Bancruptcy Law Blog

Please Note – effective September 1, 2016 – Robert S. Thomas II will be transitioning to be the Chapter 13 Trustee in Baltimore.

Posted by on Sep 1, 2016 in Uncategorized | 0 comments

Please Note – effective September 1, 2016 – Robert S. Thomas II will be transitioning to be the Chapter 13 Trustee in Baltimore.   He will take over full-time on October 1st, 2016.   Your email will be responeded to – but it will not be responded to until after hours.    If your case has been reassigned to another attorney or trustee – please contact them directly – Thanks.

Existing clients and former clients can contact our office and speak to Janine Orth –if you are a current client – please contact Janine or contact the Attorney whom the case has been transferred.

White-Williams Bankruptcy Institute Seminar, Robert S. Thomas II Featured Speaker

Posted by on Mar 2, 2015 in Uncategorized | Comments Off on White-Williams Bankruptcy Institute Seminar, Robert S. Thomas II Featured Speaker

This years featured speaker at the 2015 White-Williams Bankruptcy Institute Seminar on April 10, 2015 is Robert S. Thomas II. Click on the image below for a schedule.


Nuts-N-Bolts of Bankruptcy

Posted by on Oct 14, 2014 in Uncategorized | 0 comments

Nuts-N-Bolts of Bankruptcy

3.0 NLT Credits
3.0 CLE Credits

Friday, December 19, 2014
Akron Bar Association • 57 S. Broadway Street • Akron, Ohio

This seminar will provide the basics of Chapters 7 and 13, client intake and preparing bankruptcy schedules, and how to represent creditors in bankruptcy. The program is beneficial for those who have minimal bankruptcy law experience as well as those who want a refresher course.

Click here to download the itinerary.

Pro Bono Bankruptcy Project Seminar

Posted by on Oct 14, 2014 in Uncategorized | 0 comments

Pro Bono Bankruptcy Project Seminar

2.00 Hours CLE Credit

Thursday, October 23, 2014
Akron Bar Association • 57 S. Broadway Street • Akron, Ohio

This program will cover the basics of Chapter 7 Bankruptcy for volunteers or those interested in volunteering for the Jerome L. Holub Pro Bono Bankruptcy Project.

Click here to download the itinerary and registration form.

The Bell Tolls for Inherited IRAs

Posted by on Jul 1, 2014 in Uncategorized | Comments Off on The Bell Tolls for Inherited IRAs

In a unanimous decision authored by Justice Sotomayor, the Supreme Court found that “[t]he text and purpose of the Bankruptcy Code make clear that funds held in inherited IRAs are not ‘retirement funds’ within the meaning of §522(b)(3)(C)’s bankruptcy exemption.” Clark v. Rameker (In re Clark), No. 13-299 (U.S.S.Ct. June 12, 2014).

The opinion focused on differences in treatment under the Tax Code between inherited IRAs which go to a surviving spouse, and those that go to someone other than the spouse. A spouse has the option of rolling over the funds into a new IRA, treated like any other IRA, but a non-spouse is limited to treating the funds according to rules applicable only to inherited IRAs. The latter type differs from regular IRAs in that funds must be withdrawn either in their entirety or in annual distributions; the heir may not make contributions to the fund, a factor the Court found to be a hallmark of a retirement account; and withdrawal of the funds does not give rise to tax penalty.

The Court rejected the argument that the nature of the funds should be determined with reference to their original purpose. “Instead, we look to the legal characteristics of the account in which the funds are held, asking whether, as an objective matter, the account is one set aside for the day when an individual stops working.” The crux of the decision came in the discussion of the purpose of bankruptcy and the Court’s finding that where Congress intended to protect retirement funds and the debtor could access the inherited funds prior to retirement, the inherited IRA smacked of windfall.  “[N]othing about the inherited IRA’s legal characteristics would prevent (or even discourage) the individual from using the entire balance of the account on a vacation home or sports car immediately after her bankruptcy proceedings are complete.”

The Supreme Court took this case because there was disagreement among federal appellate courts on the issue. Federal law encourages saving for retirement by protecting “retirement funds” from creditors in bankruptcy.  Generally speaking, a person can file bankruptcy and have his or her debts discharged, while leaving an IRA or other similar retirement assets owned by the debtor intact for the debtor’s retirement.  The Court had to decide whether this exemption for retirement funds should also extend to IRAs inherited from another person, which did not represent the debtor’s own savings. The Court noted three important distinctions between an inherited IRA account and other more traditional retirement assets:  (1) Holders of an inherited IRA account cannot add additional assets; (2) Holders of an inherited IRA account are required to withdraw monies from the account regardless of whether they have reached retirement age; and (3) Holders of an inherited IRA account may withdraw assets from the account at any time, without an income tax penalty. Based on these three distinctions, the Court ruled that persons who file bankruptcy may not use the federal exemption provisions to protect inherited IRAs from their creditors. This ruling does mean that, going forward, inherited IRAs have fewer creditor protection characteristics.  The decision does not mean that creditor protection is unavailable for inherited IRAs.  Inherited IRAs can still likely be protected from creditors by at least two different means: (1) State law creditor exemptions; and (2) Leaving IRAs in trust for the intended beneficiary, rather than to the beneficiary himself/herself.

