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Bankruptcy

Monday, August 17, 2015

Congress Considering Amendments to College Tuition ‘Clawback’


What is a college tuition ‘clawback’ in bankruptcy? 


Attending college can be one of the most costly expenses a family endures – and, for some, the increasing tuition rates ultimately prove fatal to their personal financial portfolio, resulting in consumer bankruptcy. 

Under current bankruptcy guidelines, debtors engaged in the bankruptcy process are sometimes able to recover money spent in the years immediately prior to filing that could have been spent on paying down debts and avoiding insolvency. In order to qualify for this recovery – known as a ‘clawback’ – the debtor must prove that he or she did not get a “reasonably equivalent value” for the expense. Historically, the clawback principle was applied to personal loans or money spent assisting family members; or to below-market asset transfers occurring immediately prior to the bankruptcy filing. 

However, in recent years, bankruptcy courts have seen a significant influx of debtors seeking to clawback tuition payments made on behalf of their children enrolled in a college or university.
Read more . . .


Friday, August 14, 2015

Five Things to Know About Consumer Bankruptcy Credit Counseling

Is credit counseling mandatory prior to entering bankruptcy proceedings?

In most cases, a debtor considering bankruptcy is required to work through credit counseling courses prior to even beginning the Chapter 7 or Chapter 13 process. If you are considering bankruptcy, the following tips may help you better prepare for this important preliminary step: 

Tip #5: Counseling required for all debts – Under bankruptcy regulations, credit counseling is required whether the debts are primarily business, personal, or an equal mix of both. Moreover, if a married couple is filing jointly, both spouses must go through counseling. 

Tip #4: Qualified counseling – Not just any credit or debt counselor will do. Under the rules, debtors must meet with a non-for-profit budget and credit-counseling agency officially approved by the United States Treasury. A list of qualified professionals is available from the Bankruptcy Court Clerk’s office. 

Tip #3: Multiple formats available – Credit counseling is available in a number of languages to meet the needs of individual debtors. Likewise, the counseling sessions may take place in person, over the phone, or over the Internet. 

Tip #2: Only limited excusals available – Credit counseling is generally required for everybody. However, there are three scenarios that could give rise to an excusal: (1) the debtor's advanced mental disease or incapacity so severe that credit counseling would prove futile (2) the debtor's physical disability that makes participation impossible (3) the debtor's active military duty in a combat zone. 

Tip #1: Counseling may be obtained late – In limited circumstances, the court may allow debtors to obtain counseling after the bankruptcy petition is filed, but only upon a showing of certain unique circumstances. If these stipulated criteria are met, a debtor may have up to 30 days after the filing to complete credit counseling. 
Contact an Alabama bankruptcy attorney today! 

If you are considering consumer bankruptcy, please do not hesitate to contact the Mobile and Baldwin County, Alabama bankruptcy attorneys at Padgett & Robertson today: (251)342-0264. 


Tuesday, July 14, 2015

Former Adams Produce Owner Under Fire, Facing Criminal Charges

Is it possible that criminal charges will result from information obtained in bankruptcy proceedings?

 

In 2010, Adams Produce, a large family-owned company with a long history in Birmingham, was sold to a group of investors. Just two years later, in 2012, the company filed for bankruptcy and closed.  Four hundred employees were left without jobs and the company owed the employees almost three weeks back pay.  The company also owed almost $16 million to vendors, creditors, and produce suppliers.  The company blamed decreasing margins and lawsuits from rival companies in the bankruptcy filing.  Once the company filed, the United States government cancelled a recently signed, four and a half year contract for produce worth $41 million.    

Prior to the sale and bankruptcy, the family-owned business brought in outside managers to lead the business.  The family eventually sold ownership stakes to the outside CEO, CFO, COO, and an investment firm, CIC Partners.  The bankruptcy and closing impacted the original family, specifically Carl Adams III who claimed that he lost $5 million and suffered emotional and physical damage as a result of the company’s failure.  Adams was forced to return to the workforce and forgo retirement while watching his family business shut down.  Adams blamed the company’s former CEO and CFO, for most of the problems associated with the closing and bankruptcy.  

Former CFO John Stephen Alexander had insight into the company’s finances and did not inform CIC of the issues that Adams Produce faced. Adams claimed the CFO had a duty to report the fraud in the government contract and was guilty of duping people into buying into a failing company along with the CEO. Alexander was sentenced on separate fraud charges and served a prison sentence related to those charges.

If you believe that you have done something illegal and are now considering filing for bankruptcy, you should speak to an experienced attorney before making your next move.  The attorneys at Padgett and Robertson have extensive experience helping companies in the Mobile and Baldwin County areas navigate bankruptcy proceedings.  Contact us today at (251) 342-0264 for a free consultation.      


