Month: June 2016

The Bankruptcy Estate in Chapter 7

I use the term “bankruptcy estate” repeatedly  – but what is a bankruptcy estate?

A legal fiction takes place when you file a bankruptcy.  This fiction is that an estate is created at the time of filing, and this estate is distinct from the individual who is filing.  This estate is administered by a Trustee, who is given the responsibility of maximizing profits for the creditors, while maintaining the fresh start of the Debtor, who gets to keep a certain amount of property.  A trust is a separate legal entity.  A Corporation is a good analogy – similarly, a corporation is a legal entity that exists separately from you.

Another way to think about it is that you lose control over your property for a limited period of time.  (Less so in Chapter 11 and 13, but very much so in a Chapter 7)  This is the price that Debtors pay for filing a bankruptcy.

Trustee’s make sure that the rules of bankruptcy procedure and the petitions are being prepared in a professional way but they are also incentivized by profit.  This happens because they get to keep some of what they recover from a Debtor, in the event there is something to recover.   Standing Chapter 7 Trustees are independent contractors, not employees of the government.  They get paid a nominal sum (less than a hundred dollars) to speak with you at a hearing called a Meeting of Creditors.  In a  no asset case this is all they would receive.   (By the way, this doesn’t mean there are no assets – it just means your assets are below a threshold amount that varies from state to state.)

In an asset case (meaning there are assets above the threshold amount) they are able to distribute the property to the creditors.  If it is not a liquid asset, an auction is held where they solicit bids for a certain length of time.  When it is sold, the trustee gets a percentage of the sale, and the rest is distributed to the creditors pro rata.

Chapter 7 is still the most preferred form of bankruptcy because most people don’t own that much, and don’t earn that much to be at risk.  Because it only take a few weeks, and all your debts are discharged, it oftentimes seems like a straightforward and easy process.  However, unlike Chapter 11 and Chapter 13, there is no turning back with a Chapter 7; once you have filed, you have put your assets in the hands of the bankruptcy estate.  The risk may be low, but if you miscalculate, the consequences can be devastating.



Square, Bankruptcy, and Escorts

Apparently I can’t use Square to process payments for my firm.  Below is the agreement – we are right below escort services.  I have highlighted in red for easier viewing.

Square Seller Agreement:   Section 6. Your Content

The Services may include functionality for uploading or providing photos, logos, products, loyalty programs, promotions, advertisements and other materials or information (“Content”).

 You grant us and our subsidiaries, affiliates, and successors a worldwide, non-exclusive, royalty-free, fully-paid, transferable, and sub-licensable right to use, reproduce, modify, adapt, publish, prepare derivative works of, distribute, publicly perform, and publicly display your Content throughout the world in any media in order to provide and promote the Services. You retain all rights in your Content, subject to the rights you granted to us in these General Terms. You may modify or remove your Content via your Square Account or by terminating your Square Account, but your Content may persist in historical, archived or cached copies and versions thereof available on or through the Services.

 You will not upload or provide Content or otherwise post, transmit, distribute, or disseminate through the Services any material that: (a) is false, misleading, unlawful, obscene, indecent, lewd, pornographic, defamatory, libelous, threatening, harassing, hateful, abusive, or inflammatory; (b) encourages conduct that would be considered a criminal offense or gives rise to civil liability; (c) breaches any duty toward or rights of any person or entity, including rights of publicity, privacy or trademark; (d) contains corrupted data or any other harmful, disruptive, or destructive files; (e) advertises products or services competitive with Square’s or its partners’ products and services, as determined by us in our sole discretion; or (f) in our sole judgment, is objectionable, restricts or inhibits any person or entity from using or enjoying any portion of the Services, or which may expose Square, its affiliates or its customers to harm or liability of any nature.

 Although we have no obligation to monitor any Content, we have absolute discretion to remove Content at any time and for any reason without notice. You understand that by using the Services, you may be exposed to Content that is offensive, indecent, or objectionable. We take no responsibility and assume no liability for any Content, including any loss or damage to any of your Content.

Prohibited Goods and Services with Square Register

 Information outlining what you may not sell when you use Square.

 Square strives to provide a safe environment for both buyers and sellers. As such, we do not permit the sale of certain goods and services that are listed in Square’s Terms. In this agreement, you confirmed that you will not accept payments in connection with the following businesses or business activities:

 Any illegal activity or goods
 Buyer or membership clubs, including dues associated with such clubs
 Credit counseling or credit repair agencies
 Credit protection or identity theft protection services
 Direct marketing or subscription offers or services
 Infomercial sales
 Internet/mail order/telephone order pharmacies or pharmacy referral services (where fulfillment of medication is performed with an Internet or telephone consultation, absent a physical visit with a physician including re-importation of pharmaceuticals from foreign countries)
> Unauthorized multi-level marketing businesses
> Inbound or outbound telemarketers
> Prepaid phone cards or phone services
> Rebate based businesses
> Up-sell merchants
> Bill payment services
> Betting, including lottery tickets, casino gaming chips, Fantasy Football, off-track betting, and wagers at races
> Financial institutions offering manual or automated cash disbursements
> Prepaid cards, checks or other financial merchandise or services
> Sales of money-orders or foreign currency by non-financial institutions
> Wire transfer money orders
> High-risk products and services, including telemarketing sales
> Service station merchants
> Automated fuel dispensers
> Adult entertainment oriented products or services (in any medium, including Internet, telephone or printed material)
> Sales of (i) firearms, firearm parts or hardware, and ammunition; or (ii) weapons and other devices designed to cause physical injury
> Internet/mail order/telephone order cigarette or tobacco sales
> Drug paraphernalia
> Occult materials
> Hate or harmful products
> Escort services
> Bankruptcy attorneys or collection agencies engaged in the collection of debt