As to the first option (state law creditor exemptions), it appears that states opting out of the federal bankruptcy exemptions in favor of their own state-created exemptions may still create exemptions for inherited IRAs.  The Clark decision only addressed the federal exemptions in non-opt out states.  Currently, a limited number of states have such exemptions in place to cover inherited IRAs, including Florida, Alaska, Missouri, North Carolina, Texas, and our own state of Ohio (effective in early 2013).

In March of 2013 the Ohio legislature passed the Ohio Legacy Trust Act (H.B. 479) (the “Act”) which, in addition to providing rules for the creation of what may be known as legacy trusts, also amended several provision of Ohio law that are important in bankruptcy cases.

The Act also made changes to Ohio’s Exemption statute 2329.66 that also will impact bankruptcy practice. First, exemptions now will only index upward based upon the CPI. Before, exemptions would change based upon changes in CPI. Now, exemptions will only change based upon increases in CPI.

The most significant change; however, is the increase of the homestead exemption from $20,200 to $132,600.1 The Act also provides that the exemption does not impair liens for taxes or obligations owed to the State of Ohio or any agency or political subdivision instead of just taxes owed on the property.

Other changes to the exemption statute involve retirement accounts changing language from a person’s “right to receive” to a person’s “right to receive or interest in receiving” payments.

Expands the current exemption for certain payments under any individual retirement account, individual retirement annuity, “Roth IRA,” or education individual retirement account to include an exemption for certain payments or benefits under a “529 plan.” Including inherited IRA’s.

Exempts a person’s rights or interests in assets held in, or to receive any payment or benefit under, any individual retirement account, individual retirement annuity, “Roth IRA,” “529 plan,” or education individual retirement account that a decedent, upon or by reason of the decedent’s death, directly or indirectly left to or for the benefit of the person outright or in trust or otherwise

(e) The person’s rights to or interests in any assets held in, or to directly or indirectly receive any payment or benefit under, any individual retirement account, individual retirement annuity, “Roth IRA,” “529 plan,” or education individual retirement account that a decedent, upon or by reason of the decedent’s death, directly or indirectly left to or for the benefit of the person, either outright or in trust or otherwise, including, but not limited to, any of those rights or interests in assets or to receive payments or benefits that were transferred, conveyed, or otherwise transmitted by the decedent by means of a will, trust, exercise of a power of appointment, beneficiary designation, transfer or payment on death designation, or any other method or procedure.

When dealing with certain assets and exemptions it is always important to consult with experienced bankruptcy counsel like Thomas, Trattner & Malone, LLC.

Robert S. Thomas II Featured Speaker at White-Williams Bankruptcy Institute Seminar

Posted by on May 27, 2014 in Uncategorized | Comments Off on Robert S. Thomas II Featured Speaker at White-Williams Bankruptcy Institute Seminar

This years featured speaker at the 2014 White-Williams Bankruptcy Institute Seminar on April 11, 2014 is Robert S. Thomas II. Click on the image below for a schedule.


Changes to Ohio exemption law allows people to retain more of their assets

Posted by on Dec 3, 2013 in Uncategorized | Comments Off on Changes to Ohio exemption law allows people to retain more of their assets

