to register for the spring 2004 class, she was told she had to pay $38,195 then owing for her tuition and costs for the 2002-2003 academic year. Unable to come up with such a large amount of money, she applied for another leave of absence to the spring of 2005 when the course would be taught again. In the meantime, she tried to resolve the tuition issue with BU but was unsuccessful. On December 14, 2004, she filed bankruptcy under Chapter 7, listing the obligation to BU as an unsecured claim.
After filing the bankruptcy petition, she attempted to register again for her final course. BU refused. Even though she was refused, she made arrangements with the professor to attend classes, and complete tests and assignments during that Spring 2005 semester, with the hope of being allowed to register once she received her bankruptcy discharge. The discharge was received on March 28, 2005.
On March 30, 2005, the debtor filed a complaint seeking (1) a determination of whether the debt to BU was in fact dischargeable; (2) an injunction barring BU from taking any action to enforce the debt; and (3) damages, attorney’s fees and punitive damages for violating the Automatic Stay.