BANKRUPTCY FILING FOR AN INCOMPETENT PERSON

There is a bankruptcy rule to follow when a bankruptcy is filed on behalf of an incompetent person or infant.

Rule 1004.1. Petition for an Infant or Incompetent Person

If an infant or incompetent person has a representative, including a general guardian, committee, conservator, or similar fiduciary, the representative may file a voluntary petition on behalf of the infant or incompetent person. An infant or incompetent person who does not have a duly appointed representative may file a voluntary petition by next friend or guardian ad litem. The court shall appoint a guardian ad litem for an infant or incompetent person who is a debtor and is not otherwise represented or shall make any other order to protect the infant or incompetent debtor.

The general rule is that a guardian or conservator can file a voluntary petition on behalf of an infant or incompetent.

If there is no such person, a petition can be filed by a next friend. However, a typical “next friend” is a person appointed by a court to look after an incompetent person, in some legal capacity.

If there is no legal representative already appointed, the bankruptcy court has the authority to appoint a guardian ad litem or make “any other order” to protect the infant or incompetent person.

Unfortunately, care for an incompetent person may be very expensive. If a party incurs debt on behalf of an incompetent person, the incompetent person may need to have filed a voluntary petition on his or her behalf.

If you have any bankruptcy questions, please feel free to call

Attorney Robert M. Singer, 2572 Whitney Avenue, Hamden, CT 06518

203-248-8278, rsingerct@yahoo.com

Serving New Haven County and all of Connecticut

Cancer Risk among Painters

There are many components in paint including a binder (resin), pigments, dyes, fillers. Paint contains solvents, such as petroleum distillates, alcohols, esters, ketones and glycols. In addition, paint can have additives such as dispursing agents, driers, plasticizers, and anti-skinning agents.

Occupational exposure to paints has been linked to lung cancer and mesothelioma and bladder cancer.

Other studies relating to painting with lymphatic and haematopoietic cancers have been inconclusive.

https://www.ehstoday.com/archive/article/21907464/paint-exposure-may-increase-cancer-risk

Unfortunately, most painters do not use protective gear, such as masks, to prevent inhalation of poisonous fumes. In addition, exposure may occur from mixing and application of paint products. Other exposure may occur from thinning and filling. Another form of exposure can be from sanding. Oftentimes, after painting, a painter has a coating of paint on his or her body, including his or her hands.

If you believe that you have been injured from exposure to a dangerous chemical, please feel free to contact

Attorney Robert M. Singer, 2572 Whitney Avenue, Hamden, CT 06518

203-248-8278, rsingerct@yahoo.com

Serving New Haven County and all of Connecticut.

Piercing the Corporate Veil in Connecticut

Effective for all civil actions filed on or after July 9, 2019, the (Connecticut) Veil Piercing Act applies. Public Act 19-181

In a typical veil-piercing action, a party seeks to hold another person liable personally, for the actions of the person while he was acting on behalf of a corporation.

A common situation is as follows:

a corporate officer of Any Corp. lies about the financial condition of Any Corp. and purchases goods from B Corporation. Any Corp. sells the goods. Corporate Officer takes the profit from the sales out the Any Corp. and the Any Corp. dissolves. B Corporation seeks to collect the monies due, by suing corporate officer.

The common situation involves fraud by an officer or member of a corporation, who seeks to avoid personal liability by acting on behalf of the corporation.

Under the new Connecticut law, in order to pierce the corporate veil,

Sec. 2. (NEW) (Effective from passage and applicable to any civil action filed on or after the effective date of this section) (a) A statutory limitation on the liability of an interest holder of a domestic entity for a debt, obligation or other liability of such domestic entity, including without limitation, the limitation set forth in section 33-673 or 34-251a of the general statutes, may not be disregarded based upon a veil piercing doctrine, claim or remedy in connection with a transaction to which the entity is a party, unless a court finds by a preponderance of the evidence that: (1) The interest holder exerted complete domination and control over the management, finances, policies and activities of such entity with respect to such transaction; (2) such domination and control was used by the interest holder to (A) commit fraud or other intentional wrong against the person asserting such doctrine, claim or remedy, (B) intentionally violate a statutory or common law duty to such person, or (C) commit a deceitful or other unlawful act against such person; and (3) the domination and control exerted by the interest holder and the breach of duty or other act proximately caused injury or loss to the person asserting such doctrine, claim or remedy

The new law made a piercing claim difficult for several reasons

  1. There is a requirement that the interest holder (typically a corporate shareholder or officer) must have complete control over management, finances, policies and activities of the entity. This is likely only to occur in the case of a majority or sole shareholder, or an officer of a corporation.
  2. the interest holder either a. commit fraud or an intentional wrong (negligence is not sufficient) (fraud normally requires clear and convincing evidence) b. intentionally violate a statutory or common law duty to such person ( maybe a fiduciary duty) or c. deceitful or other unlawful act (possible lying about a material fact) (maybe an unfair trade practice)
  3. wrongful action caused injury or loss

Interestingly, the statute goes on to state

The failure of a domestic entity to observe formalities relating to the exercise of its powers or the management of its activities and affairs is not grounds for imposing personal liability on an interest holder of such entity for a debt, obligation or other liability of such entity based upon a veil piercing doctrine, claim or remedy.

