What We Know About Lordstown EV Car Maker’s Chapter 11 Bankruptcy

By Ryan C. Wood

Howdy my fellow humans. It seems we may have lost an option for purchasing an electric vehicle in our “free” market. Actually, Lordstown was trying to develop an all electric commercial fleet type truck named Endurance. Lordstown Motors Corp. aka DiamondPeak Holdings, Inc. and Lordstown EV Corporation filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code in the District of Delaware, today, June 27, 2023; Case Numbers 23-10831 and jointly administered 23-10832. The pickup truck to be named Endurance is apparently not happening.

The various filing by Lordstown bankruptcy attorneys provide: “The Debtors have filed these Chapter 11 Cases for the purpose of maximizing value for the benefit of their stakeholders given the ongoing, repeated breaches of contract and commitments by Foxconn.”

I do not know. I have to question Chapter 11 filings that seek to sell all assets of the debtor rather than simply filing a Chapter 7 Liquidation case and allowing a Chapter 7 Trustee to administer the case and liquidate the estate……. Things that make you go hmmmmmmm. So I will let you know what is up from down regarding this issue.

Lordstown bankruptcy lawyers also immediately filed an adversary lawsuit against defendants Hon Hai Precision Industry Co., Ltd (a/k/a Hon Hai Technology Group), Foxconn EV Technology, Inc., Foxconn Ventures Pte. Ltd., Foxconn (Far East) Limited, and Foxconn EV System LLC.

Yes, the same Foxconn you have probably heard about regarding Apple, Inc. and other Silicon Valley technology industry leaders. Their mothership name is Hon Hai Precision Industry, or more commonly referred to as Foxconn. Foxconn is a business partner of Apple, Inc., or at least they used to be. Anyway, the point is Lordstown is suing a big dog in the technology worldwide industry making very serious allegations.

Lordstown v. Hon Hai Precision Industry Co., Ltd. aka Foxconn

So Lordstown did not waste any time and immediately upon filing their petition for relief under Chapter 11 Lordstown also filed an adversary lawsuit against Hon Hai Precision Industry Co., LTD. aka Foxconn alleging is all their fault.

“This case arises from, and is based on, the fraudulent conduct of one of the world’s largest multinational manufacturing companies, which, over time, had the intended effect of destroying the business of an American start-up.”

“This course of conduct is nothing new for Foxconn and its affiliates—their modus operandi in the United States is to overpromise and under or never deliver.”

Ouch, that is pretty precise. So, what specific fraudulent conduct is Lordtowns alleging against Foxconn?

2018 Lordstown created to make Endurance EV pick-up truck
2019 Lordstown purchased 6.2 million square feet production facility from GM Motors in Lordstown, Ohio
Self-Proclaimed Equity Valuation of $5.3 billion
Goal: Combine Foxconn’s resources and efficiencies with the Debtors’ innovation, technology, manufacturing plant and people to jointly develop the next generation of electric vehicles
Lordstown alleges changing its business model to compliment Foxconn’s “EV Ecosysten”
9/30/2021 Lordstown entered into an asset purchase agreement with Foxconn to sell Foxconn the 6.2 million square foot production facility
Lordstown apparently needed the cash/capital and to lowering operational costs
Lordstown also entered into a manufacturing partnership with Foxconn
9/30/2021 Foxconn Chairman Young Liu said “[t]his mutually beneficial relationship is an important milestone for Foxconn’s EV business and our transformation strategy. I believe that the innovative design of the Endurance pickup truck, with its unique hub motors, delivers an advantageous user experience and has manufacturing efficiencies. It will undoubtedly thrive under our partnership and business model.” Foxconn later expressed hope that it could create “a trillion-dollar business opportunity for electric vehicles.”
October 2021 Foxconn via an affiliate purchases $50 million worth of Lordstown shares
November 10, 2021, Lordstown sold the 6.2 million factory to Foxconn; but DID NOT formalize all of the other alleged agreements with Foxconn Lordstown is alleging were also part of the consideration for the reduced price of the Lordstown, OH factory
Blah Blah Blah Foxconn breached the investment agreement with Lordstown and this negatively affected the share price of Lordstown…….
On June 27, 2023, arguably faced with the reality that there were no circumstances under which Foxconn would meet its contractual obligation to Lordstown, the Lordstown voluntary filed petitions for relief under chapter 11 of the Bankruptcy Code …..

Long Story Short

The short story is Lordstown would never had sold the 6.2 million square feet manufacturing center factory, its most valuable asset, to Foxconn for 1/5 of the replacement value to Foxconn if Foxconn had not made additional promises of support and partnering with Lordstown to make the Endurance pick-up a manufacturing reality. Lordstown alleges that once Foxconn owned the 6.2 million manufacturing center in Lordstown, OH, Foxconn stopped doing the other parts of the consideration for the sale of the factory to Foxconn. Such as making further investments and more or less funding one way or another all Lordstown sought to accomplish.

So yeah, once upon a time I sold a truck to a dude and part of the sale was for this dude to buff the lenses on my other vehicles and detail the other vehicles. We signed the CA DMV bill of sale and then the dude ignored me. Funny how that works.

Lordstrom Filed A Motion to Sell All Assets Free and Clear of Liens

In layman’s terms, Lordstown, is asking the bankruptcy court for authorization to sell with an overbid process all remaining assets of Lordstown for the benefit of its “creditors.” Yeah, we shall see if any creditor actually benefits from this Chapter 11 bankruptcy filing. The idea is the get as much money as possible for the remaining assets of Lordstown without hammering out which creditors are entitled to the proceeds. That will come later in the Chapter 11 LIQUIDATING plan? Not a reorganization in which the corporate debtor lives on to fight another day. So no Endurance truck ever will be made? I digress.

The bidding a sale process will culminate in a Sale Hearing proposed to held on September 12, 2023.

The Chapter 11 petition provides assets of between $100 million and $500 million with liabilities ranging from $100 million to $500 million as well.

As of December 22, 2022, Lordstown was estimated to have $452,312,000 in assets with $70,280,000 in liabilities. Lordstown has shares of preferred stock totaling 300,000 and common stock shares outstanding totaling 15,944,5582.

The top 5 largest creditors of Lordstown are as follows:

Teijin Automotive Technologies, Inc. $2,083,980.20

ZF Passive Safety Systems, Inc. $1,981,531.56

Marelli North America, Inc. $1,614,252.02

Greatech Integration (M) SDN, BHd, HA LAI $1,532,600

Barry L. Leonard and Company, Inc. $1,361,252.80

Ninth Circuit Bankruptcy Appellate Panel Again Upholds Section 105(a) Equitable Authority Compliments the Bankruptcy Code And Cannot Contravene Express Statutory Authority

By Ryan C. Wood

Howdy humans. Arguably the necessary and appropriate clause of Section 105(a) of the Bankruptcy Code was and is used to illegally amend or rewrite the Bankruptcy Code. Just like the “necessary and proper” clause of the United States Constitution is and was used to illegally amend or rewrite the United States Constitution. What we all must understand is these clauses are supposed to be limited to substantive rights the law already provides. What is necessary and appropriate/proper depends upon the facts of each case. What is necessary and appropriate/proper will complement the underlying substantive law; not supplement or contravene the law entirely. But what is happening is Bankruptcy Judges are supplementing or contravening the Bankruptcy Code by using the necessary and appropriate clause creating rights and obligations, mostly punishments, that do not exist as written by Congress. Or to individually police debtors and punish debtors for alleged bad acts to prevent abuse. Bankruptcy Judges are creating new law in response to what they deem are abuses by bankruptcy filers. Rarely will you see the use of Section 105(a) to make the law less favorable to creditors. It is almost always Bankruptcy Judges using Section 105(a) to change or entirely take away debtors’ substantive rights under the Bankruptcy Code and give creditors benefits that do not exist in the Bankruptcy Code.

The pendulum is swinging back regarding Section 105(a) of the Bankruptcy Code. So goes life. It is like eggs, I guess. Are they good for us or are eggs high in cholesterol? The pendulum of truth seems to swing back and forth about how healthy eggs are for us. The same seems to be true of Section 105(a) of the Bankruptcy Code and the necessary and appropriate, and to prevent abuse of process clauses of Section 105(a). The complete language is:

Section 105(a): The court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. No provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.

Section 105(a) and the express statutory language of Section 105(a), when applied to procedural issues compliments the Bankruptcy Code. It is not abnormal for a Bankruptcy Court, upon the request of a creditor, trustee or debtor, enter an order to help procedurally administer the case specific based upon what is taking place in that particular case. Such as delaying the entry of an order of discharge to allow time for levied funds to be returned to the debtor from a creditor. Or an order clarifying procedure or application of the Bankruptcy Code. Section 105(a) makes little sense when used to change actual law and contravene substantive rights debtors are supposed to enjoy when VOLUNTARILY seeking relief the Bankruptcy Code provides. Is Section 105(a) being used to compliment the Federal Rules of Bankruptcy Procedure or change the actual Bankruptcy Code?

This Issues Is Not New and The Supreme Court of the United States Contradicted Itself In Marrama

Few things in this world are new. They just look different, or history is forgotten entirely. It appears that is the case with Section 105(a). In 1988 the Supreme Court of the United States held that the equitable powers of the Bankruptcy Court must and can only be exercised within the confines if the Bankruptcy Code.

Norwest Bank Worthington v. Ahlers, 485 U.S. 197, 206 (1988)

In re Aquatic Dev. Grp., Inc., 352 F.3d 671, 673, 680–81 (2d Cir. 2003)

In re Combustion Eng’g, Inc., 391 F.3d 190, 236 (3d Cir. 2004)

The Ninth Circuit Court of Appeals consistently held the same regarding the use of Section 105(a) up until the Supreme Court of the United States decided Marrama. See Marrama v. Citizens Bank of Mass., 549 U.S. 365 (2007). In Marrama, SCOTUS allowed a debtor to be punished for his alleged bad acts and took away the debtors right to convert this case to Chapter 13 from Chapter 7. Okay, so how could the Supreme Court of the United States get to the holding in Marrama at all if in 1988 the same Court recognized the limitations of Section 105(a)? It is simply different human beings interpreting the same exact words and ignoring their own prior precedent. Ignoring the truth. How does this happen? We elect a President every four years and that single human gets to appoint Supreme Court of the United States justices if there is a vacancy during their term. Humans can rationalize anything and there is always a new low apparently.

But I just showed you 1 + 1 = 2 from 1988 and somehow you in 2007 ignore 1988 and your own holding? How does that happen? Life is not fair, consistent, equal, or reliable: period.

The Marrama holding turned the Bankruptcy Court to a tit for tat playground full humans believing two wrongs make a right. No, not so. Just because a debtor allegedly did bad things does not mean a Bankruptcy Court can just make up the law, not follow the law, to punish debtors for these alleged bad acts, in their humble opinion.

Two wrongs never make a right: period. Be better.

That is what Marrama did and it is pathetic. Can the humans that work for the Bankruptcy Court be better than the allegedly bad debtor they seek to punish? Nope, apparently the humans that work for the Bankruptcy Court will be equally bad and do the same exact bad thing debtors are doing. So sad. Some party somewhere must be better. Can you be better?

Marrama is an outlier and not consistent with decades of interpretation of the Bankruptcy Code. See Norwest Bank Worthington v. Ahlers, 485 U.S. 197, 206 (1988) (“whatever equitable powers remain in the bankruptcy courts must and can only be exercised within the confines of the Bankruptcy Code”).

In re Valenti is a Great Example of The Limits of Section 105(a) and No End Arounds Allowed

The 9^th Circuit BAP in Valenti held:

“We hold that, although Debtor’s alleged conduct, if proven, is reprehensible, there is a strict 180-day time limit for seeking to revoke confirmation for fraud under Section 1330(a). This bars the claims raised in Creditors’ proposed amended complaint even if Debtor concealed her alleged misconduct. We reject Creditors’ attempts to get around Section 1330(a) by alleging bad faith and by invoking Section 105(a), Section 1307(c), and Fed.R.Civ.P. 60 (incorporated by Rule 9024), which have no 180-day time limit.”

See In re Valenti, 310 B.R. 138, 52 Collier Bankr. Cas. 2d (MB) 403 (B.A.P. 9th Cir. 2004).

The debtor, Ka Ka Ka Karen Valenti, allegedly hid income totaling $700.00 per month, failed to disclose her interest in a house she quitclaimed to her daughter before filing her Chapter 13 bankruptcy case and straight lied about paying off the mortgage on the fraudulently transferred home. But Section 1330(a) is clear and creditors have 180 days after confirmation of a plan of reorganization to revoke the order confirming the plan by fraud. That is that.

