We Have Moved To A New Location In Leawood!

We have moved our bankruptcy, criminal defense, and traffic law firm to a new location in Leawood, Kansas. After spending the past 22 years located in Prairie Village, Phillips & Thomas, LLC, will now be located in beautiful Park Place in Leawood, Kansas. Park Place is located just one block north of Town Center Plaza Shopping Center and also is close to the former Sprint Campus. We are also near the busy intersection of 119th Street and Nall and are also just a few minutes south of I-435. The new address is:

Phillips & Thomas, LLC

5251 W. 116th Place, Ste. 200

Leawood KS 66211

Our phone number of 913-385-9900 and email addresses will remain the same. We look forward to serving you at our new location!

Can Bankruptcy Help During The Covid-19 Coronavirus Crisis?

 

We have received many calls lately asking how bankruptcy can help during the financial crisis triggered by the the Covid-19 virus outbreak.  As everyone knows, recent months have seen unprecedented events disrupt the normal patterns of life all across the globe in the wake of the pandemic.  This turbulence has left many of us feeling apprehensive, uneasy, and insecure.  It has also caused a great deal of financial hardship for both businesses and individuals.  Many people are out of work, or have seen their incomes go down dramatically.

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What Is The Means Test Form 122A In A Chapter 7 Bankruptcy?

The “means test” Form 122A in a Chapter 7 bankruptcy case is surrounded by myth, flawed perceptions, and misinformation.  For many people it can be a scary prospect. You hear a lot of conflicting talk in the media about the means test, and everyone seems to have an opinion about one thing or another.  Some people say it means one thing, and some people say it means something else.  A book says one thing, a website says another.  Everyone’s an expert, right?  Wrong.

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How The Foreclosure Process Works In Kansas And Missouri

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Distressed homeowners in Kansas and Missouri should be aware that there are major differences in how the foreclosure process operates in their respective states.  The procedures and processes are very different.  We will sketch the general outlines here of how things works in both states.

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The New Bankruptcy Forms: What Do They Mean For You?

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The official bankruptcy forms and schedules underwent significant changes to their appearance, layout, and presentation on December 1, 2015.  It was one of the most important overhauls of the forms in their history.

What does this mean for you?  Or does it make any difference at all?  We will explore some of the answers here.

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9 Key Ways To Make Sure Your Bankruptcy Is A Success

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You want your case to be a success, and we want your case to be a success.  And to ensure that this happens, I wanted to go over some tips and pointers that experience has shown to be some of the best ways to make sure that success happens.

I’ll start with the pre-bankruptcy phase of things, then talk about things to be aware of during the case.  And then I’ll talk about things to be mindful of after your case.  OK?

All right.  Here we go.

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Are Health Savings Accounts (HSAs) Exempt In Bankruptcy?

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What Are Health Savings Accounts (HSAs)?

Health savings accounts (HSAs) have gained some popularity in recent years.  The idea is that a person can deposit money in an account and receive tax benefits for doing so.  The funds can then be used for the payment of medical expenses when and where needed.  The idea seems to be a good one, but it is not without potential pitfalls.

When a bankruptcy case is filed, however, unused money sitting in a health savings account may not be exempt. A recent case from the Eighth Circuit Bankruptcy Appellate Panel (BAP) considered whether certain funds held in a “health savings account” (HSA) could be exempted in a bankruptcy case.  The case was In Re Leitch, BAP No. 13-6009, from 2013.

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A Step-By-Step Guide On How To Solve A Legal Problem

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Life can take unexpected twists and turns.  We can have all sorts of problems.  Some of them are medical problems.  Some of them are accounting problems.  Some of them are family or relationship problems.

And some of them are legal problems.

But we don’t often find many step-by-step guides on how to solve legal problems.  Why is this?  Well, there are a lot of reasons:  not diagnosing the problem, being misled by the media, or not acting fast enough.

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An Inherited IRA Is Different From Other Types Of IRAs

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Can an IRA (individual retirement account) inherited from a relative be exempted by a debtor in bankruptcy?  No, says a recent Kansas bankruptcy judge’s decision.  The case was In Re Mosby (14-22981), decided in June 2015 by Judge Dale Somers.  The facts were interesting.

