13 Halloween Movies With Bankruptcy Themes
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Can we all agree that Halloween is the holiday with the best
collection of movies? Perhaps due to plots
which often focus on personal choices and challenges amidst unusual tension, many
horror movies put me in mind of issues frequently encountered in consumer bankruptcy
cases. Here are 13 for your consideration:
A Nightmare on Elm Street – During the
COVID-19 pandemic many mortgage companies have suspended monthly payments. This
has been a welcome respite for many homeowners facing unemployment or reduced
income. However, the payment suspension will
not be indefinite. In many cases the
suspended payments will be coming due in full at the end of the suspension
period. Homeowners who are not able to
make the payments will be in default under the loan documents when the
forbearance periods end and could face foreclosure. A widespread housing crisis is a nightmare that
can easily spread to other homeowners in the form of plummeting property values
and perhaps living in a neighborhood full of abandoned homes.
Dracula – Dracula’s problems begin when he
moves from his rural Transylvania castle to purchase a second residence, Carfax
Abbey, in far-away London. This surely creates
a cash flow problem for Dracula because the expense of maintaining a second residence
can drain valuable resources. In some Chapter
13 cases, debtors try to hang onto property that does not have equity and does
not generate income. They often hope they
will find a renter for the property in the future, or have plans to fix it up
and sell it. In the short run, however, it’s
dead weight on the budget, and Chapter 13 Trustees will often object to
retaining such property because it isn’t necessary for an effective
reorganization. Letting go of burdensome
property can often enable consumers to successfully manage other aspects of
their finances. It’s an emotional
decision, best considered in the light of day.
Friday the Thirteenth – After the first couple of movies, why
is it that nobody ever thinks about postponing the camping trip at the lake
until Friday the 20th?! Dates in bankruptcy can be just as important. For example, Chapter 7 discharges are only available
once every 8 years. Car loans older than
910 days (2.5 years) can be reduced to the value of the automobile, a
potentially huge savings. A second Chapter
13 bankruptcy filing can be barred or ineffective to permanently stay the
actions of creditors if filed within certain time periods. The state where you lived 2 years before the
filing date can affect the value and types of property that you can exempt from
creditors. Transfer of property or
repayment of loans can be a problem if the transaction occurred within a
certain number of days or years before the bankruptcy filing date. The timing between the filing of taxes and a
bankruptcy case can be extraordinarily tricky.
And these are just a few examples.
It’s always important to double check the dates of important events and consult
an experienced attorney who can analyze the ideal timing for filing a case.
Frankenstein – Combining an old loan and a new
one can create a hybrid monster. This is
especially true with “negative equity” from a trade-in car. Suppose Abbey Normal is still making payments
on a 2015 Igor Motors Model S (yes, of course it’s electric!) that she has had for
three years. The Model S runs okay, and although
Abbey owes a balance of $18,000 the car is only worth about $10,000. While the Model S is being serviced at the
local dealership Abbey is smitten by the new Model 6-5000 GT, one in the rare “sickly
green” color, offered for just $39,995.
The dealer is happy to help Abbey finance the new vehicle and “trade in”
the old Model S, and Abbey drives her new car home in a state of sticker shock,
strapped with a new loan for $47,995 and a much higher monthly payment. Had Abbey held onto the Model S and needed to
file Chapter 13, she could have reduced the amount owed to the car’s value – an
$8,000 savings – because it was an older loan.
The new car purchase is protected from such valuation under the Bankruptcy
Code including the “negative equity” from the old car. There is far less that can be done to reduce
the payments on the newer vehicle in a bankruptcy case, and the high payments
can create a real “feasibility” problem that would not occur if Abbey had held
onto the older car (in which case she may not need bankruptcy relief at all).
Get Out – The title of this movie, when shouted
at protagonist Chris Washington, was absolutely the right advice, as it
generally is any time you hear those words from a disembodied ghostly voice in
your home. Landlords are also very fond
of offering this suggestion, and while renters have rights too, the extent of
those rights can vary significantly from jurisdiction to jurisdiction. If you are behind in rent, a Chapter 13 case
can give you time to catch up, or “cure” missed payments, but the timing of the
bankruptcy filing and understanding of the applicable law is critical in these
situations. Once a landlord has obtained
an eviction judgment (which may be called other things, such as a “judgment for
possession” or “writ of possession”) the ability to cure the arrearage becomes
much more difficult, or might not be possible at all: In those cases, a bankruptcy
filing will only stay the eviction efforts if you file a statement under
penalty of perjury that there is “state or other nonbankruptcy law” that
applies to the judgment and would allow you to stay in the residence by paying
the landlord the entire delinquent amount.
In some states there may not be any such right. You will also be required to deposit rent
that comes due during the first 30 days of the bankruptcy case with the Clerk
of Court. The takeaway is that it is
generally best to consider a Chapter 13 case to cure rental arrears as soon as
you become aware of an eviction or dispossessory proceeding and do not believe
you will be able to cure the arrearage immediately. Waiting too long can drastically limit your ability
to deal with this problem in a bankruptcy case.
I Know What You Did Last Summer – Think of all of the horror movies where
a bad situation is made even worse by a terrible decision. Everyone who files a bankruptcy case is
required to submit detailed information concerning all of his or her finances,
signed under penalty of perjury. The
expectation of full disclosure that is both accurate and complete is the trade-off
for receiving protection from creditors and relief from debt. Most debtors are honest and fill out the
information correctly, to the best of their ability. The dishonest debtors are often exposed
during the “meeting of creditors” due to what is sometimes called “the ex
factor”: An ex spouse, business partner or neighbor may come forward and inform
the Trustee about missing or incorrect information. Knowingly and fraudulently providing false
information or concealing information in bankruptcy paperwork or court
testimony is a federal crime and that makes it a horrible idea to even consider
doing anything other than being 100% forthcoming. For those who don’t follow the rules, there
is usually someone out there who knows . . .