Many Bankruptcy Court opinions that rely upon Section 105(a) do not specifically cite “or to prevent an abuse of process” language, but it is there in Section 105(a); at the end. Most Courts cite their holding is necessary or appropriate to carry out the provisions of this title or focus on the Court’s equitable authority. The problem is many of the uses of Section 105(a) are not consistent with the Bankruptcy Code and the holdings are not necessary or appropriate, but a complete rewriting of the Bankruptcy Code and Congress’ intent when writing the Code. If the legislative history of an express statutory language includes “absolute right” then there should be nothing a Bankruptcy Judge can hold to change that “right” as it is absolute. That is not what has happened over the years throughout the Bankruptcy Code. Section 105(a) has been used create a different result when filing for bankruptcy and it has worked up until case Law v. Siegel holding Section 105(a) cannot be used to contravene an express statutory provision. More to come on Law v. Siegel after discussing what led to again expressly limiting the use of Section 105(a).

Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365, 127 S.Ct. 1105, 166 L.Ed.2d 956 (2007)

So, as provided above limiting Section 105(a) is nothing new and is actually the prevailing enforceable interpretation of Section 105(a). So how did this change? This mess really came to a head in 2007 when the Supreme Court of the United States held in Marrama, that a Chapter 13 debtor did not have the absolute right to dismiss their Chapter 13 case. Marrama held a debtor’s right to voluntarily dismiss a Chapter 13 case under § 1307(b) is not absolute, but there is qualified implied exception for bad-faith conduct or abuse of the bankruptcy process by the debtor. Implied or a made up punishment by a human never elected to Congress to create and pass law. Debtor, you did this this and this, so we will create a punishment for you that does not exist in the Bankruptcy Code pursuant to Section 105(a) as “necessary and appropriate.” No, that is wrong and not how it is supposed to work.

Section 1307(b) provides: (b) On request of the debtor at any time, if the case has not been converted under section 706, 1112, or 1208 of this title, the court shall dismiss a case under this chapter. Any waiver of the right to dismiss under this subsection is unenforceable.

So, the express statutory authority has keywords that are not open to interpretation and are bolded above. Yet somehow SCOTUS and many lower Bankruptcy Courts created an exception to the plain language of Section 1307(b) that does not exist in the Bankruptcy Code. A “bad faith” exception open to case-by-case interpretation by a single human Bankruptcy Judge. Generally, this will lead to unequal results and discrimination between debtors. Following the express statutory authority of Section 1307(b) gives all debtors the same right to convert their case without some human opinion about whether the conversion is right or wrong. It is right because the law, the Bankruptcy Code, says a debtor gets this right. So simple but so difficult for one human to allow another to have all their rights. The right to dismiss a Chapter 13 case is huge for debtors that may or may not have a sound plan of reorganization. Chapter 13 is voluntary and Chapter 13 becomes not voluntary if the debtor has no right or a limited right to dismiss or convert the case as the Bankruptcy Code allows. This was also not Congress’ intent. Congress intended debtors to be able to decide their fate. Not forced into a Chapter 7 liquidation and not voluntarily lose assets.

When one area of the Bankruptcy Code is not followed as intended it negatively effects a debtors rights under other areas of the Bankruptcy Code. It creates an imbalance that Congress did not intend. Debtors are supposed to choose their destiny within the confines of the Bankruptcy Code.

In re Rosson, 545 F.3d 764 (9th Cir. 2008)

So, the Ninth Circuit Court of Appeals believes in precedent and relied upon the Marrama case and held in Rosson, relying upon Marrama, (holding that, under Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365 (2007), “even otherwise unqualified rights in the debtor are subject to limitation by the bankruptcy court’s power under § 105(a) to police bad faith and abuse of process”).

In Rosson the Ninth Circuit solidified Marrama and it’s holding as to Section 1307 and a debtor right to convert or dismiss a case can be limited by the opinion of the Bankruptcy Court as to the debtors alleged bad faith conduct. This was and is still a huge problem. There is the express statutory language of the Bankruptcy Code, as written by Congress and signed into law by the President of the United States yet entirely opposite results were and still are being supported by Bankruptcy Judges. Legacy law? Old law or old interpretations of the law do not seem to change overnight even though one day a case will not exist and the next day a case exists with a contrary interpretation.

In Rosson the debtor sought to voluntarily dismiss his Chapter 13 case pursuant to Section 1307(b). Rosson was to receive a large arbitration award and submit the funds to the control of the Chapter 13 Trustee as ordered by the Bankruptcy Court. Rosson did not turnover the funds upon receiving the funds though. The bankruptcy court found that Rosson was “rebelliously” “horsing around” with estate assets and, on its own motion, converted the Chapter 13 case to one under Chapter 7. In Chapter 13 the words good faith exists. Not bad faith though. A Chapter 13 Plan and petition must be filed in good faith and not forbidden by law pursuant to Section 1325 in Chapter 13; only. Chapter 11 has no such counterpart regarding the petition being filed in good faith, only the plan pursuant to Section 1129(a)(3). But there is not good faith grounds exist to object to confirmation of the plan of reorganization only. Lack of good faith in either Chapter 13 or 11 does not open the door creating punishments on a case-by-case basis creating drastically not equal results for debtors across the United States.

So, what then in this saga? After Marrama Bankruptcy Courts cherry picked precedent and just cited Marrama as authority not limiting Section 105(a) even though binding precedent already existed.

Law v. Siegel, 571 U.S. 415 (2014)

Seven years after Marrama, Law v. Siegal was heard by SCOTUS in 2014. Now SCOTUS truly did an about face and again recognized the long-standing interpretation that Section 105(a) cannot contravene express statutory provisions. In Law Section 105(a) was used again by the Bankruptcy Court to punish the debtor for alleged bad faith and surcharged, reduced, the debtors statutory right to his homestead exemption. The amount of the homestead exemption for Law is set by California State law and the dollar amount cannot be changed but for the California legislature choosing to increase the homestead exemption. Section 105(a) was used created a sanction, a punishment, of the debtor for again alleged bad faith conduct. But why? It all comes down to money, money and more money. The Chapter 7 trustee is supposed to follow and enforce the law. Not manipulate the Bankruptcy Code to get paid for the work they did for the benefit of the bankruptcy estate. There are express statutory provisions regarding Chapter 7 trustee and their professionals’ compensation. After Marrama and Rosson Chapter 7 trustees and their attorneys Money, money and more money is the cause to not allow debtors to convert their Chapter 7 cases to Chapter 13 or allowing for the voluntary dismissal of Chapter 13 cases. Not allowing dismissal or conversion forces the debtor to pay trustee’s and their professionals involuntarily and not consistent with the Bankruptcy Code. There are remedies for debtors not fulfilling their duties under the Bankruptcy Code. Reducing exemptions set by state law, not allowing for dismissal or conversion of a bankruptcy case are no part of the Bankruptcy Code. Only human interpretation of the Code created these remedies.

SCOTUS arguably saw the error in its ways with the Marrama holding broadly giving bankruptcy courts authority to create law and not follow the actual Bankruptcy Code.

So Marrama swung the pendulum away from various debtor rights provide by the Bankruptcy Code and emboldened various parties to push the envelope. But the trustee in Law went too far and now the pendulum is swinging back to the express statutory language of the Bankruptcy Code and limiting punishments that do not exist.

It should be noted that a unanimous Supreme Court of the United States supported the holding in Law v. Siegel. That the Chapter 7 Trustee may not reduce the debtors homestead exemption, or surcharge/reduce, the amount of the exemption for the debtor due to alleged bad faith of the debtor. SCOTUS held a bankruptcy court may not exercise its authority to carry out the provisions of the Code, 11 U.S.C. 105(a), or its inherent power to sanction abusive litigation practices by taking action prohibited elsewhere in the Code; the “surcharge” contravened section 522, which (by reference to California law) entitled Law to exempt $75,000.00 of equity in his home and which made that $75,000 “not liable for payment of any administrative expense,” including attorney’s fees or expenses incurred by the Chapter 7 trustee.

Due to the amount of litigation Law forced the Chapter 7 Trustee Siegel to participate in the Chapter 7 Trustee wanted to get paid by reducing the state law homestead exemption of the Law and put that money in his pocket instead of Law’s pocket. Court after Court said this was okay until Law took the matter to the Supreme Court of the United States. SCOTUS said no, enough is enough. A Bankruptcy Court and the Bankruptcy Code does not have express statutory authority allowing for the reduction of a state law right to an exemption. There are other remedies within the Bankruptcy Code to address bad debtors committing fraud on the Bankruptcy Courts. As bankruptcy attorneys know an adversary proceeding can be filed objecting to the debtors right to a discharge under 727 of the Bankruptcy Code.

Law v. Siegel is a perfect example of Chapter 7 Trustee abuse of process and hubris when administering Chapter 7 cases. Siegel tried to change the law created and passed by the California State legislature regarding exemptions. This is never supposed to happen according Bankruptcy Code Sections 321, 704 and 28 C.F.R § 58.3(b).

The minimum qualifications for membership on the Chapter 7 Trustee panel are set forth in 28 C.F.R § 58.3(b). The panel member must:

Possess integrity and good moral character.
Be physically and mentally able to satisfactorily perform a trustee’s duties.
Be courteous and accessible to all parties with reasonable inquiries or comments about a case for which such individual is serving as private trustee.
Be free of prejudices against an individual, entity, or group of individuals or entities which would interfere with unbiased performance of a trustee’s duties.
Not be related by affinity or consanguinity within the degree of first cousin to any employee of the Executive Office for United States Trustees of the Department of Justice, or to any employee of the Office of the United States Trustee for the district in which he or she is applying.
Be either: a. A member in good standing of the bar of the highest court of a state or of the District of Columbia; b. A certified public accountant; c. A college graduate with a bachelor’s degree from a full four-year course of study (or the equivalent) of an accredited college or university; d. A senior law student or candidate for a master’s degree in business administration recommended by the relevant law school or business school dean and working under the direct supervision of:
Be willing to provide reports as required by the United States Trustee.
Have submitted an application under oath, in the form prescribed by the Director, Executive Office for United States Trustees, to the United States Trustee for the district in which appointment is sought; provided, that this provision may be waived by the United States Trustee on approval of the Director.

So now we have Marrama in 2007 and seven years later Law v. Siegel in 2014 seemingly overruling Marrama. At least that is how the Ninth Circuit Court of Appeals sees it another 8 years later. For eight years after Law SCOTUS’ holding is finally being enforced, at least at the appellate level in the Ninth Circuit, and the limitations of Section 105(a).

Nichols v. Stockyard (In re Nichols), 618 B.R. 1 (B.A.P. 9th Cir. 2020)

Then we have Nichols. The 9^th Circuit Court of Appeals held in Nichols that Rosson was effectively overruled by Law v. Siegel, 571 U.S. 415 (2014), which held that a bankruptcy court may not use its equitable powers under 11 U.S.C. § 105 to contravene express provisions of the Bankruptcy Code. The panel held that Rosson therefore is no longer binding precedent.

Rosson filed a motion to dismiss his case pursuant to Section 1307(b). The Bankruptcy Court cited Rosson and denied the voluntary dismissal of Rosson’s Chapter 13 case. What did Rosson allegedly do to earn this punishment that does not exist in the Bankruptcy Code?

After the Nichols filed for voluntary relief under Chapter 13 of the Code, they were indicted on federal criminal charges for their alleged participation in a scheme to defraud Marana Stockyard and Livestock Market, Inc. The Nichols sought to avoid disclosure of information that might compromise their position in the criminal proceedings, so the Nichols chose to not complete any of the steps required by the Bankruptcy Code to advance their case. They refused, inter alia, to hold a meeting with creditors, cf. 11 U.S.C. § 341; to file outstanding tax returns, cf. id. § 1308; or to propose an appropriate repayment plan, cf. id. § 1322. Their bankruptcy case thus languished for months without resolution. Okay, so the Chapter 13 plan cannot be confirmed and the Chapter 13 case should be dismissed; right?

Well, creditors filed a motion pursuant to Section 1307(c) to force conversion to Chapter 7 and liquidation of the debtors not exempt/not protected assets. Again, money, money and more money for the Chapter 7 trustee and their professionals.

So, the Nichols naturally filed their own motion to voluntarily dismiss the Chapter 13 case and here we are now with the Ninth Circuit Court of Appeals holding Rosson was overruled by SCOTUS in Law.

What next?

