Frederick J. Hanna & Associates suffered a defeat in federal court recently when the judge denied a motion to dismiss a complaint filed by federal regulators against the law firm.  Fred Hanna and Associates have been accused of operating like a factory and filing thousands of lawsuits on credit card debts against Georgia residents without much, if any, attorney review.  The Consumer Financial Protection Bureau says Fred Hanna lawsuits violate the Fair Debt Collection Practices Act and the Consumer Financial Protection act by using deceptive or misleading practices.

The law firm of Frederick J. Hanna & Associates regularly represents credit card companies and collection agencies in lawsuits against Northwest Georgia residents in Dalton, Chatsworth, and the surrounding Whitfield and Murray Counties.  If you have been served with a demand letter or legal papers by Fred Hanna’s law firm, please call us today to review your legal rights and remedies with a free consultation.  We can inform you of your legal rights and fight the lawsuit or consider whether a Chapter 7 or Chapter 13 bankruptcy is the best course of action.

Have you been served with a Nice Cars lawsuit?  As with the wave of cases in the past, local residents who purchased vehicles from Nice Cars or Navigator Auto Sales may have defenses available, such as under the Georgia Motor Vehicle Sales Finance Act and the Uniform Commercial Code.  Many lawsuits on repossessed vehicles are past the applicable statute of limitations.  Sometimes counterclaims can even be lodged for unlawful repossession or malfunctioning automatic car shutdown devices.

A Nice Cars lawsuit involves the allegation of a deficiency balance owing on a repossessed vehicle.  In Georgia, car lenders who repossess a vehicle must follow certain protocol for auctioning the vehicle and pursuing any remaining amounts owed.  Due to high interest rates and low auction values, many former Nice Cars or Navigator car buyers find themselves owing more than the car was originally worth.

At the Hurtt Law Firm, we have handled hundreds of deficiency balance claims on repossessed vehicles, many of which involved Nice Cars and Navigator.  If you have been served with a Nice Cars lawsuit on a repossessed vehicle, please call and schedule a free and confidential consultation with our attorneys.

Georgia law allows a lender to quickly obtain a court order to repossess property of a borrower with a Writ of Possession.  Unlike normal lawsuits, petitions for writs of possession require immediate responses.  O.C.G.A. § 44-14-230 et seq. provides that borrowers must respond within 7 days of service of the summons.

Such a short time-frame unfairly affects Georgia’s farmers.  Many farmers, be they in poultry, livestock, logging, or traditional crops, have their equipment financed with lending institutions.  A missed flock or bad weather can easily lead to a missed payment and a petition for a writ of possession for the financed equipment.  A mere 7 days to respond is not enough.  Our farmers have demanding jobs and are usually many miles from the courthouse and legal offices.  Moreover, many farmers organize their business under a corporation, which means the farmer cannot represent the corporation in the lawsuit — an attorney must be hired.  Seven days simply isn’t enough time.

The Georgia legislature should amend O.C.G.A. § 44-14-230 et seq. to provide a longer response period or other safeguards in order to protect our local family farmers, be they in Dalton, Resaca, Lafayette, Chatsworth, or anywhere in Northwest Georgia.

Often times, farmers faced with a writ of possession are best served by filing a Chapter 12 Reorganization.  Chapter 12 is a special bankruptcy chapter for family farmers.  They can keep their farm and their assets, while they restructure their debts.  It puts a stop to the writ of possession and any other foreclosure or repossession efforts.  We have saved individual clients hundreds of thousands of dollars through the Chapter 12 process.

We are proud that our managing attorney, Michael D. Hurtt, was recently recognized by the Dalton Regional Office of the Georgia Legal Services Program for outstanding legal service to the community.  He received the Private Attorney Involvement Leadership Award for 2013 for his longstanding commitment to offering pro bono service and support to the local community in bankruptcy law.  Georgia Legal Services also gave a special thank you to our associate attorney, David W. Johnson, for volunteering his time and expertise at the Free Legal Advice Clinic held at the Mack Gaston Community Center in Dalton, Georgia.