(The prior argument was that if an entity failed to act like an entity – such as holding board meetings- the entity should be pierced. This argument is no longer valued.

Reverse Piercing no longer seems to be available as a remedy.

The statute states: No domestic entity shall be responsible for a debt, obligation or other liability of an interest holder of such entity based upon a reverse veil piercing doctrine, claim or remedy.

If you have any questions concerning corporate liability or debts, please feel free to contact:

Attorney Robert M. Singer, 2572 Whitney Avenue, Hamden, CT 06518

203-248-8278, rsingerct@yahoo.com

Serving New Haven County and All of Connecticut

Mortgage Stripping in Bankruptcy

The situation is as follows

a. A husband and wife own property together.

b. The property is a residence.

c. The residence has a value of $100,000

d. The residence has a first mortgage with a balance of $140,000.

e. The residence has a second mortgage with a balance of $50,000

The wife files for chapter 7 and receives a discharge.

The husband files a Chapter 13 bankruptcy alone and asks the court to strip off the second mortgage.

Some courts have allowed the mortgage stripping, holding that the stripping could be allowed as the second mortgage has no value for bankruptcy purposes, because the first mortgage is owed more than the value of the property. See In Re Strausbough, 426 B.R. 243 (2010).

Other bankruptcy courts have not allowed mortgage stripping. In effect, the Courts have held that both the husband and wife have an interest in the property, which is subject to a mortgage lien. One tenant cannot avoid a lien, “whether partially or wholly unsecured” on tenants by entirety property. See In Re Hunter 284 B.R. 806 (2002).

I could not find a case in Connecticut discussing the stripping of a mortgage by one party who owns property jointly with another party. (In Connecticut, most property is owned jointly with right of survivorship). However, the Strausbough case cited above did not rely on the type of ownership (i.e. tenants in the entirety) but rather the fact that the lien was unsecured under bankruptcy law, in allowing the mortgage stripping.

In Connecticut, the economy is slowing and the residential real estate market never fully recovered as in other parts of the country. Therefore, we may soon see a case of a debtor seeking the benefits of the Strausbough case.

If you have any questions about mortgage stripping in Connecticut, please feel free to contact

Attorney Robert M. Singer

2572 Whitney Avenue, Hamden, CT 06518

203-248-8278 rsingerct@yahoo.com

Serving New Haven County and all of Connecticut

Partition Sales in Connecticut

In Connecticut, two or more parties can hold property as joint tenants with right of survivorship. In a typical situation, two parties own property together, jointly. The property is held in survivorship so that when one party dies the other property owner becomes the sole owner.

Unfortunately, the joint owners may not always agree on how to manage the property. For example, one owner may want to sell the property, and the other property may refuse to sell.

In these situations, one party can go to court, to get a court order for a partition sale, under Connecticut General Statutes 52-495. A court will order that a committee be appointed to do a partition sale.

Unfortunately, it can be expensive to get a court order for a partition sale, because of the attorney’s fees and costs involved. In addition, the committee appointed must be paid.

If you are having problems with another joint tenant, please feel free to contact

Attorney Robert M. Singer

2572 Whitney Avenue

Hamden, CT 06518

203-248-8278

rsingerct@yahoo.com

Serving New Haven County and all of Connecticut

IRS Form 1099 Cancellation of Debt Income and Mortgage Release

Particularly in the case of a second mortgage, a lender may send a Form 1099 to a taxpayer/mortgagor, to report cancellation of debt income. In effect, a lender is reporting to the Internal Revenue Service, that it has written off the loan as uncollectible for tax purposes.

Many taxpayers who receive a Form 1099 mistakenly believe that with a Form 1099, the taxpayer is automatically entitled to a Mortgage Release.

However, the truth is different.

  1. The Form 1099 is issued by the lender so that it can take a loss, for tax purposes. This is a tax issue.
  2. A Release of Mortgage is given when a mortgage is satisfied. The filing of a Form 1099 does not automatically release a Mortgage. The Mortgage remains a lien on the subject property.

In order to get a lien release, a taxpayer/mortgagor still needs to negotiate with the mortgage holder to obtain a Release.

(Note, in many cases, a mortgage is assigned/transferred to a third party “assignee.” The payment needs to be made to the assignee).

If you have any questions concerning your mortgage, please feel free to contact

Attorney Robert M. Singer

2572 Whitney Avenue

Hamden, CT 06518

203-248-8278

rsingerct@yahoo.com

Mortgage Financing & Modification – in Connecticut

After the financial crisis, there has been a change in the sources of funds for mortgage lending. Before, the financial crisis, banks were very actively involved in providing money for mortgage lending.

The situation has changed. Now, most of the money comes from non-bank lenders. Banks take in deposits and use the money from deposits and other sources to fund loans.