In re Black Gold S.A.R.L., 635 B.R. 517,(9^th Cir. BAP 2022)

Then came the Black Gold case regarding a Chapter 15 issue. What, Chapter 15? Yes it exists and few humans are aware of it. Black Gold S.A.R.L. appealed an order denying their petition for relief for recognition of a foreign

The lower bankruptcy court ruled that, based on the misconduct and bad faith of Black Gold, its insiders, Mr. Samba, and their attorneys, the case did not serve the purposes and objectives of § 1501, and it denied recognition of the Monegasque Proceeding on that basis. Again, the words “bad faith” also do not exist in Chapter 15 of the Bankruptcy Code.

The Ninth Circuit Bankruptcy Appellate Panel reversed holding the requirements for recognition under § 1517(a) were satisfied, and that recognition of the Monegasque Proceeding would not be manifestly contrary to U.S. public policy.

The requirements for recognition of a foreign proceeding are outlined in § 1517(a), which provides that, subject to § 1506, an order shall be entered recognizing a foreign proceeding if: (1) the “foreign proceeding” is a “foreign main proceeding” or “foreign nonmain proceeding” within the meaning of § 1502;(2) the “foreign representative” applying for recognition is a person or body; and (3) the petition meets the requirements of § 1515.

There is no bad faith in Chapter 15, so where did it come from? Cross-chapterization is the misapplying Bankruptcy Code sections in the wrong Chapters in violation of express statutory provision Section 103 of the Bankruptcy Code. So bad faith cross-chapterization from wrong interpretations in Chapter 13 seemingly led to a belief bad faith can be used at any time upon the discretion of a Bankruptcy Judge. No, no, this is wrong and the pendulum is slowly swinging back to the express statutory language Congress chose.

And now the Powell case just decided last month, October 2022.

In re: Jason Philip Powell, BAP No. NV-22-1014-FLB Bk. No. 3:21-bk-50147-NMC (Oct. 21, 2022)

The most recent case in this saga is Powell, a Ninth Circuit Bankruptcy Appellate Panel case discussing Section 1307(b). Mr. Powell filed a motion to dismiss his Chapter 13 case pursuant to Section 1307(b). A creditor opposes arguing Mr. Powell cannot voluntarily dismiss his own Chapter 13 case given Mr. Powell

Until recently, the Ninth Circuit adhered to this view. In re Rosson, 545 F.3d at 773 n.12 (holding that, under Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365 (2007), “even otherwise unqualified rights in the debtor are subject to limitation by the bankruptcy court’s power under § 105(a) to police bad faith and abuse of process”).

So there are now at least four appellate cases in the 9^th Circuit clearly providing, at least in the Ninth Circuit, that Bankruptcy Judge must stop using Section 105(a) to manipulate the Bankruptcy Code in contravention of the express language of the Bankruptcy Code. So again, this is not new, but just the pendulum swinging back to how the Bankruptcy Code was always interpreted. The most striking issue is the inconsistency between interpretation and other sections of the Bankruptcy Code. Debtors’ rights to convert or dismiss are just the issues that come up regularly and why there are more cases on these subjects. But the fact is there are all kinds of interpretations of the Bankruptcy Code with the only authority in support is Section 105(a) and a Bankruptcy Court seemingly entering an order that is necessary and appropriate.

If there is still a question about Section 105(a) in the 9^th Circuit I do not know how.

Does there have to be an appellate case for each and every Bankruptcy Code section changed by Section 105(a)? It appears that is the case. So far it seems Bankruptcy Courts are not capable of consistently applying appellate decisions and just following the plain, not ambiguous, express statutory language of the Bankruptcy Code.

Ninth Circuit Court of Appeals Affirms BAP In re Powell Holding re Section 1307(b)

On October 1, 2024, the Ninth Circuit Court of Appeals affirmed the Ninth Circuit Bankruptcy Appellate Panel holding in In re Powell regarding the plain and not ambiguous language of Section 1307(b).

It says:

“On request of the debtor at any time, if the case has not been converted under section 706 [Chapter 7], 1112 [Chapter 11], or 1208 [Chapter 12] of this title, the court shall dismiss a case under this chapter.”

So simple. Why did it become a problem?

Why Does It Matter?

I can write another 5000 words on how these incorrect interpretations of the Bankruptcy Code regarding the sections listed above screw up the entire process of representing debtors.

Bankruptcy attorneys throughout the country can never rely upon the express statutory language of the Bankruptcy Code when filing cases and providing advice to clients? Absurd.

Let us discuss the human factor here. The big deal is many debtors filing for bankruptcy protection enter bankruptcy under extreme stress and at the last minute. Bankruptcy is and should be considered a last resort. With this comes some uncertainty of circumstances that may or may not equate to a successful reorganization or discharge in Chapter 7. A temporary stay by the filing of the Chapter 13 may all that is necessary for a debtor to obtain relief and improve their circumstances. Section 1307(b) says you can dismiss your case at any time. So filing the Chapter 13 is strategic even though the case does not intend to confirm a Chapter 13 Plan or completing the case. THIS IS NOT BAD FAITH BUT EXACTLY WHAT THE BANKRUPTCY CODE ALLOWS. The debtor is supposed to be able to file the Chapter 13 case and either convert it or dismiss the Chapter 13 case at the pleasure or best interest of the debtor. The debtor is supposed to be able to choose their destiny due to voluntarily filing for bankruptcy protection. Debtors are not supposed to involuntarily have their assets liquidated; ever.

So now this touches on Chapter 7. Chapter 7 is also an entirely a voluntary process. If a debtor does not like how it is going, the Chapter 7 trustee is not being reasonable about the value of an assets, straight lying about the value of assets, or for any reason deemed justifiable, the debtor is supposed to also have the absolute right to convert to a reorganization chapter if and only if the case was not previously converted. The debtor is supposed to have one free short at converting and improving their circumstances. For years now bankruptcy attorneys have had to caution debtors given the uncertainty surrounding whether a case will be converted by a Bankruptcy Court or not due to made up bad faith. This is not what Congress intended and opened the door to blatant abuses by Chapter 7 Trustees and their attorneys for the own personal financial gain. Chapter 7 Trustee’s are independent contractors for the Department of Justice and the Office of the United States Trustee. What happens when those tasked with enforcing the law are the ones intentionally ignoring and violating the law? Now that is bad faith.

It is criminal how many humans lost their homes due to Bankruptcy Courts not allowing debtors to convert their cases to Chapter 13 or Chapter 11 from Chapter 7 creating a punishment that does not exist under the law. The number one means for poor, normal humans to get ahead financially is home ownership. The illegal prohibition of converting cases from Chapter 7 liquidation has affected the generational wealth of thousands of bankruptcy filers.

Is Elder Abuse Dischargeable Under The Bankruptcy Code?

By Ryan C. Wood

Howdy humans. Elder abuse? Yes, elder abuse. I tell humans repeatedly bankruptcy touches all of life one way or another. Even elder abuse can become a bankruptcy issue. Bankruptcy touches all of life given when life goes bad bankruptcy may ultimately be the only way to get relief from what is taking place in the real world, outside of the Bankruptcy Code. The question is what human or entity is benefiting from the bankruptcy filing and is the human or entity allowed this benefit under the Bankruptcy Code?

Can you determine who is the good guy or bad guy is? Is it possible that the human or entity that is owed the money is the bad guy collecting from someone that should have to pay? Or did the debtor filing bankruptcy and their bankruptcy attorney seek to get over on creditors and obtain results not allowed under the Bankruptcy Code? Both can be true at the same time in the same case.

In a recent Ninth Circuit Bankruptcy Appellate Panel case elder abuse was the issue and why the human bankruptcy filers filed for relief under Chapter 7 of the Bankruptcy Code. The bankruptcy filers were sued for elder abuse, did not defend the lawsuit, default judgment was entered against the bankruptcy filers in state court, and then the present Chapter 7 bankruptcy case was filed to discharge the default judgment entered against the bankruptcy filers for elder abuse.

Background Leading to 9^th Circuit Bankruptcy Appellate Panel Appeal

To not name the precise humans involved we will call the court appointed fiduciary, appointed to take care of the older human, the Fiduciary, and the person being taken care of the Client. Then we have the people alleged taking advantage of the Client and committing elder abuse. Since a default judgment was entered against them, we will call them the Elder Abusers.

A court appointed the Fiduciary to take care of the Client and for some unknown reason.

The Elder Abuses are the victim’s daughter, daughter’s husband and daughters sister. Three Elder Abusers. The Elder Abusers are accused of misusing a durable power of attorney and taking money they should not have.

The Oregon State Court complaint filed against the Elder Abusers included three claims for relief:

(1) elder abuse under Oregon Revised Statutes (“ORS”) 124.110 against all defendants

(2) unjust enrichment against all defendants

(3) breach of fiduciary duty against the one daughter of the victim.

Pursuant to ORS 124.100, it awarded Van Loo treble damages totaling $1,069,606.86 against Kristine and Bryce and an additional judgment against Kristine for treble damages of $887,276.16 – exactly what Van Loo requested. It also issued a second limited judgment awarding Van Loo attorneys’ fees and costs and conservator fees

The Fiduciary was awarded a default judgment against the Elder Abusers totaling $1,069,606.86 and an additional judgment against the specific daughter totaling $887,276.16. There was also another judgment awarding the Fiduciary attorneys’ fees and costs with conservator fees.

Will the default judgments be discharged or not in Chapter 7 Bankruptcy?

A Little Commentary First

So, you get sued for elder abuse and you ignore the lawsuit. Please read your mail each day no matter what. Will the bankruptcy filing be strike three given strikes one and two happened before any state court lawsuit was ever filed. No doubt the issue of whether elder abuse took place in this case was hashed out prior to any state court lawsuit being filed and the bankruptcy filers/Elder Abusers and most likely had some opportunity to improve the circumstances or at least defend the allegations against them. To allow a default judgment to be entered against yourself for elder abuse is highly questionable and concerning. The bankruptcy filers/Elder Abusers allowed a default judgment be entered against for elder abuse against their own family member. Begs the question why? I will attempt to fill in that blank and then review the bankruptcy filers filed petition to know their circumstances.

At first blush it is difficult to know why the state court lawsuit was not defended. Did they have no money to pay attorneys to fight for them? Was service of the state court lawsuit was defective or fraudulent so they never knew they were getting sued? Hmm no. Did they believe even if a default judgment was entered it would be dischargeable when filing Chapter 7 Bankruptcy so why spend the money defending the Oregon State Court lawsuit for elder abuse? Did a bankruptcy attorney advise the Elder Abusers to not defend the lawsuit and if a default judgment is entered you can just file for bankruptcy protection?

Generally a bankruptcy should be filed prior to a default judgment being entered so at least what happened in this recent Ninth Circuit Bankruptcy Appellate Panel case illustrates.

Oh, and there has to be money involved because no one cares if their loved one was abused unless money was lost in the process as well. Just say’in.

Chapter 7 Bankruptcy and Discharge of Elder Abuse Default Judgment

The Elder Abusers filed for Chapter 7 bankruptcy to obtain a discharge of the elder abuse default judgment. Pursuant to Section 523(a) of the Bankruptcy Code certain types of debts, or how the debt was incurred, make the debt or claims not dischargeable. Section 523(a)(2) is generally fraud; Section 523(a)(4) breach of fiduciary duty, embezzlement, defalcation, larceny; Section 523(a)(6) willful and malicious injury. An adversary lawsuit must be filed to prove the debt/claim should not be discharged.

The Fiduciary filed the adversary lawsuit against the Elder Abusers in the Elder Abusers Chapter 7 bankruptcy case to have the Bankruptcy Court determine the default judgment against the Elder Abusers cannot be discharged.

The Elder Abusers defended the adversary proceeding of course and generally denied all of the allegations alleged in the Complaint to Determine Dischargeabillity of Oregon State Default Judgment for Elder Abuse against the Elder Abusers/bankruptcy filers.

Can The Oregon State Court Default Judgment Be Used to Prove Elder Abuse Claim is Not Dischargeable?

So, some states allow the preclusive effect of default judgments and other states do not. The argument is if the lawsuit was not defended then nothing was actually litigated and should not and cannot be used in another legal matter to preclude the use of the default judgment. Oregon happens to be a state that does allow default judgments to be used against the defendants in other matters; like a Chapter 7 bankruptcy case. This is very controversial given the Oregon State Court lawsuit was not defended and the Fiduciary was awarded everything requested only because the Elder Abusers’ did not fight. No actual litigation took place to make sure the allegations were true and damages are reasonable under the circumstances.

Nevertheless, Oregon law says no problem. So the Bankruptcy Court entered a judgment against the daughter Elder Abuser under Section 523(a)(4) ruling the $1,069,606.86 from the Oregon State Court default judgment is not dischargeable.