Night of the Living Dead – Usually the undead are
a problem due to a poor regulatory environment.
Or, to be fair, sometimes it’s a comet.
For consumers, “zombie debt” is a real thing. It’s old debt that is often past the statute
of limitations for collection. Unscrupulous
collection agencies can often “revive” the legal right to collect this debt by obtaining
a small payment and renewing the statute of limitations. Still other debt collectors will use state courts
to enforce the stale debt, leaving the fact that it is legally unenforceable to
be raised as a defense by the consumer; and if the consumer does not oppose the
action, the debt collector may obtain a judgment that can be recorded as a lien
on assets or used to garnish bank accounts or paychecks. Courts have also held that this stale debt can
be submitted as a “proof of claim” in a bankruptcy case, leaving it up to the
debtor or a trustee to object. This is a
multi-billion dollar business for debt collectors, who may buy up the debt in
bulk for pennies on the dollar, profiting by inflicting misery on consumers,
and placing a strain on court resources.
Nobody has ever explained the problem as brilliantly as John Oliver did here
(warning: contains some adult language and themes).
Psycho – Yes, everyone remembers the shower
scene, but bankruptcy lawyers start to feel uneasy way before that, when Marion
Crane steals $40,000 from her employer.
We know that the debt to the employer cannot be discharged in bankruptcy. Section 523(a) exempts from discharge certain
types of debt, including those based on bad acts like fraud, embezzlement and
larceny.
Sometimes They Come Back – A few different
Stephen King movies could fit this theme. Christine is about a car, and Salem’s
Lot sounds like it could be about a buy-here-pay-here auto dealer. Chapter 13 gives wage earners a chance to
reorganize and cure payment defaults, including payments on car loans. In many jurisdictions, the right to do this exists
even if the car has been recently repossessed (but provided that it has not yet
been re-sold, e.g., at an auction).
Thus, a Chapter 13 filing often places an obligation on the lender to
return a recently repossessed car to the debtor. Your local practice and procedures may vary. (Honorable mention to Repossessed,
a 1990 comedy-horror starring Leslie Nielsen and Linda Blair.)
The Raven – The Raven is a poem by
Edgar Allan Poe, but it’s also a 1963 movie starring Vincent Price, Peter
Lorre, Boris Karloff, and Jack Nicholson.
Both feature the ominous word “nevermore.” Just as certain debts can be excluded from a
bankruptcy discharge, debtors who behave badly can have their entire discharge
denied under Section 727 of the Bankruptcy Code, leaving them legally responsible
for those debts evermore. This often
happens if a debtor is found to have concealed assets or committed other
bankruptcy crimes. It can also result
from failing to comply with a Court order or to cooperate with a Trustee, by destroying
books and records, or not being able to explain the loss of assets or the lack
of assets in relation to a comparatively staggering amount of debt.
Us – Jordan Peele’s masterpiece examines the
unsettling thought that each of us could have a doppelgänger. Many bankruptcy cases are filed due to
complications which arose from identity theft.
Besides liability for unauthorized credit card purchases, consumers may
not be able to file tax returns because a return was already filed, and the
refund already claimed, by someone else using their identity. To protect yourself, maintain a healthy suspicion
and awareness of potential scams and vulnerability to identity theft. This summer, the IRS released its “dirty dozen”list of scams that could lead to identity theft, among other things.
The Wolfman – The
sad thing for the wolfman is that he’s usually just a regular guy. Unfortunately, at certain intervals he
transforms into a wolf and roams the countryside. During these down times, he is not able to maintain
normal periods of employment. That’s not
unusual for some consumers, who may have seasonal employment, or rely on a “gig
economy.” In order to be eligible to be
a debtor in a Chapter 13 case, an individual must have “regular income.” The definition is often interpreted liberally,
but interruptions in income can hinder the ability to make regular bankruptcy
payments and could lead to an inability to successfully complete a Chapter 13
plan.
Finally, what do 13 Ghosts, It, The Ring,
The Evil Dead, The Fly, The Thing, The Texas Chainsaw Massacre,
and Invasion of the Body Snatchers have in common? Yes, they’ve all had movie remakes. After a Chapter 13 plan has been confirmed (formally
approved) by the Bankruptcy Court, it can be modified under certain
conditions. But until recently a Chapter
13 plan could never provide for a total term of more than 5 years. On March 27, 2020, the Bankruptcy Code was
changed to permit plans that had been approved on that date to be extended to a
total of up to 7 years if the debtor “is experienced or has experienced a
material financial hardship due, directly or indirectly, to the coronavirus
disease 2019 (COVID-19) pandemic.” This means
that debtors who are falling behind in a Chapter 13 plan due to reduced income
resulting from the pandemic can propose a “remake” in which they extend plan payments
over a longer period. This may allow
missed payments to be put at the end of the case, or lower the monthly payment
to a more affordable amount.
👻👻👻
Don’t Open that
Door! This blog is a basic discussion
for educational and entertainment purposes, and should not be taken as legal
advice. Not consulting a qualified
attorney who can advise you on your specific situation and the laws that apply
in your jurisdiction is like venturing into a haunted house/spooky forest/abandoned
factory, then splitting up your group so that it will be easier to look for
clues. It can end badly! Have fun this Halloween, spend wisely, and be
safe.
The 7thirteen is a blog written by Jeff Narmore, focusing on consumer bankruptcy issues. Visit my website at narmorelawoffice.com.
Narmore Law Office LLC is a debt relief agency and helps people file for relief under the United States Bankruptcy Code.
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