Non-bank lenders use sources other than deposits. Commonly, the non-bank lenders are using lines of credit (loans from third parties) to fund mortgages. https://www.bloomberg.com/news/articles/2019-11-05/mortgage-liquidity-squeeze-flagged-as-risk-to-powell-mnuchin

In the event of a financial crisis, it is uncertain if these non-bank lenders will be able to modify mortgages for mortgagors in distress (loan modifications) or even survive a financial crisis.

Interestingly, Quicken Loans has become the largest non-bank mortgage lender.

When there is a recession, if these lenders cannot provide a loan modification to borrowers, borrowers may have to use Chapter 13 bankruptcy to reorganize their debt (and save their home).

If you are having problems paying your mortgage, please feel free to contact

Attorney Robert M. Singer

2572 Whitney Avenue, Hamden, CT 06518

203-248-8278

serving all of Connecticut

Junk Bond Bear Market – 2020, 2021

As the economy slows down in 2019, and the trade war continues, it seems more likely that the economy will fall into recession in 2020.

The growth of debt in the U.S. goes on, unabated. One particular area of concern is the junk bond market, non-investment grade corporate debt.

There are two ways to have a junk bond bear market:

a. as interest rates rise, the value of a bond decreases.

b. in a slowing economy or recession, a corporate issuer may not be able to pay back the principal and interest due on the junk bonds, thereby resulting in a default.

For an interesting article on the debt market: https://www.thebeartrapsreport.com/blog/2018/12/30/one-sky-high-junk-bond-maturity-wall/

Now can be the time for investors to reallocate their portfolio away from high yield bonds, and high yield bond funds. Complacency can be costly. Don’t wait until the bear market hits, before adjusting your portfolio to protect against losses.

If you have losses from high yield bonds or high yield bond funds, please feel free to contact

Attorney Robert M. Singer

2572 Whitney Avenue

Hamden, CT 06518

203-248-8278

Serving all of Connecticut

Securities Arbitration for Investors.

Uber & Lyte Auto Accidents In Connecticut

Many people are using rideshare services, such as Uber & Lyte. Unlike with a taxi company, a driver for Uber & Lyte is an independent contractor, rather than an employee. The difference becomes very important in the event that a person is hurt as a result of the negligence of a driver.

Taxi companies employ drivers who work for the company. The taxi company has its own liability insurance company to cover the vehicle driven by an employee. If a driver is involved in an auto accident with a company vehicle, even if he has no passenger, typically, the taxi company insurance policy covers the claim.

An accident with an Uber or Lyte vehicle may be different. Uber and Lyte have a 1,000,000 policy, which will cover passengers in a vehicle. However, the coverage is different than a taxcab commercial insuance policy. If you are involved in an accident with an Uber or Lyte vehicle which is not transporting passengers (or going to pick up passengers), there may be an issue as to whether the 1M policy will cover your claim.

I recently renewed my auto insurance. The insurance company asked if I use my vehicle for any ride sharing service, such as Uber or Lyte. Ride sharing drivers need commercial insurance to cover claims. If you are involved in an accident with an off-duty rideshare driver, the other driver’s insurance company may deny the claim if he or she does not have commercial insurance.

If you were involved in an acciident with an Uber or Lyt motor vehicle, please feel free to contact

Attorney Robert M. Singer

2572 Whitney Avenue, Hamden, CT 06518

203-248-8278

Serving New Haven Count and all of Connecticut

rsingerct@yahoo.com

Motor Vehicle Insurance – Payment for Vehicle Loss

A person can be in an accident in which a vehicle is “totaled.” When a vehicle is totaled, an insurance company will pay to replace the vehicle. This often happens when the cost to repair the vehicle is greater than the value of the vehicle. For example, it is not economical for an insurance company to pay $10,000 to repair a car which is worth only $7,000.

In these situations, you need to determine how the insurance company will determine “value.” If your insurance company will be paying the amount due, check if your policy provides for payment based on “actual cash value” or “replacement cost.”

  1. With replacement cost, you determine how much it would cost to replace the same vehicle at the time of loss. Often, you can look at a guidebook, such as the book from NADA (nadaguides.com).
  2. The “actual cash value” is a different calculation (ACV). ACV considers the depreciation on a vehicle. The normal calculation is –
  • original cash value less depreciation

the depreciation number should be based on the useful life of the vehicle and the number of years in service, i.e. 60% depreciation if car is 3 years old with a 5-year useful life.

there can be an additional deduction for items such as high mileage

In certain cases, you can obtain full replacement cost coverage. Also, if you are buying a car on credit, you may be required to obtain “gap insurance.” which covers the difference between normal insurance coverage and the amount of a loan. Gap insurance between important when a loan is upside loan (the loan amount is greater than the value of the motor vehicle).

If you have any questions in Connecticut concerning insurance coverage issues, please feel free to contact

Attorney Robert M. Singer

2572 Whitney Avenue, Hamden, CT 06518

203-248-8278

Serving all of Connecticut