The Elder Abuse daughter appealed the Bankruptcy Court’s entry of a judgment against her and here we are. So do no defend the original Oregon State Court lawsuit, file for Chapter 7 bankruptcy, then defend adversary lawsuit objecting to the discharge of the default judgment and spend the money to appeal when the Bankruptcy Court entered judgment against Elder Abuse/bankruptcy filer. Would it have been better to spend money and defend the original Oregon State Court lawsuit? Or was there no hope and the only hope was to seek a discharge of the claim/elder abuse? Hard to know.

Ninth Circuit Bankruptcy Appellate Panel Affirmed the Bankruptcy Courts Judgment

A little housekeeping regarding law. Issue preclusion does apply in nondischargeability adversary proceedings pursuant to § 523(a) and See Grogan v. Garner, 498 U.S. 279, 284 n.11 (1991). Federal Bankruptcy Courts must also afford full faith and credit to state court judgments. 28 U.S.C. § 1738. So the Bankruptcy Court in this adversary proceeding required to give the Oregon State Court’s default judgment against the Elder Abusers the same preclusive effect it would be given by other Oregon courts. See Far Out Prods., Inc. v. Oskar, 247 F.3d 986, 993 (9th Cir. 2001).

Generally the elements of issue preclusion are well settled. If the Oregon State Court default judgments provides the following 5 elements, then the Bankruptcy Court in the dischargeability adversary proceeding is bound by the findings of fact and law in the Oregon State default judgment against the Elder Abusers.

1. The issue in the two proceedings is identical. 2. The issue was actually litigated and was essential to a final decision on the merits in the prior proceeding. 3. The party sought to be precluded has had a full and fair opportunity to be heard on that issue. 4. The party sought to be precluded was a party or was in privity with a party to the prior proceeding and, 5. The prior proceeding was the type of proceeding to which this court will give preclusive effect.

The Elder Abusers were part of both lawsuits whether the Elder Abusers participated in the Oregon State Court lawsuit or not.

In this appeal the Elder Abusers disclose or argue why they did not defend the Oregon State Court lawsuit. The inability to retain or hire an attorney, so the Elder Abusers were not given a full and fair opportunity to litigate the Oregon State Court lawsuit. The problem is the Elder Abusers were in fact served and aware of the Oregon State Court lawsuit and their choice to not defend or have the ability to retain a bankruptcy attorney is not denial of a full and fair opportunity to be heard. If the Elder Abusers could establish they were procedurally denied evidence or be heard then maybe no full or fair opportunity to be heard could be found in their favor.

Two of the issue preclusion elements need a more detailed analysis: (1) whether the issues in the two proceedings were identical; and (2) whether the issues were essential to the state court’s judgment.

The lower Bankruptcy Court said yes, and the Ninth Circuit Bankruptcy Appellate Panel agreed.

Oregon state courts have four elements regarding financial abuse of elders: (1) a taking or appropriation (2) of money or property (3) that belongs to an elderly or incapacitated person, and (4) the taking must be wrongful.

The Ninth Circuit Court of Appeals disagreed with the lower bankruptcy court’s decision but still affirmed the entry of the dischargeability judgment against the Elder Abusers for separate findings.

Oregon State’s elder abuse law does not specifically require a finding of a fiduciary relationship while Section 523(a)(4) of the Bankruptcy Code does. This is a problem. But the 9^th Cir. BAP found the default judgment did include enough information to assume, or read into the default judgment, the elements for larceny and embezzlement pursuant to Section 523(a)(4). What did the default judgment in Oregon State Court specifically find though?

The 9^th Cir. BAP found that the elements of the Oregon State elder abuse law are exact as to larceny and embezzlement when compared to Section 523(a)(4) even if the Oregon State court default judgment did not go into detail as to findings of fact. It must be assumed the entry of the default judgment incorporates the elements of Oregon State law regarding elder abuse or the default judgment would not be entered period.

The 9th Circuit Bankruptcy Appellate Panel therefore conducted the analysis for the Oregon State court providing the Oregon Court had to make finding that the Elder Abusers: (1) took or appropriated (2) money or property (3) that belongs to the victim, who was incapacitated, and (4) the taking was wrongful. They held there was no need to find the Elder Abusers were acting in fiduciary capacity given the elements for larceny and embezzlement pursuant to Section 523(a)(4) were satisfied.

Do Not Let A Default Judgment Be Entered Against You At All Costs

This is a cautionary tale of allowing a default judgment entered against you. Even if the default judgment does not include detailed findings of fact and law a court may look to the elements of the law in support of the default judgment to determine if the elements for dischargeability of a debt are satisfied. The entry of the default judgment itself is probative in jurisdictions that allow the preclusive effect of default judgments in Bankruptcy Court cases.

California’s CCP 704.225 Exempt and Extend Necessary for Maintenance and Support

By Ryan C. Wood

Howdy humans. In 2020 the State of California legislature and Governor Gavin Newsome changed the California exemptions under to California Civil Procedure Section 704. There is also the CCP 703 exemptions. Exemptions protect your assets from those you owe money to in the event the creditor seeks collection for the money you owe them. The CCP 704 exemptions are usually chose when the debtor has equity in their primary residence. The CCP 704 exemptions have large exemptions, homestead exemptions, to protect a lot of equity in a primary residence. The CCP 703 set of exemptions has a limited or lower dollar amount homestead exemption. No human can be left shirtless and penniless even if they owe money to some third-party. There are exemptions for different categories of assets such as: household goods, jewelry, vehicles, clothes, equity in primary residence and bank account money. There are more, but these are the main exemptions. The CCP 704 exemptions were changed to add a new exemption to protect bank account money for those choosing the CCP 704 exemptions.

California Civil Procedure Section 704.225

California added a great exemption to the California Civil Procedure Section 704 set of exemptions for bankruptcy lawyers to help clients discharge their debts while having enough money to continue to eat and live.

704.225 provides: “Money in a judgment debtor’s deposit account that is not otherwise exempt under this chapter is exempt to the extent necessary for the support of the judgment debtor and the spouse and dependents of the judgment debtor.”

Great, so what dollar amount is “extent necessary for the support of the judgment debtor and the spouse and dependents of the judgment debtor.” Is it $5,000 or $50,000?

When new exemptions are added there is no case law or interpretation of the new exemption initially. Can a debtor exempt $50,000 in their bank account? Can a debtor exempt only $5,000 in their bank account when seeking protection under the Bankruptcy Code?

Other exemptions share the same language as Section 704.225. “Extent necessary for the support of the judgment debtor and the spouse and dependents of the judgment debtor,” language is also used in exemptions CCP 704.100, 704.150 and 704.140.

Exemption CCP 704.100 protects certain life insurance policy claims. Exemption 704.150 protects certain wrongful death claims. Exemption 704.140 protects certain personal injury claims.

Interpretation of Extent Necessary for Support of Judgment Debtor or Bankruptcy Filer

While there currently is limited interpretation of the new 704.225 exemption there is analysis of other exemptions using this same language.

We shall start with In re MacIntyre, 74 F.3d 186, 188 (9th Cir. 1996) and also In re Spenler, 212 B.R. 625, 628 (9th Cir. BAP 1997); In re Toplitzky, 227 B.R. 300, 302 (9th Cir. BAP 1998).

Section 704.225 exemption is part of California state law, accordingly the state law burden of proof applies. See Schwartzman v. Wilshinsky, 50 Cal. App. 4th 619, 626, 57 Cal. Rptr. 2d. 790, 795 (1996); In re Davis, 323 B.R. 732, 741 (9th Cir. BAP 2005) (Klein, B.J., concurring) (burden of proof is substantive, so state law should provide the rule of decision regarding the burden on each state exemption).

California exemption statutes shall be liberally construed, for their manifest purpose is to protect income and property needed for the subsistence of the judgment debtor (bankruptcy filer). See In re Payne, 323 B.R. 723, 727 (9th Cir. BAP 2005) (citation omitted); see also Schwartzman, 50 Cal. App. 4th at 630 (California exemption statutes should be construed to benefit the judgment debtor).

When it comes down to it whether the amount exempted pursuant to CCP 704.225 is determined on a case by case basis with consideration of factors including income, employment situation and prospects, retirement status, age, life expectancy, health, certainty of future financial status, budget, ability to regenerate retirement assets, tax obligations, and dependents’ needs.

If the debtor of judgment debtor is an elderly retiree, the bankruptcy court should consider the debtor’s future financial needs and seems to imply that future financial needs will be at least as great or greater than present.

Back to Specific Dollar Amounts

Circumstances vary widely between one human and another. Expenses from rent, basic living needs, necessities versus luxury, car payments, student loans, taxes owed and many other factors will all be relevant. The bankruptcy filer has the burden of proving the amount exempted is necessary for the maintenance and support of the debtor in the future rather than the past. The analysis should place greater importance on future needs of the debtor. Again, bankruptcy has no intent of leaving humans penniless upon receiving a discharge of debts. Humans must be able to continue a seemingly normal existence and this is where problems always will arise. Bankruptcy Court’s have broad discretion to determine what is necessary or not. What is necessary for one human will be different than another human with different obligations in life. One debtor may have a dependent that is disabled, a young child, or some other human that requires special needs. This human will have higher expenses as a result and therefore be able to exempt more bank account money than the human with no dependents.

For elderly retirees most have limited income and any money they can squirrel away in a bank account. An elderly retiree with fixed income should be able to exempt more bank account money than a 30 year-old still working everyday with no future limits on ability to earn more money. Bankruptcy attorneys will need to ask detailed questions about past and future needs of the debtor specific and possibly special to their life. These types of difference or factors need to be supported by declaration and other documentary evidence. Income versus necessary monthly expenses should be balanced and evidence the likelihood of future savings will be limited therefore every penny of existing money in a bank needs to be exempted/protected.

If an elderly retiree only has $15,000 in the bank that will probably be all they really have as to liquid assets. $15,000 for most humans only represents a few months of expenses or a couple of emergencies that cannot be anticipated, and the money just needs to be available to deal with the emergency. If an objection to the claimed exemption is filed, the basis for the dollar amount exempted must be supported by declaration and documentary evidence to prove the amount is necessary for the maintenance and support of the debtor and their dependents.

Howdy Humans: Why Are Credit Card Interest Rates So High?

By Ryan C. Wood

They say your credit card interest rates are based upon credit risk. It is far more complicated than that and a little history regarding interest rates is helpful. Your individual credit risk does come into play. It is just not as large a part of the equation as they would have us all believe. Credit card interest rates are high because there is no law capping credit card interest rates under Federal Law. Prior to 1978 state usury laws limited or capped credit card interest rates for you protection.

In 1978 the Supreme Court of the United States allowed one bank in one state to export their interest rates based upon their state law to their customers in other states with different usury laws limiting interest rates. Naturally state “X,” to be named later, just did away with all caps on interest rates under their state law, the banks said great, we will come setup shop in your state with no cap on interest rates so we scan export high interest rates to all our customers throughout the United States of America. This is why credit card interest rates are so high and everything else you hear is just fake news to take your eye off the ball.

Here in California generally the cap on interest is 10%. This is a generalization and there are of course exceptions after exceptions. The 10% cap only really applies to human to human extension of credit/loans. Does not matter given Citibank, N.A. is doing business out of South Dakota and South Dakota has no caps on interest rates. Citibank, N.A. may export the interest rates of South Dakota to their customer here in California trumping the California state law usury 10% cap.

If You Have A Net Over Worth $1.0 Million How Can You Have A 79% Interest Rate?

They say interest rates are based upon your credit risk. That is why your credit card interest rate is so high. That is not really true and probably the smallest part of the truth. If so, then why does someone with an 825-credit score have not one credit card with an interest rate under 15%? If so, then someone that has never missed a payment on anything their entire life should have a credit card interest rates that are extremely low, say 5%. No, this is not how it works because YOUR credit risk is only a small part of the truth. The truth those who pay each month and on time will always have to pay higher rates to make up for those that default. So the truth is extension of credit/loans are given to those with a higher credit risk driving up the interest rates for everyone. Why not have a lower rate of default by lowering interest rates? No, no, we make more money getting everyone to pay once illegal loan shark interest rates.

The truth is 79% interest on a revolving credit account for an 80-year human that has a net worth over $1.0 million is somehow legal and has nothing to do with credit risk. This is actual fact that happened to one human. Only in certain aspect of our economy do we allow buyer beware to fully take over.