Changes to Ohio exemption law allows people to retain more of their assets

Legal News Reporter
Published: November 22, 2013

Every state has a set of exemption laws intended to prevent creditors from pushing debtors and their families into financial peril.
Many studies suggest that liberal exemption laws that protect debtors have a positive impact on entrepreneurship within the state since owners of small businesses may be less likely to start high-risk ventures if the punishment for failure is too great.
In recent years, exemption laws in a number of states, including Ohio, seem to be following that philosophy, allowing debtors to retain more of their assets when filing Chapter 7 and 13 cases.
“Exemption laws preserve basic items of property from seizure by creditors, so that debtors can to continue to work productively and support themselves and their families,” said Robert S. Thomas II, a partner and Akron bankruptcy attorney at Thomas, Trattner & Malone, who specializes in bankruptcy and commercial law. “These laws are intended to protect at least basic wages and essential property from seizure by creditors.
“Federal bankruptcy exemption law is pretty generous but 35 states have their own exemption laws,” said Thomas. “Massachusetts and Iowa have the most expansive laws but Ohio is becoming a much more debtor friendly state, which in theory should encourage more people to take a chance and start a business here.”
That was not always the case. In Ohio, for example, Thomas said no major changes had occurred for over 20 years in the exemption statute until 2008. That year lawmakers enacted Amended Ohio Senate Bill 281, which took effect on Sept. 30, 2008.
The amended provisions of Ohio Revised Code section 2329.66(A) raised the homestead exemption for residential property, including a mobile home, from $5,000 to $20,200 per debtor on one item or $40,400 for a husband and wife together, provided they were both on the title and occupying the property on the date of the filing.
Other exemptions went up as well, but those increases are nothing compared to this year’s changes in Ohio, which raised homestead exemptions to $132,900 per individual or $265,800 for a husband and wife.
“What this means is that if a husband and wife own a home without a mortgage that is not worth more than the $265,800 exemption they receive together, they may be able to fully exempt their home without a problem, meaning they can likely keep it,” said Thomas. “Attorneys need to be updated on current case law and trends in exemptions and objections to exemptions.”
The other big changes that took place from 2008 to 2013 in the exemption statute are a 100 percent exemption for child tax credits, earned income tax credits, college savings plans/529 plans and inherited IRAs. In addition, increases to household item exemptions have gone from $10,775 in 2008 to $12,250 in total or from $525 to $575 per item. In the case of motor vehicles, the exemption increased in 2008 from $1,000 to $3,225 and is presently at $3,675.
“This exemption is not in the aggregate and can only be used on one vehicle,” said Thomas, a leading bankruptcy lawyer Akron, Ohio. “A husband and wife who are both listed as owners on the title for a motor vehicle could each apply their exemption to the same motor vehicle.
“I believe lawmakers are not only trying to make Ohio a more friendly place to do business, I think they want to give debtors a chance at having a fresh start by allowing them to keep more of their basic necessities like their home, car and household goods.”
Thomas said some people who might not have qualified for bankruptcy in the past because of certain assets may now find that it is a viable option. “Right now about 90 percent of the people who file should be able to exempt most of their assets. I am seeing older people who live on a fixed income but own their homes now looking at filing.”
In addition to retaining their tangible items, Thomas said debtors could also potentially keep more of their personal injury/bodily injury settlements. For example, recipients may be able to exempt $23,000 of that money when filing for bankruptcy versus $5,000 several years ago. “That’s probably more than most people would walk away with anyway once they pay legal fees, medical claims, costs and other expenses,” said Thomas.
He said an individual can exempt up to $450 dollars in a bank account and is eligible in bankruptcy proceedings to apply a “wild card” exemption of $1,225 generally to any other asset that may have equity above the claimed exemption.
“Most people are surprised to find out that social security benefits, unemployment benefits or workers compensation benefits are either exempt under federal law or the Ohio exemption statute, meaning these benefits generally cannot be garnished or subject to attachment from creditors.”
Despite the changes, Thomas said bankruptcy filings are actually down this year in the state, as they are nationally.
“Case filings have been down nationally since 2011,” said Thomas. “What I have seen in the past 15 years is a gradual increase in filings per year with a maximum number in 2005 and a drop in 2006 and 2007, and then a gradual increase in filings until about 2011. Since 2011, filings are down about 12 to 15 percent.
“With the expansion of Ohio’s exemption laws, attorneys can better advise their clients on business transactions, financial matters, asset protection and financial problems.”

Changes in the works for Chapter 13 bankruptcy filings

Posted by on Nov 19, 2013 in Uncategorized | Comments Off on Changes in the works for Chapter 13 bankruptcy filings

Changes in the works for Chapter 13 bankruptcy filings

Legal News Reporter
Published: November 15, 2013

As states continue to adopt the Common Core State Standards in an effort to provide consistent education guidelines for students, parents and educators, bankruptcy attorneys and judges are being asked to consider a similar idea for Chapter 13 filings.

For the past two years, the Judicial Conference Advisory Committees on Bankruptcy and Civil Rules have been discussing the creation of a national plan form for Chapter 13 cases in an effort to bring uniformity to the practice and simplify the review process for debtors, courts, trustees and creditors. The idea is among the top Proposed Amendments to the Federal Rules of Bankruptcy and Civil Procedure unveiled for public comment on Aug. 15.

Brennan, Manna & Diamond Bankruptcy Department Chair Michael Steel explained the proposal is a direct result of the U.S. Supreme Court’s decision in United Student Aid Funds Inc. v. Espinosa.

“The Supreme Court indicated that even though a confirmed Chapter 13 plan may be procedurally improper it would still have a ‘preclusive effect’ if challenged later on by someone who did not object to the submitted plan,” said Steel.