Attorneys should strive to give back to their local communities and our attorneys at the Hurtt Law Firm follow through with this responsibility.  We understand that residents of Dalton, Chatsworth, and Northwest Georgia in financial distress have few places to turn.  When good people fall on hard times, a bankruptcy can provide a fresh start and an aggressive attorney can provide peace of mind.

In an alarming decision earlier this year, an Indiana District Court extended personal liability of business owners for their company’s taxes.  The Court ruled in US vs. Sperry that where a business owner exercises discretion to pay salaries or other creditors, instead of paying non-trust fund taxes to the IRS, the owner can be personally liable under 31 U.S.C. § 3713.

It has been well-known in the bankruptcy world that trust fund taxes, such as withholding taxes, are collectible against the business owner or person responsible.  Therefore, these taxes were always top priority for payment when a business needed to be shut down.  Other taxes, however, were not high on the priority list because business owners are typically protected through the corporate, limited liability model.

However, this new ruling changes this priority scheme.  Business owners who are winding down their operation should pay careful attention to what discretionary payments they make.  If credit cards, trade debt, or salaries are paid instead of even non-trust fund taxes, the business owner may find themselves liable to the IRS.  Such a predicament may force the business owner into their own insolvency and needing to file a Chapter 7 or Chapter 13 bankruptcy case.

Recently, the Eastern District of Tennessee disagreed with many other courts to rule that the filing of 1099-C may bar collection of the underlying debt.  1099-C’s are forms filed creditors submit to the IRS when debt is supposedly forgiven.  The IRS treats this debt forgiveness as income and in turn taxes the borrower.  Typically, the borrower who did not have money to pay debt also does not have money to pay additional taxes.  In other cases, the 1099-C is used as a threat by the creditor to coerce payment from borrowers.

In In re Reed, E.D.TN case no. 12-30049 (May 14, 2013), Judge Stair evaluated whether the filing of a 1099-C means the debt is discharged or forgiven.  The borrower’s attorney filed an objection to a claim submitted by First Tennessee Bank.  The bank was trying to collect on a mortgage foreclosure deficiency and had previously filed a 1099-C with the IRS to report the deficiency as discharged.  The bank argued that the IRS has stated via letter that the filing of the 1099-C does not preclude collection of the debt.  Judge Stair disagreed due to the plain language of the internal revenue code.

The ruling breathes life into a very simple argument that other courts have rebuked – it is unfair to tax borrowers for discharged debts and then still collect the debt.  It’s a form of a double recovery and flies in the face of common sense.  The weight of case law is still against it, however, but at least the filing of a Chapter 7 or a Chapter 13 bankruptcy can discharge a debt without the worry of a creditor submitting a 1099-C and triggering income taxes.

In a victory for honest but unfortunate debtors, the US Supreme Court adopted a higher standard for the antiquated term “defalcation” in Bullock v. BankChampaign.  Creditors can object to a debt being discharged in bankruptcy if the debt arises from defalcation while acting in a fiduciary capacity, under 11 U.S.C. § 523(a)(4).  Many courts and scholars have disagreed about what defalcation actually means.  It is important for people considering bankruptcy, because both Chapter 7 and Chapter 13 discharges do not include debts under § 523(a)(4).

The Supreme Court has finally settled the issue in deciding that defalcation requires a culpable (bad) state of mind.  This includes actions that the person knows are wrong or that are reckless.  The Court found it important that the other types of debts under § 523(a)(4), fraud, embezzlement, and larceny, all involve an intentional wrong, moral turpitude, or bad faith conduct.  Furthermore, the Court confirmed that exceptions to discharge should be construed narrowly.

Many every day Americans can find themselves in a legal dispute over the handling of an estate of a loved one or a trust set up by a family member.  Unsophisticated individuals may unknowingly violate the terms of the estate or the trust, as is what occurred in the Bullock case, and be slapped with a lawsuit.  At least now, if a bankruptcy is needed, these honest people can still obtain a fresh start.

We have re-launched our website and are excited to have the web hosting back under our personal control.  Please take a look around and hopefully it will answer many of your bankruptcy, financial, or litigation questions.  As always, the best thing to do is to contact us and schedule your free and confidential consultation right away!