Attempts To Reform Interest Rates At The Federal Level Are Always Rejected

It seems so simple given we had protection for consumers against loan sharking and predatory lending to consumers based on each state’s laws. Just legislate caps on interest rates at the federal level and we will no longer have this patchwork of state usury laws confusing everyone and it seems limitless loopholes. As I have yelled from the highest mountain top for years, we protect people from price gouging during natural disasters yet allow humans to get destroyed by once illegal interest rates during their personal financial disaster. Why is a bankruptcy attorney arguing for limits on interest rates decreasing the number of bankruptcy cases filed? How about we be intellectually honest and treat all types of disasters equally. Oh no, there is that word again, equal. We cannot equally apply philosophies to different circumstances creating equal opportunity. Somehow capping interest rates is arguably a bad idea because we have a free market economy? That has to be the biggest joke out there and the biggist lie. The government/law allows, even requires, manipulation of the free market creating financial losers and winners all the time. This market manipulation is how we have a safe food supply, safe buildings, safe cars, seatbelt laws, product liability, and finally speed limits. The market is manipulated and made not free all the time for all kinds of horrible reasons. THE REAL MANIPULATION OF THE MARKT NOW IS NOT LIMITING INTEREST RATES GIVEN WE KNOW NOT LIMITING INTEREST RATES IS BAD FOR HUMANS. THIS IS WHY LAWS WERE PASSED IN EACH STATE TO LIMIT INTEREST RATES.

PLEASE EXPLAIN TO ME HOW DOING AWAY WITH SEATBELT LAWS HELPS CONSUMERS? PLEASE EXPLAIN TO ME HOW DOING AWAY WITH LIMITS ON INTEREST RATES HELPS CONSUMERS?

You all support rent control right. The manipulation of the market for a very select few humans creating massive inequality. If you qualify for rent control can you even have credit cards? If you are a rent control human can you human also have your interest rates be capped too? You are limiting how much rent control human pays for rent but still allow rent control human to have a $1,200.00 phone with a monthly bill of $200.00? How can a trillion-dollar world conglomerate charge rent control human 36% interest on what they are purchasing at Target? The human only has money to drive to Target and buy stuff because their are on rent control and pay less rent. Does that make any sense to you? So this human’s landlord is forced to not make as much money so the rent control human can have four credit cards, each with a 30% plus interest rate, and buy a bunch of junk that sooner than later will all be worth $0.00. I am all about affordable housing but rent control does nothing to fix the problem of affordable housing. Rent control merely treats the cancer for a select special few and does nothing to cure the cancer. Everyone seems to like band aids to cover cuts rather than preventing further cuts. No, no, we will just keep placing band aids.

See these issues are cherry-picked. So just one parameter (RENT) is manipulated while not changing anything else in someone’s financial life. It will never work. No doctor is going to reattach your pinky finger when you have a punctured lung. You cannot cherry-pick the remedy to the problem and ignore the other problems that are also contributing to the patient’s death. So why do we do this when it comes to economic problems? Why can we not consistently apply philosophies equally to all issues?

The Most Recent Matry I Am Aware Of – U.S. Sen. Sherrod Brown (D-OH)

U.S. Sen. Sherrod Brown (D-OH), Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs apparently would like to cap interest rates for poor people at 36% interest. Sorry, but that will not help much, is still loan sharking, and used to be illegal for a reason. Apparently, the following bill/law will be introduced to the U.S. Senate entitled: “Protecting Americans from Debt Traps by Extending the Military’s 36% Interest Rate Cap to Everyone.” Thirty-six percent is almost five times the eight percent reasonable rate of return for us normal oxygen breathing humans are supposed to be happy to receive on our investments. Wish I could guarantee 36% return on my money guaranteed.

Toomey Statement 7-29-21.pdf (senate.gov)

I may comment on each paragraph of this “Opening Statement” by Ranking Member Senator Pat Toomey (R-Pa) via YouTube. Please YouTube Ryan C. Wood and Bankruptcy to find the YouTube video. It may not be up yet, but it will be shorty.

Hello Senator Sherrod Brown. How about creating another federal or state entity to help protect consumers? We have/had the Federal Trade Commission along with the Consumer Financial Protection Bureau (FTC). It would be nice to see the FTC did not allow two corporations to merge together further and further limiting choice by human consumers thereby forcing us to pay more? It would be nice to get back to trust busting for the benefit of the consumer. Then the Consumer Financial Protection Bureau (CFPB) was created after the mortgage meltdown to help consumers more. So now we have two federal entities, FTC and CFPB doing the same consumer protection, so consumers should be twice as protected right? Both entities are doing great things to help consumers everyday. The job is overwhelming though and there are just too many scamsters out there to prosecute. For ten plus years I see the same problems with interest rates and consumer loans and credit cards repeatedly.

Here in California Governor Newsome signed into law the California Consumer Financial Protection Law (CCFPL) which created the new California government entity the Department of Financial Protection and Innovation (DFPI) in September 2020. The language says the DFPI is supposed to resemble the Consumer Financial Protection Bureau. But the CCFPL and DFPI only create another set of eyes on persons offering or providing consumer financial products or services in California. Like magic federal and state-chartered banks ARE NOT SUBJECT TO REGULATION BY THIS NEW CALIFORNIA CONSUMER FINANCIAL PROTECTION LAW. Ah, so you are creating more oversight of “persons” making loans to other “persons” in the State of California? I will guess that the big federal and state chartered banks are the ones making 99.99% of loans and they are the ones that need 99.99% more regulation and oversight. THIS IS THE NEW NORMAL THOUGH. THE LAW ALLOWS CORPORATIONS AND THE GOVERNMENT ACTORS TO DO TO OTHER HUMANS WHAT THEY [CORPORATION OR GOVERNMENT EMPLOYEE] COULD DO TO ANOTHER HUMAN INDIVIDUAL ON AN INDIVIDUAL LEVEL.

The reality is there is very little competition at the corporate large-scale consumer credit industry. There are only a few players, and THEY ARE TOO BIG TO FAIL, and you are TOO SMALL TO MATTER. The thermometer says 80 degrees, so I report the 80 degrees. I did not make the 80 degrees. The fake news is your individual life, your rights, your happiness, is more important than the over all system. The overall system sadly is more important than you.

Caps On Interest Rates Were Legislated For a Reason: Your Financial Protection

It all comes down to bargaining power and the free market. Or what “they” call the free market. Poor consumers have no bargaining power so those with the means of production, the money, can take advantage of the consumer. This is precisely what took place until laws were passed to limit interest rates, prevent abusive loansharking, and bring order to the chaos. The reason why usury laws were passed to limit interest rates still exists, yet we have chosen, well the Supreme Court of the United States in Marquette National Bank v. First Nat’l. Bank of Omaha Corporation, 439 U.S. 299 (1978) decided to take the limits off interest rates. So, if there is no more cap on interest rates how is the problem this creates being solved now? It is not. You all are getting fleeced by banks and interest rates that are supposed to be illegal. Since life is so short you should probably just dump as much money in the stock market and take advantage of the increase in share value of these same corporations. Why make things better when you can profit off the bad?

The 1978 Marquette National Bank Supreme Court Decision Changed It All

I believe this case, its holding, changed more about our lives than previously considered. Prior to 1978 there were caps on interest rates. Each states usury laws regarding interest rates controlled. In 1978 state parks were free. There were no bank fees for services such as balance check fee, money order fee, ATM fee or statement fee. Government buildings were not Taj Mahal’s built with marble with an entire room dedicated to “espresso.” Most people did not have multiple revolving consumer unsecured debts (a bunch of credit cards with balances carried over each month accruing interest.)

The removal of caps on interest rates changed it all. This started the downward spiral of your ability to work a normal job and afford a normal house, two or more cars, a boat, a houseboat, a cabin, and retirement. All of this when working a normal job clocking in day in and day out. You know this person can no longer afford to buy a house let alone the other items to enjoy life.

We are going to open the credit markets to the higher risk borrowers that are less likely to pay back the debt, so we have to charge everyone higher interest rates to lend you the money. This is a blatant lie and an example of how truth is disseminated modernly. We small consumers prior to 1978 were protected by state usury laws limiting credit card interest rates. That is the entire point of the usury laws existing to begin with. That said this limited the availability of credit and extension of credit. Limiting the availability of credit to the masses is also bad. Having the law determine the maximum interest rate is always better than “Joe Loan Shark” choosing an interest rate for a human……..

This opened the door to blatant discrimination that previously could not exist given there was capped interest rates for all; capping credit card interest rates at 10% ensures the delta/difference for manipulation is far less; we all get the same equal treatment with the same limited interest rates
When interest rates can be as high as 79% a company can give one person an interest rate of 5% and another 79% under the lie of credit risk; what a massive delta for discrimination creating winners and losers in our FREE market…….

So it is not your credit score or likelihood to pay back the debt controlling interest rates but the law itself, greed and extension of credit to everyone.

There is nothing new about human interaction between humans or how humans interact with Earth. Those in power who are not ignorant just ignore what history has taught us for their own personal financial gain. Our system determined it was in the best interest of all to limit interest rates to limit abuse of the poor. Once that determination is made over years of experience, trials and tribulations, I would call this an absolute. There are certain absolutes in the law and why certain laws exist. You can call it natural law. Limitations on interest were legislated to thwart loan sharking for the benefit of all yet somehow, we reverted back to loan sharking by even more powerful entities: corporations that live on forever. Infinite existence with infinite financial dealings with humans with limited lives. The law got rid of individuals or organized crime from loan sharking and gave the reigns to legal corporations.

It is called capitalism and life is just so short that humans choose themselves over other humans. We are lucky to get 50 good years. The first 18 years, or more, are spent trying to figure out whom you are and if what your parents brainwashed you with is the right or wrong stuff. The next years are traditionally dedicated to making other humans and money to support them gaining experience. The next period can range anywhere from 20 – 50 years or more depending upon the individuals’ finances. Sadly, some humans have to work their entire lives until they die. No human should be forced to die working. So not necessary in 2022.

THERE IS A FORREST BEHIND THE TREES; A BIGGER PICTURE

This saying is about only being able to see the first row of trees yet there is a vast forest behind that cannot be seen. I encourage everyone to research the forest and ignore the first row of trees. You must ignore the first thing you hear or read. There is a reason this is the first thing you are being told. The first row of trees is what leads to commercials advertising how cigarettes are healthy for you. If you did not know this is true it is true. There is always a bigger picture and what you are being shown is rarely the truth.

WHY ARE CORORATIONS PART OF THIS DISCUSSION?

Corporations are part of this discussion because the corporate entity insulates the officer and director humans from personal liability when charging humans loan sharking interest rates. It is the “corporation” doing this not me personally. The “corporation” is a fault. Well, the corporation breaks all the rules of punishment and deterrence our system is based upon. We cannot put a “corporation” in jail or put the “corporation” to death for premeditated willful murder of another human. A “corporation” can commit willful first-degree murder and be fined money for it. A human being will be put in prison and potentially put to death. So, the “corporation” charges you the anti-human financial health interest rates and there is not one single human liable for such an atrocity.

Here is an excerpt from a Federal Reserve article written by Lisa Chen and Gregory Elliehausen published on August 21, 2020.

Trends in Costs of Consumer Finance Companies
Gross revenue of consumer finance companies in 2015 was $29.09 per $100 of receivables (table 1), an amount higher than gross revenue per $100 of receivables in 1964 and 1987 ($21.40 and $24.89, respectively). Total cost in 2015 ($25.19 per $100 of receivables) was also higher in than in the earlier years. Gross revenue less total expenses (net income) is the cost of equity funds. This amount is compensation for owners’ investment on the firm. The cost of equity funds in 2015, $4.80 per $100 of receivables, was more than twice the cost of equity funds in 1964 or 1978.

So I will say that legislating out caps on interest rates significantly expanded the United States economy, hell the world economy, on the backs of working Americans and going into debt. The argument goes now that banks can offer higher interest rates, they can offer credit to higher risk borrowers allowing everyone to have stuff, cars, whatever without having the money to purchase the thing. Previously only high-cost items such as homes and cars had loans. Everything else you had to pay for it all at once or you could not purchase the thing. K-Mart has lay-away for certain items. So, has opening up credit markets to everyone been a good thing? For the rich and powerful of course. For the poor and fragile no.

1968 is apparently the first-year revolving consumer credit was totaled. In 1968 Americans had $1,316,000,000 ($1.3 billion) in revolving consumer credit debt versus $105,455,000,000 ($105 billion) in nonrevolving consumer debt like home or vehicle loans.

In 1968 revolving consumer credit debt was less than 1.5% of total consumer credit debt.