“The end result was a directive to bankruptcy judges to independently review Chapter 13 plans. The move toward a national standardization of Chapter 13 plans is designed to make it easier on bankruptcy judges, creditors and other interested parties to review the contents of a plan.”

As a result, Steel said he expects to see a more “check-the-box” type of approach for Chapter 13 filings, rather than “a creative approach to dealing with debtor problems.”

As part of the proposed change to Rule 3012, he said debtors would be able to seek a determination of the amount of a secured claim through the proposed bankruptcy plan, subject to objection at the confirmation hearing, whereas previously this may have been done by motion in some jurisdictions.

“Further proposed changes to Rule 4003, would allow a debtor to do lien avoidance through the plan.

“I believe the move toward uniformity will result in more disputes between the debtor and creditors earlier in the process since the issues will have to be addressed in the first few months of the case rather than later on.”

Steel said this could be a good thing for those who practice in the area since making a determination about the plan’s feasibility and amounts of certain claims earlier will move things along better as opposed to finding out six months into the process that there are significant problems that cause a dismissal or conversion of the case.

Secured creditors would also be required to file a claim if the proposal takes effect. “Up to now, the current rules suggest that only unsecured creditors had to file a claim,” said Steel. “The claims deadline is being changed from 90 to 60 days after the petition for bankruptcy is filed. The change will impose additional burdens on creditors to quickly review the petitions.”

He said the Chapter 13 process could be more akin to Chapter 11 business bankruptcy filings where discussions are held with secured lenders well in advance of filing because times frames are shorter and more importance is placed on the confirmation document.

“I would expect debtors and attorneys to be paying more attention to what they are trying to accomplish in the bankruptcy plan,” Steel said.

Current restrictions on Chapter 13 filings generally result in more high-income, high net-worth individuals filing Chapter 11 cases, Steel said, since Chapter 13 restricts how much unsecured debt a person can owe.

“While the new changes may create a change in what can be done through a Chapter 13 plan document, it is likely not going to change who may eligible to file a Chapter 13 type of bankruptcy case,” said Steel.

Changes to bankruptcy schedules and forms are part of the package as well.

“There will be stylistic and substantive changes to the schedules and the forms will have a whole new look,” said Robert S. Thomas II, a partner at Thomas Trattner & Malone, who specializes in bankruptcy and commercial law. “There will be big changes on how they are reviewed and prepared.”

Thomas said the goal is to make the forms more user friendly and less error prone.

“The proposed forms have a new modern style and there are a lot of drop-down boxes that require a yes or no answer or further information,” said Thomas. “The proposed forms and schedules resemble modern tax forms with lots of instructions and explanations. From the trustee perspective I think the ones we have now are easy to read and the new ones will take some getting used to. Attorneys will need to make sure all the boxes are answered correctly.”

Although explanations will be part of the new forms, he said the length and multiple questions would still prove complicated for the average person.

On the other hand, he said the modernized forms would make it easier “to capture the information for electronic filing and should reduce errors in providing accurate information.

“It has been over 20 years since the last forms update,” said Thomas. “The industry has moved from paper to electronic files. The revisions produced forms with a more intuitive layout and a uniform feel with clearer instructions that explain the process, with prompts and checklists, and with separate more extensive instruction sheets.”

The Chapter 7 U.S. Bankruptcy trustee said a lot of the United States Bankruptcy Code has been updated and amended since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The Act made it more difficult for certain consumers to file bankruptcy under Chapter 7, causing some to opt for Chapter 13 instead.

“There is now a requirement for pre-petition credit counseling and a post-filing financial management course before a bankruptcy can be discharged. Individual debtors who file under Chapter 7 will have to pass a means test which is dependent on income. If they cannot do so, the case can be dismissed or converted to Chapter 13.

“In Ohio there have been changes to the Ohio exemption laws that have increased the value of the exemptions that debtors can claim,” said Thomas. For example, he said this year the homestead exemption for personal residences was raised to $132,900 per individual, which allows people who could not file before to potentially look at bankruptcy as a viable insolvency plan.

He said all the changes make it more difficult for the individual to go it alone and he does not recommend that individuals file without the assistance of an experienced bankruptcy attorney.

“Bankruptcy law is complex and the new forms make clear at the outset what information will be needed for completion,” said Thomas. “The complexities of filing for bankruptcy are underscored. As a consequence, more unrepresented debtors may seek representation rather than file pro se.”

The public comment period on the proposed amendments ends on Feb. 15, 2014.

With or without revisions, the proposed amendments will take effect on Dec. 1, 2015, assuming they are approved by the relevant advisory committee, the Committee on Rules of Practice and Procedure, the Judicial Conference and the Supreme Court, and if Congress does not act to defer, modify or reject them. The revisions to the Official Bankruptcy Forms would become effective on Dec. 1, 2014 if the rules committees and the Judicial Conference approve them.