Bankruptcy Trustee Hearings Will Soon Be on Zoom

Posted by Robert Weed / in Blog, Virginia Bankruptcy, Weekly Posts /

Bankruptcy Court Trustee Hearings Will Soon Be On Zoom

Bankruptcy Trustee hearings are now telephonic. That started for the pandemic, effective April 9, 2020. They are moving to Zoom, soon.

Associate Attorney General Vanita Gupta made that announcement Friday at the annual convention of the National Association of Consumer Bankruptcy Attorneys.  Colorado, Wyoming, and Utah switched at the first of this year.  Ohio, Michigan and Hawaii are next.  We hope Virginia will be in the next expansion.  

Zoom Hearings Should Work Better for Everyone

Before the pandemic, people in bankruptcy often lost a day from work for their three-or-four minute bankruptcy trustee hearings. In some parts of the country people had to travel hundreds of miles to the nearest Federal Court House. Here, you could spend hours in traffic trying to get to Old Town Alexandria during the morning rush.

Doing the hearings by telephone conference call avoided that travel time; but phone hearings could often be noisy and hard to follow who was talking. Zoom should work a lot better.

Why Do We Have These Hearings?

By law, people who file bankruptcy“appear” in front of the bankruptcy trustee to answer questions.  (For most people, the questions are, “Did you go over these papers when you signed them, and is everything you put there true?”) Those hearings are called “Meeting of Creditors” although creditors rarely show up. By law are between four and six weeks after we send your papers to the court. The Alexandria bankruptcy court schedules forteen an hour. So that’s four minutes or so per case.  

Colorado Bankruptcy Homestead Just Increased to $250,000

Posted by Robert Weed / in Virginia Bankruptcy, Weekly Posts /

In Bankruptcy, Can I Protect the Equity in My House?

Bankruptcy is set up by the Federal government, but each state sets its own rules on how much equity you can protect if you file Chapter 7 bankruptcy.  That protection is called your homestead exemption.  In April 2022, Colorado raised their homestead exemption from $75,000 to $250,000.

Colorado is one of five states that has increased their homestead since 2020. Let’s see how they compare.

California increased to $300,000

Colorado to $250,000

Connecticut to $250,000

Washington state to $125,000

Virginia to $30,000

July 2020 was when Virginia increased their homestead exemption from $5,000 to $30,000.  At the time that seemed like a big boost. And that did move us out of last place in the entire country.  But it’s still one of the lowest anywhere. 

Now the good news for most married people is that the Virginia’s homestead exemption is mainly needed by singles.

Virginia Does Have a Better Rule for Married Couples       

Virginia recognizes tenancy by the entirety, which gives great protection to real estate owned by married couples.  Under tenancy by entirety, real estate owned by a married couple is safe from the creditors of only one.  Some married people, for cultural reasons or bad advice, put the house in only one name. And entirety doesn’t protect you for loans you co-signed for each other. 

Widows, divorced people, singles need the protection of a bankruptcy homestead exemption or Chapter 13

Widows, divorced people, singles and poorly advice married people need the protection of a homestead exemption. Virginia’s is near the bottom.  Now, having too much equity does NOT mean you automatically lose your house when you can’t pay your credit cards.  The bankruptcy court can help you with a Chapter 13. Chapter 13 is a payment plan through the bankruptcy court. That payment can be quite painful. Because the Virginia homestead exemption is one of the smallest in the country, people who could file Chapter 7 bankruptcy in most places end up in a Chapter 13 payment plan here.   

Want to know more about Virginia exemption law?    

I’ve written more about Virginia exemption law here.                

  

A Million Dollar Mistake: Personal Injury and Bankruptcy

Posted by Robert Weed / in Virginia Bankruptcy, Weekly Posts /

A Million Dollar Mistake: Personal Injury and Bankruptcy

Under Virginia law, the bankruptcy court cannot take away a personal injury claim.  Injured in a car accident? Hurt in the hospital? Anyone in Virginia can file bankruptcy and still keep those claims.

Steven Ramsdell, one of the top bankruptcy lawyers here, is desperately trying to save a possible million dollar injury claim involving a Mr. Barnes, who “forgot” to tell the bankruptcy court about his personal injury.

Barnes filed bankruptcy in June 2020 and it was discharged in October 2020.  Two months later, Barnes sued a Loudoun County doctor for a million dollars, claiming a wrong prescription caused permanent damage to his liver.  In May 2021, the Loudoun County Circuit Court court threw Barnes put of court.

That’s How To Lose Your Personal Injury Claims In Bankruptcy

Here’s what happens when someone forgets to tell the bankruptcy court about your car accident or any other personal injury.

Those rights are forfeit. Two ways.

First, because forgetting to tell the bankruptcy court about the claim means forgetting to protect that claim. So the injury claim now belongs to the bankruptcy trustee. Sometimes in law, “you snooze, you lose.”

Now, Barnes will ask the bankruptcy court to cut him some slack.  If the bankruptcy judge finds Barnes “forgot” because of “excusable neglect,” he may get a second chance to claim and protect his rights. 

Supposed a mortgage company overcharged someone and they didn’t know they were owed a refund. Forgetting to tell the bankruptcy court about that would easily be excusable neglect.

Barnes, on the other hand, sued his doctor less than three months after his bankruptcy was over.  Does that look like “excusable neglect.”  Or does it look like lying? 

Second, even if the bankruptcy judge helps him out, the state court judge can still toss out the suit for judicial estopple.  If Banes told the bankruptcy court that nobody owed him any money, how can he come into the state court and claim the doctor’s insurance owes him a million dollars?

Imagine this in the state court.  “You are telling this court, Mr. Barnes, that you are in constant pain? But you didn’t mention that pain when you met with your bankruptcy lawyer? Why should any jury believe you?”

Today, we don’t know how the Barnes case will turn out. Last week, the bankruptcy judge agreed he’d at least give Barnes a chance to explain his side.

PS  I should add that Steven Ramsdell was NOT the lawyer who first handled Barnes bankruptcy case. Barnes, of course, may be tempted to blame the problem on the first lawyer who handled his bankruptcy.  That first lawyer knew Barnes hadn’t worked for five months. Was that because of this injury? Should the bankruptcy lawyer have asked?

A lot of people will be sweating when the bankruptcy judge decides on “excusable neglect.”