Articles Posted in Chapter 7

Both Chapter 7 and Chapter 13 bankruptcy filings are down 16.35% when compared to the year to date filings from last year. These filings, which are traditionally down at the end of December and early January traditionally peak in the month of March. This is likely because people hold off filing their cases for those two months due to the holidays and come around to filing as soon as March hits and the financial strain of the holiday season is over. You can see the peaks on the above graph. Blue represents 2010, while red represents this year thus far.

Hopefully, this is a sign of economic recovery, however it may just say that those who were going to bankrupt have already done so.

The Las Vegas Mobster Museum is headed to court, but not for racketeering. The museum that houses the world’s largest collection of organized crime artifacts (other than the FBI evidence room), has found itself faced with a Chapter 11 bankruptcy filing citing $5.8 million dollars in debt.

This museum’s debt is proportionally greater than the amount Capone owed to the IRS. When Capone was arrested in 1931 he owed $215,000 to the IRS. According to WestEgg.com this is the equivalent of about $3 million dollars today (after adjusting for inflation) and lead to Capone being given an eleven year prison sentence.

The Mobster Museum will be purchased for $2 million by JVLV Holdings LLC. The former developer, Jay Bloom, is faced with accusations stemming from overstated potential daily visitors and using corporate money to pay for personal automobiles, credit card bills and groceries. Depending on Mr. Blooms testimony, these transactions may be a violation of the bankruptcy code under 18 U.S.C. § 152. which protects against fraud in bankruptcy cases. Even if so, the maximum imprisonment under this statute is only five years, which is quite light when compared to Capone’s eleven. I guess this tells us something we already knew- that it’s bad to lie in bankruptcy court, but it’s far worse to lie to the IRS.

The filing fees for the Jacksonville District Court increased November 1st. The fees for filing are as follows:

Unfortunately, everyone is hard pressed for money these days. This includes the government, which appears to have lead to this cost increase. It does make one wonder if the people who are bankrupt are the ones who should be paying extra when they really are the ones who have the least.

var _gaq = _gaq || [];
_gaq.push([‘_setAccount’, ‘UA-26810504-1’]);
_gaq.push([‘_trackPageview’]);

(function() {
var ga = document.createElement(‘script’); ga.type = ‘text/javascript’; ga.async = true;
ga.src = (‘https:’ == document.location.protocol ? ‘https://ssl’ : ‘http://www’) + ‘.google-analytics.com/ga.js’;
var s = document.getElementsByTagName(‘script’)[0]; s.parentNode.insertBefore(ga, s);
})();

As you may be aware, the L.A. Dogers filed for Chapter 11 bankruptcy protection in late June of this year. Chapter 11 is a reorganization bankruptcy available to both individuals and businesses where the creditors get to vote on whether or not to approve your proposed repayment plan.

Although McCourt is the owner of the Dodgers, it is the business, the “Los Angeles Dodger” that is filing the bankruptcy. McCourt withdrew an alleged $189.16 million dollars from the businesses funds according to the Los Angeles Times to settle his divorce with Jamie McCourt. To read more about the divorce side of things, see the Jacksonville divorce blog. Taking money from your own business probably wouldn’t be an issue if that business weren’t already insolvent.

In theory, Mr. McCourt has diverted money that could have gone to pay the business’ creditors to his now ex-wife. These transactions could be violations of the bankruptcy code. Things have gotten so contentious that Major League Baseball has petitioned the court to order the sale of the Dodgers. It is difficult to say what will happen in this case as new facts and arguments are coming every day, but the moral of the story is that you don’t drain the assets of an insolvent business and then try to file that business in a bankruptcy.

The Claims Bar Date is vitally important in any bankruptcy because it establishes the date by which all creditors must make a claim on your estate or be barred from collecting their debt. This date first appears on your Notice of Filing, which is automatically generated when your case has been filed. Any creditor who received notice of the bankruptcy must provide a claim within 90 days or be barred from collecting the debt owed. If a creditor is not properly noticed, they may be allowed to bring a late claim. Governmental Units are provided additional time to bring claims, but have a claims bar date as well.

Despite the fact that the creditors receive a Notice of Filing that comes with a claims form and instructions, some creditors never file their claim or file their claim improperly. You or your attorney can object to claims that are unfounded, incorrectly filed or state inaccurate sums owed. Knocking out claims can save Chapter 13 debtors significant amounts of money and can sometimes create the possibility of ‘paying out’ of a bankruptcy. Paying out occurs when all creditors who have filed claims get paid every penny they’re owed. When this happens, and there is no one left to pay, the case is closed.
Continue reading →