The debtor filed a voluntary petition under Chapter 7 on December 29, 2014. The debtor claimed Jackson Life IRA valued at $15,015.50 as exempt under various Kansas statutes, including K.S.A. 60-2308, 60-2308(b), and 60-2313(a)(1).

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A Lease Or A Secured Loan: Economic Realities Matter, Not Words

A common tactic of creditors in bankruptcy litigation is the attempt to characterize the nature of their debt in a way that is the most favorable for them.  It is almost a version of the philosopher Gottfried Leibniz’s old phrase “the best of all possible worlds”:  whatever characterization produces the most favorable outcome, that is generally what the creditor will choose.  We have seen, for example, loan contracts (drafted by creditors) that basically contain enough contract provisions that they can claim to be nearly anything:  a secured loans, a trust agreement, a purchase money security agreement, or a lease.

Such issues have arisen in the context of the issuance of money orders (a trust agreement or a security agreement?) by businesses or “floor plan” arrangements for used auto sales (is it a trust agreement or a secured loan?)  When such contracts are eventually brought before a court during litigation in an adversary proceeding or some other bankruptcy-related proceeding, a creditor may point to any number of various (and sometimes conflicting) contract provisions to try to claim that its debt is somehow “special.”

Not surprisingly, courts will often look past such verbiage to examine the actual nature of the transaction between the parties.  In bankruptcy court, it doesn’t matter what you call it, what matters is the underlying nature of the transaction.  This issue arose recently in a Kansas case in the context of a vehicle contract for the use of a debtor’s car.  The financing company claimed the arrangement was a lease.  The debtor (In Re James, case no. 12-23121, decided in the District of Kansas in November 2014) claimed the arrangement was a de facto secured loan.

Judge Robert Berger, who issued the decision, pointed to the Supreme Court case of Butner v. United States, 440 U.S. 48, 54-55 (1979) for the proposition that property right questions must generally focus on state law.  Following this logic, the Court focused on K.S.A. §84-1-103, which holds that the economic realities of a transaction must be the primary factors in interpreting its essence.  In other words, it doesn’t matter what a party calls something; what matters is the actual nature of the transaction (the “economic realities”) that matters.  Looking at the fine print of the contract, the Court noted that the “lease” agreement actually gave the debtors the option to become the owners of the goods for no additional consideration.

In addition, the vehicle contract did not give the debtors the option to terminate it, which is supposed to be one of the main features of a true “lease.”  Actually, there was a “cancellation” provision in the contract, but it required the debtors to pay the remaining balance due.  For this reason, the cancellation provision was a creditor ruse.  “Early termination” of the lease was an illusion.  Because the so-called “lease” gave the debtors no rational option but to continue making payments until completion of the contract, it was not a true “lease.”  The Court found it to be a security interest, and would treat it as such within the debtor’s Chapter 13 plan. Although the car loan could not be crammed down, the terms of the contract could still be modified somewhat in the Chapter 13 plan (interest rate lowered, different payment terms, etc.).

The James decision highlights a tactic frequently used by creditors:  fill a contract with fine print that has features of nearly any scenario that might arise.  As stated above, we have seen creditors attempt to characterize ordinary, garden-variety commercial loans as priority trust agreements (deserving special treatment), as statutory trusts, as security agreements, as leases, or as other things.  The tactic is also used frequently by payday loan establishments in possession of debtors’ checks.

It is becoming more and more common for large institutional creditors to take advantage of their size and unequal bargaining power to compel debtors to sign agreements that may not be what they appear to be.  The practice also is found in business situations and commercial loans.  Fortunately, the rule here is clear:  it doesn’t matter what a creditor says a contract is; what matters is what the economic realities of the transaction are.  If you have been saddled with a contract or agreement that a creditor claims to be one thing or another, it is critical to get independent legal advice.  Very often, you may have more rights than you think you have.

Read More:  Bankruptcy Debtors Can’t Be Discriminated Against