Monday, July 13, 2015

Recent Bankruptcy Law Changes Lead to Increase in Personal Property and Homestead Exemptions


What are the current asset thresholds and exemptions for consumer debtors considering a Chapter 7 liquidation or Chapter 13 restructure?


As a foundational principle, bankruptcy is an appropriate financial step for anyone whose debts and liabilities far exceed assets – and it is no longer feasible to make monthly debt payments without extreme hardship. While bankruptcy debtors are expected to be highly cash-strapped and tapped of most of their assets, the law does not mandate total poverty – and exemptions have been worked into the law to ensure debtors are able to keep some of what they have earned in both real and personal property assets. 

While the Bankruptcy Code is of course a federal statute, bankruptcy courts are often required to follow certain rules and procedures set forth by the state in which the debtors are situated. One such state law, known as the exemption threshold, varies significantly from one state to the next and dictates the amount of property a debtor may own in order to qualify for Chapter 7 or Chapter 13 bankruptcy proceedings. 

Alabama increases exemption thresholds 

Unlike its peninsular next-door-neighbor with one of the highest thresholds in the nation, Alabama’s threshold is one of the lowest in the United States – meaning debtors must be very insolvent before qualifying.
Read more . . .


Friday, July 3, 2015

Supreme Court Issues Ruling on ‘Underwater Mortgages’ & Bankruptcy


I currently owe more on my home than it is worth, and I currently have two mortgages on the property. If I pursue Chapter 7 bankruptcy, will the debts be discharged? 



The phrase “Chapter 7 bankruptcy” derives its name from the seventh chapter of the U.S. Bankruptcy Code wherein debtors are afforded an opportunity to liquidate a number of debts and forever discharge the obligations. While not all debts are dischargeable (e.
Read more . . .


Friday, June 26, 2015

Conversion From Chapter 13 to Chapter 7: Who keeps the funds?


I recently decided to convert my consumer bankruptcy case from a Chapter 13 payment plan to a Chapter 7 liquidation. What happens to the unused funds held by the trustee? 


For consumers facing insolvency, there are two options in bankruptcy. The first, known as a Chapter 13 proceeding, allows debtors to enter into a repayment plan with the help of a trustee to oversee the process. In theory, this plan will help protect debtors’ credit, keep most of their secured assets, and experience the satisfaction of debt payoff. The other option, known as a Chapter 7 proceeding, allows debtors facing serious, insurmountable debt the opportunity to break free from the confines of financial pressure and avoid repayment all together through discharge.
Read more . . .


Wednesday, June 10, 2015

Jefferson County Files an Appeal in its Bankruptcy Claim


What is going on with Jefferson County’s Bankruptcy?

When Jefferson County filed for protection under Chapter 9 of the Bankruptcy Code in 2011, they hardly expected the legal challenges would continue as long as they have.  The county owned sewer system that contributed greatly to the county’s financial trouble is the subject of a lawsuit from several customers attempting to block Jefferson County’s exit from bankruptcy.  The county’s bankruptcy plan includes rate hikes for sewer customers each year for the next forty years.


Read more . . .


Friday, May 29, 2015

Alabama Among Leaders of Bankruptcy Filings Per Capita


How many people are filing bankruptcy this year?

A recent study shows that Alabama has the second highest total of bankruptcy filings per resident so far this year, after Tennessee.  0.524% of Alabama residents declared bankruptcy in April.  This was a slight increase from 0.
Read more . . .


Friday, May 22, 2015

Bankruptcy Petitioner Attempts to Block $13.08 Million Auction


Can a bank foreclose on a property when the mortgage documents were forged?

Danny Ray Butler is fighting a thirteen million dollar battle from a federal prison.  Butler filed for an emergency injunction to prevent the sale of 4 parcels of real estate.  He says that the mortgage on four parcels of real estate was forged and that he never signed mortgage papers.
Read more . . .


Thursday, May 21, 2015

Article 9 Repo Sales Gaining Popularity


What are alternatives to Chapter 11 Bankruptcy?

Recently creditors’ seeking to dispose of the assets of a delinquent borrower through Article 9 of the Uniform Commercial Code instead of in Bankruptcy court has become a popular procedure.  To repossess encumbered assets and sell them under the UCC, a creditor only has to perform a lien search, notice the interested parties, and conduct the sale.


Read more . . .


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Bankruptcy Law News

Padgett and Robertson assist clients with Bankruptcy, Personal Bankruptcy, Consumer Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy and The New Bankruptcy Law in Mobile, Alabama and throughout southern Alabama. Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”



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Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”