Questions about debts or bankruptcy? Call Doug Beaton, a local specialist in American bankruptcy law.

While bankruptcy forms may be endlessly amended, there is much to be said for submitting them correctly at the outset of the case.

A good example of this can be found in the Yonjan case, a recent decision by bankruptcy judge William Hillman in Boston.

There the debtor was the former operator and president of a restaurant in Harvard Square. he had signed a personal guaranty for debts due to one of the restaurant’s suppliers, but neglected to list it on his original bankruptcy papers. When the restaurant itself filed bankruptcy, the supplier started chasing the debtor, filing suit against him in Taunton District Court.

Debtor Bikram Yonjan responded by trying to reopen his personal bankruptcy case for the purpose of listing the guaranty and the debt. The supplier complained, saying that reopening might allow the debtor to try to discharge some post-petition debts as well.

Judge Hillman wasn’t able to make a ruling based just on the papers submitted by the parties, and has now scheduled this case for a full trial! Obviously, if you have a personal bankruptcy case, this is the last way you want it to end. Hire a good attorney, give him all your paperwork and try your best to have your case complete the first time it is filed!

By Doug Beaton

If bill collectors have ever used an auto-dialer (a.k.a. “robo-call”) to ring you up on your cell phone, they could be in big trouble.

It is not the bankruptcy code per se that prevents this, but a related federal consumer protection law called the Telephone Consumer Protection Act. Florida attorney Chip Parker has posted a nice article on how this law works here.

The key to the TCPA is that every single call that violates it is subject to a $500 penalty, so collection agencies that are in violation can rack up a huge liability fast.

One of the catches, though, is that if your cell phone is your only phone, and therefore the only place you can be reached, call to that number are allowed. You have the option however, of informing the creditor that they are calling a cell phone, at which point they are required to honor your request that they stop calling it.

By Doug Beaton

Schedule D is where debtors in all chapter of the bankruptcy code — 7, 11, and 13 — list their secured debts. The form itself isn’t very complicated. There are spaces for listing the name and address of the creditor, the last four digits of the account number, and a basic description of the debt and the property that is the security for the debt (example: small business loan, secured by Caterpillar bulldozer, etc.).

On the right hand side of the form, the total amount of the debt is listed. Next to that is a space for listing if the debt is partially unsecured (example: a business loan for $200,000 on a bulldozer currently worth $150,000 is unsecured for $50,000).

While the form is simple, there are some hidden issues with secured debts. Traps if you will, for those who would try to proceed without advice. For car buyers filing Chapter 13 cases, secured auto loans can’t be modified if the car was bought within 910 days (not quite 3 years) of the filing date for the case.

Also, home owners will have their homestead exemption capped at about $146,000 no matter where they lived, if they bought their house within 1215 days (about 40 months) of filing. And if you moved across state lines within two years of filing, you can’t use the homestead exemption your new state, you have to use the exemption of your old state.

By Doug Beaton

Collecting an unemployment compensation check after being laid off from your job shouldn’t prevent you from filing a bankruptcy case if you need to, right?

Well, in the topsy-turvy underworld of consumer bankruptcy law, you just never know.

At issue is whether unemployment compensation should be counted towards the “means-test” that determines whether a debtor can file a chapter 7 case. If you have just been laid off from a relatively well paying position, the extra unemployment income could still put you over the limit, and out of bankruptcy.

If unemployment counts at all, that is.

Back in 2007, a bankruptcy judge right here in Massachusetts came to the rescue of debtors in this situation. Judge Rosenthal ruled that unemployment compensation was authorized by the Social Security Act, making it effectively a type of social security benefit. And since social security doesn’t count in means testing, unemployment doesn’t either.

But Judge Rosenthal retired last spring, and the views of other judges in the Massachusetts and New Hampshire area aren’t necessarily known.

I can tell you that at least three bankruptcy judges around the country have ruled the opposite way. They say that unemployment is countable towards the means test, because it is really a state benefit paid by state agencies mostly from state tax funds, and therefor is not really a part of social security after all. The judges who have ruled against debtors in this way are from southern Illinois, central Illinois, and Harrisburg, Pennsylvania.

On the other hand, a bankruptcy judge from the Cincinnati area agrees with Judge Rosenthal; so Ohio unemployment isn’t countable, at least in the southern part of the state.

So, five years after the enactment of the BABPCA means test amendments, we really have no good answer to a fairly basic and common question. A topsy-turvy world, indeed!

What to do? If you live in Massachusetts and are thinking of filing for chapter 7 bankruptcy, I would leave unemployment out of the means test equation for the time being. Until this debate percolates up to the Supreme Court, we may not have a definitive answer, but for now I would take an aggressive stand and file the case under chapter 7 if you really need the debt relief.

By Doug Beaton