In 1978 revolving consumer credit debt increased to $36.92 billion versus nonrevolving consumer credit debt of $225,840,720,000 ($226 billion). 1978 revolving consumer credit grew to over 6% of total consumer credit debt.

In 2021 revolving consumer credit debt increased to $974 billion versus nonrevolving consumer credit debt of $3.2 trillion. As of 2021 revolving consumer credit grew to over 23% of total consumer credit debt.

That is exponential growth. $974 billion at an average interest rate of what? Ony 6 percent or over 35%? You do the math, and the result is trillions in interest for the poor to pay to obtain credit. Prior to 1978 this was not legally possible for your protection.

Look At The Stock Market Before 1978 and After 1978

Please go to: https://www.macrotrends.net/2324/sp-500-historical-chart-data and look at the chart after 1978. But for a couple of blimps nothing but up for the largest companies in the world. Is this direct evidence or merely a correlation?

How about something like:

THE PERSONAL FINANCIAL DISASTER AND EMERGENCY PRICING ABUSE PREVENTION ACT

So a law exists entitled: The Financial Disaster and Emergency Pricing Abuse Prevention Act barring price gouging during natural disasters and PANDEMICS. Have you heard of enforcement of this Federal Law during the COVID NOVEL CORONA VIRUS PANDEMIC? Yeah, some humans believed they could corner the market on hand sanitizer by doing what would normally be a perfectly legal way to screw people and charge too much. So how about “The PERSONAL Financial Disaster and Emergency Pricing Abuse and Prevention Act? Seems intellectually honest and consistent right?

What is the point protecting humans from one disaster only to leave them entirely exposed to other types of disasters? Is this intellectually honest to you? If someone is starving due to loss of employment, does it really matter how or why they are no longer employed and cannot feed themselves anymore? The important part is they are starving, and it is wrong to take advantage of this persons because they are under this stress. Yet the system has you walking the fence on this one whether you admit it or not. Anyone can buy a 75” television whether they need it or not or can afford or not at this point on credit. There is no credit check when using the credit card. When the card is issued a marginal evaluation of ability to pay back the credit card is made. Understand that doing a thorough evaluation of ability to pay first was taken off the table with the SCOTUS 1978 holding. Do not worry about ability to pay. Just charge a very high interest rate to even it all out. Why treat people fairly and equally when we can just charge 36% interest and we, the big bank corporations, will make money hand over fist no matter what. It is a mathematical certainty. We will CAPITALIZE upon the masses and the masses do not care so what is the problem?

What is bad for one human is bad for all humans. Be stubborn about this. If you believe this and execute on it all humans should be happy and healthy. You do want this right?

You must work on raising the tide, so all ships go up.

Can you honestly believe someone is in their right mind getting a payday loan at 70% or more in interest so they can eat or pay their rent? Or the fees for this short period loan are 150% of the total amount borrowed?

Are you being kept just treading water, your head is just above the water lever, never actually swimming anywhere but you can always see the land?

Seems like prior to 1978 humans had a house, a boat, a motorhome, retirement, and healthcare all while working normal jobs. How a wonderful a world this was. Can you imagine? State and Federal parks did not have admittance fees and the maintenance of the land was all part of your taxes already. This is also back when government buildings would never contain marble. There was a feeling of we are all in the same boat. That changed. I argue our entire economy changed with increased access to credit for all.

Back to The Personal Financial Disaster and Emergency Pricing Abuse Prevention Act. The human seeking a payday loan is under constant mental stress for probably an extremely extended period of time. Unlike someone that is involved in an earthquake or tornado. The earthquake or tornado happens, you deal with it, and hopefully things get better within a year or so. Your personal financial disaster does not register the same as an equally devastating natural disaster. Your personal financial disaster may extend for 10 years or more before there is some sort of finality for the stress and anxiety to go away permanently. Your personal financial disaster should be treated the same way as a personal disaster due to a natural disaster. The stress someone is under is daily when they are coming up short each day on their bills. It is detrimentally affecting their entire life which will also affect yours because you are living in the same world as them. Those things other people are doing you complain about are symptoms of their financial disaster and these symptoms are negatively affecting your life. How about we do things that cure the debt cancer and not just treat the cancer only to have the patient die? Why?

Has Quasi-Deregulation of Caps on Interest Rates Worked?

Has this been a good thing? I say no. As a bankruptcy attorney that has dealt with thousands of humans in financial turmoil, I have to say no. It has just led to financial abuse of those who can least afford it. We humans have been here before. This is nothing new.

There is a reason why we created usury laws and caps on interest rates. We humans lived for many years with no protection from those more powerful holding all the means of production and generational wealth.

Individual humans born with nothing have always and will always needed protection from those that were born with everything. This is an absolute truth regardless of period of history, location on Earth, skin color, or gender. When will humans learn? We must “OUTTHINK INSTINCT” (@ All Rights Reserved 2022) and this is what laws are.

Consumer Credit Levels:

See Federal Reserve: www.federalreserve.gov/releases/g19/hist/cc_hist_sa_levels.html

Unconscionability/Unconscionable:

CIVIL CODE – CIV – TITLE 4. UNLAWFUL CONTRACTS [1667 – 1670.11]

1670.5.

(a) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.

(b) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination.

Ninth Circuit Bankruptcy Appellate Panel Opinions – March 2022

By Ryan C. WoodG

1. Gutierrez v. Oregon State Department of Corrections – 523(a)(17), 11 USC 28. 1915(b)(2)

2. Ebuehi v. United States Trustee, Los Angeles – 727(a)(3), (a)(4), (a)(6)

_____________________________________________________________________________________________________

1. GUTIERREZ; BAP No. ID-21-1156-SGB; March 2, 2022

Bankruptcy court does not have “related to” subject matter jurisdiction over claims/allegations that arise after a Chapter 7 bankruptcy case is fully administered. The claim/allegation cannot therefore affect or change a debtor’s rights, liabilities, options, or freedom of action which impacts the administration of the original bankruptcy case; it is done; See Section 523(a)(17) of the bankruptcy code and 28 U.S.C. Section 1915(b)(2)

Mr. Gutierrez appealed a couple of issues from his Chapter 7 bankruptcy case. Yes, humans may file for bankruptcy relief when incarcerated. Most bankruptcy attorneys will never file a case for an incarcerated human. It is far more likely that a human files their own Chapter 7 bankruptcy case rather than hire a bankruptcy lawyer to assist them.

Mr. Gutierrez received his discharge of debt, the case was closed, then Mr. Gutierrez reopened the Chapter 7 case to file two adversary lawsuits alleging various allegations. One of which was against the Oregon State Department of Corrections. Mr. Gutierrez owed a debt based upon federal court fees incurred under 28 U.S.C. Section 1915(b).

While Mr. Gutierrez admitted that the nature of the fees are governed by Section 523(a)(17); barring dischargeability of such fees, he argued that

Bankruptcy Code Section 523(a)(17) provides:

(a)A discharge under section 727, 1141, 1192 [1] 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt—

(17) for a fee imposed on a prisoner by any court for the filing of a case, motion, complaint, or appeal, or for other costs and expenses assessed with respect to such filing, regardless of an assertion of poverty by the debtor under subsection (b) or (f)(2) of section 1915 of title 28 (or a similar non-Federal law), or the debtor’s status as a prisoner, as defined in section 1915(h) of title 28 (or a similar non-Federal law)

The not dischargeable federal fees are collected from the inmate’s prisoner trust account by the applicable correctional institution. See 28 U.S.C. § 1915(b)(2). Thus, Mr. Gutierrez’s issue is with the Oregon Department of Corrections.

FIRST, Mr. Gutierrez argues the federal court fees, while covered by Section 523(a)(17), they should be dischargeable given none of his appeals were frivolous. SECOND, Mr. Gutierrez challenged how the federal court fees were collecting the allegedly not dischargeable federal court fees. 28 U.S.C. Section 1915(b)(2) limits the amount that can be collected to 20% of the prior months credited income to their prisoner account without consideration of the number of cases the prisoner owes federal court fees. Mr. Gutierrez’s issue is notification of how the not dischargeable court fees were to be collected: 20% of his income PER lawsuit filed and not 20% of total without consideration of number of cases.

The lower bankruptcy court dismissed the Section 523(a)(17) allegation and held it did not have jurisdiction over the allegation of wrongful collection method of the federal court fees and 28 U.S.C. Section 1915(b).

Standards of This Appeal

De novo review = appellate court reviews case as if the case is being heard for the first time; subject matter jurisdiction requires de novo review upon appeal

Abuse of discretion = concerning retention of jurisdiction after case dismissal

Abuse of discretion occurs when the lower bankruptcy court applies an incorrect legal rule or when its factual findings are illogical, implausible, or without support in the record. TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832 (9th Cir. 2011).

Mr. Gutierrez focuses his argument on “related to” the bankruptcy case for the lower bankruptcy court to have jurisdiction. A bankruptcy court may have “related to” jurisdiction if the result could change a debtor’s rights, liabilities, options, or freedom of action which impacts the administration of the original bankruptcy case.

HOLDING: The collection of the not dischargeable federal court fees is not part of the bankruptcy court’s jurisdiction. At the time Mr. Gutierrez filed the adversary proceeding lawsuit his Chapter 7 bankruptcy case was fully administered. Only then did the Oregon Department of Corrections begin collecting the fees. Jurisdiction for “related to” is the date the adversary lawsuit is filed; not before.

In re Casamont Invs., Ltd., 196 B.R. at 521 (citing In re Fietz, 852 F.2d at 457 at n.2); measure of time is as when adversary proceeding filed/commenced

Montana v. Goldin (In re Pegasus Gold Corp.), 394 F.3d 1189, 1193 (9th Cir. 2005)

Fietz v. Great W. Sav. (In re Fietz), 852 F.2d 455, 457 (9th Cir. 1988) (cleaned up) (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984))

_____________________________________________________________________________________________________

2. Ebuehi, BAP No. CC-21-1199-FLT, March 8, 2022

The Ninth Cir. BAP held the bankruptcy court did not error in denying the Ebuehi’s their discharge pursuant to Sections 727(a)(3), 727(a)(4), and 727(a)(6).

The Ebuehi’s originally filed a Chapter 11 reorganization case and confirmed, obtained approval, of the Chapter 11 Plan of Reorganization. After approval creditors accused the Ebuehi’s of not making payments to them properly and misappropriating $5,000.00 a month in rental income. The Court issued an order to show cause why the case should not be converted to Chapter 7 liquidation. No real fight was mounted, and the case was converted to Chapter 7.

The Chapter 7 Trustee assigned to the case naturally sought to liquidate the Ebuehi’s assets including a piece of real property the Ebuehi’s resided at. The Ebuehi’s eventually vacated the property. The Chapter 7 Trustee then decided to file an adversary proceeding to take aware the Ebuehi’s discharge for alleged wronging doing pursuant to Section 727(a)(3), (a)(4) and (a)(6).

Section 727(a)- the court shall grant a discharge unless

(3) the debtor concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information

(4) the debtor knowingly and fraudulently, in or in connection with the case (A) made a false oath or account

(5) the debtor has failed to explain satisfactorily, before determination of denial of discharge under this paragraph, any loss of assets or deficiency of assets to meet the debtor’s liabilities

So the Court held denial of discharge was warranted under § 727(a)(6) given the Ebuehi’s had failed to comply with the Court order regarding conversion to Chapter 7 and turnover of the real property to the Chapter 7 Trustee.

In order to establish that the debtors “refused” to comply with an order, the party seeking to deny discharge “must show that Debtors (1) were aware of the order and (2) willfully or intentionally refused to obey the order (i.e., something more than a mere failure to obey the order through inadvertence, mistake or inability to comply).” Vaughan v. Weinstein (In re Vaughan), BAP No. NV-15-1254-JuKiD, 2016 WL 878308, at *7 (9th Cir. BAP Feb. 29, 2016).

Under § 727(a)(4) the debtors allegedly made a false oath regarding the number of missed mortgage payments. The Ebuehi’s has 11 missed mortgage payments versus listing only 4. Okay, so did they intentionally does this for some reason and does it really matter? Apparently yes, yes it did.

The fundamental purpose of § 727(a)(4)(A) is to insure that the chapter 7 trustee and creditors have accurate information without having to conduct costly investigations.” Fogal Legware of Switz., Inc. v. Wills (In re Wills), 243 B.R. 58, 63 (9th Cir. BAP 1999).

Under § 727(a)(3) because the Ebuehi’s allegedly failed to maintain records regarding the rental payments or turn over their record-keeping notebook, making it impossible to ascertain their financial condition.

Debtors are required to “present sufficient written evidence which will enable his creditors reasonably to ascertain his present financial condition and to follow his business transactions for a reasonable period in the past.” Id. (quoting Rhoades v. Wikle, 453 F.2d 51, 53 (9th Cir. 1971)).

The Ninth Cir. BAP found no error in the bankruptcy courts denial of the Ebuehi’s discharge.

Mortgage Interest and Fun With Numbers

By Ryan C. Wood

Do you know how much your home will cost you? That is the total cost of the loan? Did you look at the total amount of interest you will end up paying if you make each and every mortgage payment for 30 years? What if you refinance in year three? How will that change what you are paying? One of the nastiest parts of purchasing a home is that your mortgage payments are heavily weighted to pay interest first rather than principal. When a house value is continuing to increase this is not a huge issue. If the value of the home is slowly increasing or the market is stagnated your investment by buying the home is actually decreasing each month. The mortgage meltdown crisis should tell you enough about how things work.

Too big to fail versus too small to matter is how it went down. Just ask any bankruptcy attorney that lived the mortgage meltdown.

The thing is though most people will never be able to pay cash for a house. Spreading out payments over 30 years makes the loan affordable and allows more people to purchase homes that could not otherwise. Purchasing a home and the resulting fixed monthly mortgage payment is usually a huge financial win for housing costs. Rent increases with inflation and other market conditions significantly over time. This is why rental properties are such a great investment under most circumstances. Once you purchase a home though hopefully your wages increase but your housing costs stay the same.

What If Mortgage Payments Were Half Interest and Half Principal From the Beginning?

Here comes the fun with numbers part to illustrate the huge difference. Let us take a $1,000,000 homes since that only gets you one bedroom with a bathroom on the Peninsula in the Bay Area where I am located. With a 20% down payment to avoid private mortgage insurance the mortgage loan will be $800,000.00. To pay off the $800,000.00 loan at a fixed interest rate of 3.7% and amortized over 30 years the total amount paid will be $1,427,615.00. Of that total interest paid is $525,615.00.

Amortization Schedule

$800,000.00 at 3.7% interest with 360 monthly payments

Total Payments: $1,325,616.14

Total Interest: $525,616.14

The first mortgage payment is about 67% applied towards interest and 23% applied to principal. Over the life of the 30 year mortgage these percentages slowly change. At the 6 year mark 60% is applied to interest and 40% is applied to principal or $1,471.24 towards principal and $2,211.02 towards interest ($3,682.26 total monthly payment). The middle mark of the loan term or the 181th payment is 43% principal and 57% interest. The last payment of 360^th payment is a mere $11.32 towards interest and $3,670.95 to principal and the loan is paid in full. The 360^th payment is 0.30% interest and 99.70 % principal.

At 2.75% interest: Total Interest Paid: $375,734.60

At 3% interest: Total Interest Paid: $414,219.62 +38,485.02

At 4% interest: Total Interest Paid: $574,956.05 +$160,736.43

At 4.5% interest: Total Interest Paid: $659,253.69 +$245,034.07

Let us assume we are in year 7 and you have now paid $316,674.36 in total principal and interest. Of this you have paid approximately $174,173.00 in interest through 86 or seven years of mortgage payments. We will come back to this below when examining the result of a refinancing the mortgage to a new fixed 30 year loan to get a better percentage rate of pull out equity that has accrued in the seven years since purchase.

So how do mortgage lenders ever lose money? Everything they do is resulting in interest income from funds on deposit and getting money from the Federal Reserve at a lower rate.

Why Are Mortgage Payments Primarily Applied to Interest and Not Principal In the Beginning?

This type or amortization provides for equal payments throughout the entire 360 month or 30 year term of the mortgage. As a bankruptcy attorney I can tell you that this probably a necessary evil and helps people keep things straight. There is a huge percentage of homeowner are just getting by each month and pay different amounts each month for their mortgage. Why you ask? The vast majority of people buy too much house and cannot pay a down payment totaling 20% or more to avoid private mortgage insurance. They make it worse by choosing to not pay property taxes and insurance directly but via the monthly mortgage loan payment. You will then be dependent upon the servicer or mortgage company to recalculate the property tax and insurance as the property taxes increase. Therefore the mortgage payment must increase too. The problem is many servicers and mortgage companies fail to timely and regularly recalculate the taxes and insurance so this results in large changes in the monthly payment to catch up on already paid property taxes. This system is ripe for fraud and miscalculation.

Does Anyone Save Money When Refinancing A Mortgage Loan?

Did you calculate the amount of interest paid versus principal prior to refinancing your mortgage loan? Or is the enticing thought of paying less each month or obtaining the cash from pulling out equity from your home too much to pass up?

So taking our example above you paid $174,173.00 in interest during the first 7 years of your mortgage loan and decide to refinance at a lower percentage rate. We shall use 2.70% instead of 3.7%. After 7 years of payments the principal owed at that time and the amount refinanced is $683,076.57. Your new refinanced loan with a new term 30 year term at 2.70% will cost you a total of

Amortization Schedule

$683,076.57 at 2.7% interest with 360 monthly payments

Total Payments: $997,395.73

Total Interest: $314,319.16

Just comparing the loans on their face you will save $211,296.98 total. But did you take into account all the interest already paid? Yes, you reduced the principal and you are refinancing the lower principal amount too. How much did you really save though? When taking into account the interest already paid totaling $174,173.00 already you will save about $37,123.98 over the total life of the 30 year loan.

No Stacking of California Bankruptcy Exemptions

By Ryan C. Wood

There is no stacking of the California homestead exemption pursuant to California Civil Procedure. The Ninth Circuit Court of Appeals held that Section 522(m) of the Bankruptcy Code is not applicable in California given California has opted out of the Federal Exemption scheme and adopted exemptions under California State law. See CCP 703.140 and CCP 704. Therefore a married couple cannot stack the homestead exemption, which means both spouses claiming the homestead exemption to double the amount of equity they can protect in their primary residence. This issue became more relevant due to California recently increasing the maximum homestead exemption pursuant to CCP 704.30 to between $300,000 and $600,000 depending upon the median home value for the prior year in the California County. In the Bay Area that means all residents of all Bay Area counties have a right to a $600,000 homestead exemption given the median home price in all Bay Area counties far exceeds $600,000.

But a married couple in California cannot stack the $600,000 homestead exemption to exempt $1.2 million in equity in their primary residence when filing for bankruptcy; just $600,000. This is not true in every state. In Florida the homestead exemption can be stacked for the benefit of the bankruptcy filer.

What Are Exemptions?

Exemptions are what protect assets from being sold or liquidated when a bankruptcy case is filed. The exemption exempts the asset from the bankruptcy estate that is created upon filing for bankruptcy protection. There is the Federal Exemptions and each state may choose to create their own exemptions and opt out of the Federal Exemption scheme. California created two sets of exemptions. One set is pursuant to CCP 703.140 and is known for its generous wild-card exemption that can be applied to any type of asset. California created a second set of exemptions pursuant to CCP 704 and is known for its large homestead exemption to protect equity in the bankruptcy filer’s primary residence. The two sets of exemptions under California law are very different and protect different amounts of types of assets.

California Opted Out of The Federal Exemption Scheme

Again California opted out of the Federal Exemption scheme and that has legal significance. Bankruptcy Code Section 522(m) provides as follows: “Subject to the limitation in section 522(b), this section shall apply separately with respect to each debtor in a joint case.” States like Florida pursuant to Section 522(m) “stacking” of claims of exemption. See (In re Rasmussen, 349 B.R. 747, 753-754 (Bankr. M.D. Fla. 2006)). Stacking is expressly prohibited under applicable California law though.

California Civil Procedure Section 703.110(a) prohibits the claiming of separate exemptions by married couples. This has been true since 1987. See (In re Talmadge, 832 F.2d 1120, 1123-25 (9th Cir. 1987)). The Talmadge case is from the Santa Rosa Division of the United States Bankruptcy Court for the Northern District of California. The Bankruptcy Court first held that California exemption statutes were unconstitutional as applied to debtors that are married. The lower Bankruptcy Court held that California Code exemptions/sections could not survive a constitutional attach given certain subsections of California Code: (1) contain vague and ambiguous language in violation of the fourteenth amendment’s due process clause, (2) arbitrarily discriminate against married couples in violation of the fourteenth amendment’s equal protection clause, and (3) conflict with federal law and, therefore, violate the Supremacy Clause of Article VI of the Constitution.

The District Court did not agree, reversed the Bankruptcy Court and instead held that equal protection of the law is not denied by the California exemption statutes limiting married debtors to a single set of exemptions and the Ninth Circuit Court of Appeal agreed.

In Talmadge each debtor claimed a full set of exemptions, thereby ‘doubling up’ their exemptions under applicable California statute. The Talmadge’s and their bankruptcy attorney argued that California CCP 703.140 conflicted with Bankruptcy Code Section 522(m). The Ninth Circuit, in affirming the District Court’s decision disallowing the debtors’ stacked exemptions, concluded that the provisions of 11 U.S.C. § 522(m) did not apply to California debtors because California had opted out of the federal exemption scheme and that provisions of the California Code of Civil Procedure prohibited married couples from obtaining more than a single exemption with regard to a specific property where the amount of the exemption had a maximum dollar amount limit. In re Talmadge, 832 F.2d 1120, 1123-25 (9th Cir. 1987).

Accord, In re Rabin, 336 B.R. 459, 460 (Bankr. ND CA 2005) (“Under California law, spouses who own and reside in a homestead are entitled in bankruptcy to a single homestead exemption. Cal. Code Civ. Proc. §§ 703.110, 704.710(b), (c), 704.730(a) (2). This is so regardless of whether both spouses file bankruptcy, and regardless of whether the spouses file joint or separate bankruptcy petitions. Cal. Code Civ. Proc. § 704.730(b); Talmadge v. Duck (In re Talmadge), 832 F.2d 1120, 1123-25 (9th Cir. 1987) [**3] (married debtors filing joint bankruptcy petition); In re Nygard, 55 B.R. 623, 626 (Bankr. E.D. Cal. 1985) (dictum re married debtors filing individually.

Why Bankruptcy Exemptions Stacking Became an Issue

Unfortunately in 1984 bankruptcy attorneys lost a tool to help bankruptcy filers keep their assets when seeking to discharge their debts. Prior to 1984 California bankruptcy filers could choose between using the Federal Exemptions under Section 522(d) or choose California State exemptions. In 1984 the California State legislature took advantage of opt out provision of Bankruptcy Code Section 522(b)(1) when enacting California Civil Procedure Code 703.130 and 703.140. Once California exemptions became the only legal chose for California bankruptcy filer’s Bankruptcy Code Section 522(m) no longer was applicable. Since 1984 stacking of exemptions for California bankruptcy filers is prohibited.

What Are The Best Credit Cards To Rebuild Credit After Filing Bankruptcy?

By Ryan C. Wood

The best credit cards to rebuild credit after filing bankruptcy are secured creditors with no annual fee. Do they exist? Yes, secured credit cards with no annual fees do in fact exist. Like all parts of capitalism there are business, banks and lenders that are targeting this segment of society and offer services. Many of my chapter 7 clients report receiving vehicle loan offers in the mail even before they receive a discharge in their chapter 7 bankruptcy case. Lenders are targeting them given the lenders know they have not debts post-discharge.

Best Credit Cards to Rebuild Credit After Filing Bankruptcy

The following is a list compiled from many different websites and the information may no longer be accurate due to interest rate changes and other factors. Some of the interest rates are very high. If you pay off the balance each month it does not matter at all though. You may want to start with the highest interest rate no annual fee cards since they are more likely to give you a card. If no success, then try the low interest rate low annual fee cards. If not then try the high interest rate with high annual fee cards.

Surge MasterCard: Annual Fee $75 – $100 APR- 26% – 30%

Total Visa Unsecured Card – No additional information listed

Petal “1” Visa Credit Card: No annual fee APR – 20% – 30%

Platinum Elite Credit MasterCard Secured Card: Annual Fee $29 APR – 19.99%

First Progress

Capital One Secured Credit Card: No annual fee APR – 26.99%

Discover It Secured No annual fee APR – 22.99%

1% – 2% Cash back on certain purchases

Milestone Gold Mastercard: Annual Fee $35 – $100 APR – 24.90%

Avant Credit Card: Annual Fee $39 APR – 25.99%

Next Gen Platinum Master Credit Card Annual Fee $48 – $75 APR – 35.99 %

First Digital

Official Nascar Credit Card Annual Fee: $0 – $100 APR – 17.99% – 23.99%

Credit One Bank; 1% cash back on certain purchases

Platinum Prestige Mastercard Secured Card Annual Fee: $49 APR – 9.99%

Merrick Bank Secured Visa Card Annual Fee: $36 APR – 17.45%

Platinum Elite Mastercard Secured Credit Card Annual Fee: $29 APR – 19.99%

Credit One Bank Plantinum Visa Annual Fee: $0 – $99 APR – 17.99% – 23.99%

For Rebuilding Credit

Reflex Mastercard Annual Fee: $75-$99 APR- 25.90% – 29.99%

First Access Visa Credit Card Annual Fee: Unknown APR – Unknown

Fingerhut Advantage Credit Account Annual Fee: $0.00 APR – 29.99%

By WebBank

Indigo Platinum Mastercard Annual Fee: $0.00 – $99 APR – 24.99%

The Open Sky Secured Visa Credit Card Annual Fee: $35 APR – 17.39%

Platinum Select Mastercard Secured Card Annual Fee: $39.00 APR – 13.99%

How To Rebuild Credit After Bankruptcy

Never ever pay anyone or any company to help you rebuild your credit. Not even a bankruptcy attorney like me. There is no magic wand that can be waived to fix a credit score. If you have inaccurate information on your credit report is should be removed so it does not drag down your credit score. You can do this yourself and for little effort. Do not call the phone number on that sign you see posted on a telephone pole promising to fix your credit in 30 – 60 days. It is a scam. At the same time you are always permitted to pay someone to wash your car even when the car is not dirty.

Pay Your Bills Each Month On Time Each and Every Month

Yeah, easier said than done right? It is still the single most important step you can take to rebuild credit once things did not go quite right. Pay your cell phone bill on time. Pay your rent on time. Pay your utility bills on time. If you do obtain a credit card or somehow are allowed to keep a credit card be sure to pay the monthly balance off in total each month. Do allow a balance to remain that accrues interest. It all matters at this point and every little bit will help rebuild your credit.

If You Have Credit Do Not Use It All

This is referring to the total amount you could borrow or use on your various credit accounts. For example if you have two creditors both with credit limits of $10,000 you have a total of $20,000 in available credit. If you use up all of your available credit you will probably need the services of a bankruptcy lawyer sooner than later. The amount of credit you use versus the amount you have is a metric used for your credit score. The lower the percentage the better for your credit score., For example if you have $20,000 in available credit and you are have a balanced owed totaling $18,000 you are using 90% of your available credit. Not good. If you are only using $2,000 of the available $20,000 you are only using 10%. That is what you want. So a trick you can play to help this percentage is to apply for more credit cards thereby increasing your available credit while the amount you are using stays the same. This will lower the percentage of your available credit you are using. In the example above the person with $18,000 in debt could apply and obtain two more credit cards each with $10,000 credit limits. The would not have $40,000 in available credit while only using $18,000 lowering the percentage to 45% of credit used. This is much better than 90% they had previously. See number three below though too.

Opening A Bunch of New Accounts All At Once

Inquiries for obtaining credit can damage a credit score. Each time you open a new account an inquiry is made to the credit bureaus and these temporarily will lower your credit score. So if you open five new credit accounts within a six month period you will have many inquiries and your credit score will suffer. This is a game of chess. It is not just jumping over your opponent like in checkers. So open accounts over a period of a long time to increase your available credit rather than all at once. Just because you have $200,000 in available credit does not mean you have to use it. That is the difficult part when things do not go as planned and credit are used for basic living expenses such as food and utilities. But this is about rebuilding credit and having a great credit score so increasing your available credit slowly over time is a good thing.

As Mentioned Above Apply For a Secured Credit Card

Secured credit cards are a great way to rebuild credit. You will have to provide an initial deposit so secure the repayment of the credit card but that is fine. As you use the secured credit card and there are no issues they will increase your credit limit and eventually the deposit can be refunded to you. It is important to note this is not a pre-paid card but a secured credit card.

Actual Harm From California Transmutation Agreement and California Uniform Voidable Transactions Act

By Ryan C. Wood

There will be more and more cases involving arguably voidable transactions due to the recent In re Clifford Brace California Supreme Court decision. In re Clifford Brace was about whether the California Family Code community property presumption should be followed rather than the record title presumption when a married couple acquires real property during marriage and takes title as joint tenants. The California Supreme Court, right or wrong, provides there needs to be some sort of additional writing or evidence of the married couple’s intent; a transmutation agreement, providing the married couple’s intent.

A recent Ninth Circuit Bankruptcy Appellate Panel case, In re: RUDOLPH MEDINA a.k.a. Rudy Medina, BAP No. SC-19-1299-FSG; Bk. No. 12-13764-LT7 and Adv. No. 18-90039-LT the issue was just a transmutation and whether it could be voided. This appeal is form the United States Bankruptcy Court for the Southern District of California. The chapter 7 debtor had a $1.4 million judgment against another party and that was part of his chapter 7 bankruptcy estate. The judgment debtor, after a judgment examination, transmuted half of his community property to his spouse then argued her separate property interest could not be touched or was protected from chapter 7 trustee enforcing the judgment against them. During another judgment debtor examination the judgment debtor informed the chapter 7 trustee he has transferred half the community property to his wife. The judgment debtor’s assets totaled approximately $3.8 million with liabilities the married couple in aggregate totaling $4.1 million. In theory there was no harm or actual injury due to the transmutation agreement given the judgment being enforce was around $1.4 million or less than the judgment debtor’s assets even after the transfer. The record on appeal is not clear on how the $4.1 million in liabilities affects the judgment debtor’s assets. Maybe the bankruptcy attorney or the chapter 7 trustee’s attorney can make the party that made the transfer pay for the cost of voiding the transfer even though there was no actual harm or injury.

This a huge deal given that a creditor may enforce its claim to payment against the debtor’s separate property and all community property but may not enforce its claim to payment against the non-filing or non-debtor spouses separate property. This is why in the Medina case the judgment debtor transmuted half the community property to his spouse in an attempt to protect half the value of their assets. Timing in the Medina case is the issue and this will be potentially true of married couples that execute a transmutation agreement due to the In re Clifford Brace holding.

Even with the holding in In re Clifford Brace taking title to property as joint tenants does create separate property interests; just not when filing for bankruptcy protection due to the inconsistent interpretation of law. See how joint tenancy is treated under California law upon: Death vs. Bankruptcy vs. Taxes vs. Divorce.

The issue is when must the transmutation agreement or additional writing providing their intent and in theory transferring assets to a spouse and the filing of a bankruptcy case be executed? I had this question a long time ago and when filing for bankruptcy the look back period for the California Uniform Voidable Transactions Act is four years. In 1985 the State of California requires the transmutation of property, from community property to separate property, be in writing clearly providing the parties intent; but when? If the transaction took place in 2001 does the transmutation writing have to be in 2001 or close in time? If the issue is as in In re Clifford Brace that a married couple purchased property and took title as joint tenants during marriage why would they have to enter into a transmutation agreement until now given the Supreme Court of California just now ruled on this issue? Up until now it was unclear how to precisely interpret the community property presumption versus title presumption. If a couple enters into a transmutation today but one spouse files for bankruptcy in two years did they fraudulently transfer or create a voidable transaction under California law?

Presumptions Defined and Discussed

Presumptions are how humans discriminate against other humans on a daily basis and it is all wrong. Some horrible people use race as a conclusive presumption while others use race as a rebuttable presumption. Both way it is horrible and not how we should strive to analyze an issue.

The truth is we all have certain beliefs that are rebuttable presumptions. Our society has programmed everyone to believe certain products say something about their owners and creates a rebuttable presumption. Just because someone is driving a $100,000 car does not mean they are rich. It does create a rebuttable presumption. If someone is walking towards me and they are covered in dirt and smell it creates a rebuttable presumption that they are homeless. For far too many people things they see or experience create conclusive presumptions without further information. Not good.

I should get back to the legal stuff and presumptions. So the law creates presumptions to help solve problems. Let us create then assume something that may or may not be true rather than start with the truth to find the truth?

According to the Merriam-Weber Dictionary the definition of presumption is: a legal inference as to the existence or truth of a fact not certainly known that is drawn from the known or proved existence of some other fact.

So the fact that a married couple purchased a home or land during marriage, a true fact, creates an unknown truth or unproven presumption that the home or land is community property while ignoring the signed, notarized and recorded joint tenant tile. Oh by the way, in my legal world we have something called authentication of evidence. Evidence has to be properly authenticated to be entered and considered by the Court. I can obtain a certified copy of the recorded title

Federal Rules of Evidence 902: (4) Certified Copies of Public Records. A copy of an official record — or a copy of a document that was recorded or filed in a public office as authorized by law — if the copy is certified as correct by: (A) the custodian or another person authorized to make the certification; or (B) a certificate that complies with Rule 902(1), (2), or (3), a federal statute, or a rule prescribed by the Supreme Court. So I guess the self-authenticating title is just evidence of how the property was taken during marriage and that truth must be ignored until further evidence of the married couples’ intent is presented; another writing that probably is not even self-authenticating. Not good.

So again back to timing of the transmutation agreement and the judgment debtor in the Median 9^th Cir. BAP case.

Back to the Medina Case and the Judgment Debtor Transmutation During Enforcement of the Judgment by the Chapter 7 Trustee

Okay, so to recap, Medina filed a chapter 11 that was converted to chapter 7 and part of property of the bankruptcy estate that was being enforced by the chapter 7 trustee was a judgment. The defendant or judgment debtor while the chapter 7 trustee was enforcing the judgment, trying collect on the judgment, the judgment debtor transmuted or transferred half his community property to his wife creating two separate property interests in theory protecting his wife’s now separate property interest from enforcement/collection of the judgment by the chapter 7 trustee. But arguably there was no harm in the transfer to the bankruptcy estate so what is the problem? Whew!!

Think it will work when timing is everything in this world? The Bankruptcy Court held the chapter 7 trustee had to prove actual injury or harm for the transfer to be voidable under the California Uniform Voidable Transactions Act; See California Civil Code Section 3439 – 3439.14. The Bankruptcy Court acknowledged that the Transmutation Agreement put certain assets out of reach of the bankruptcy estate but found that there was “cushion” to satisfy the State Court Judgment.

That may or may not have been true given the chapter 7 trustee chose to spend the time and money to appeal the Bankruptcy Court’s holding. It is never that simple and just because there might be assets to satisfy the judgment the transfer of half of the judgment debtor’s interest could significantly increase the costs of satisfying the judgment. If this was an issue the published opinion by the 9th Cir. BAP does not address it. One of the most frustrating parts of being a bankruptcy attorney for me over the years is other parties unnecessarily increasing costs in cases so they can profit at the expense of debtors. This is why we have court appointed and paid defense attorneys in criminal matters. So rights are protected and the ability to pay is not an issue. This is not true in bankruptcy or most civil matters. If you do not have the funds to defend yourself you will lose regardless of the merits of the claim against you. Not good.

The Ninth Circuit Bankruptcy Appellate Panel held that was an erroneous interpretation of the law and reversed the granting of summary judgment for the judgment debtor and remanded the matter back to the Bankruptcy Court for the litigation to continue.

The California Uniform Voidable Transfer Act provides a party must prove there was: (1) “transfer” of an (2) “asset” and was (3) “made . . . with actual intent to hinder, delay, or defraud any creditor of the debtor. There is no statutory language that supports a requirement that the plaintiff prove damages or actual injury or that the debtor’s remaining assets after the transfer were insufficient to satisfy the debt without undue burden.

So the timing of the transmutation in this case was not as important as first though. Whether the transfer is voidable pursuant to the California UVTA is a much more fact based analysis that does not include proving actual harm or damages to void the transfer.

Bay Area Bankruptcy Buzz

Advice for your Bay Area Bankruptcy – Chapter 7 Chapter 11 Chapter 12 Chapter 13

What We Know About Lordstown EV Car Maker’s Chapter 11 Bankruptcy

Ninth Circuit Bankruptcy Appellate Panel Again Upholds Section 105(a) Equitable Authority Compliments the Bankruptcy Code And Cannot Contravene Express Statutory Authority

Is Elder Abuse Dischargeable Under The Bankruptcy Code?

California’s CCP 704.225 Exempt and Extend Necessary for Maintenance and Support

Howdy Humans: Why Are Credit Card Interest Rates So High?

Mortgage Interest and Fun With Numbers

No Stacking of California Bankruptcy Exemptions

What Are The Best Credit Cards To Rebuild Credit After Filing Bankruptcy?

Actual Harm From California Transmutation Agreement and California Uniform Voidable Transactions Act