With Regard to the Income of a Bankrupt’s Nonfiling Spouse: Will BAPCPA's "CMI" Become an Acronym for “Clearly Misinterpreted”?
by Emily Abbott, Esq.
and Gilbert B. Weisman, Esq.
Becket & Lee LLP, Malvern, Pa.
Once the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) goes into effect, a critical computation for any consumer bankruptcy case will be the debtor's "current monthly income" (CMI). BAPCPA defines this new term, to paraphrase, as a six-month average of the debtor’s income, and specifically includes amounts paid by entities other than the debtor for regular household expenses. See 11 U.S.C. §101 (10A) (quoted below). Though undoubtedly intended to provide clear guidance in means testing in chapter 7 and the calculation of disposable income and maximum plan length in chapter 13 cases under BAPCPA, the use of the term may result in volumes of litigation as each court weighs in on what it means in cases involving a nonfiling spouse with income. This article will examine the ambiguity created by the newly defined term “current monthly income” with respect to a nonfiling spouse's income in the context of both chapter 7 abuse analysis and chapter 13 disposable income analysis under BAPCPA.
Homestead Exemptions and Limits under BAPCPA
by Alane A. Becket
Becket & Lee LLP, Malvern, Pa.
Facts:
On Nov. 1, 2005, an involuntary petition is filed against the debtor who, seven months previously, had moved from a state with a maximum homestead exemption (State A) of $15,000 in value to a state with an unlimited homestead exemption (State B). The debtor's new state of residence is an opt-out state, which prohibits its citizens from electing the federal exemptions. The value of the debtor's new residence is $500,000 and it was purchased in part from the proceeds of the sale of the debtor's former residence and part from the proceeds of the liquidation of certain previously nonexempt investments. Four and one-half years prior to the filing of the petition, the debtor had been involved in an automobile accident in which he caused serious physical injury to another person as a result of driving while intoxicated. What are the debtor's rights to exempt his recently acquired residence? What challenges can a creditor raise?
Agenda for the 2005 Winter Leadership Conference
The Consumer Bankruptcy and Ethics Committees will present a joint program, “My Practice Will Go On…or Will It?—Ethical and Other Challenges for Consumer Bankruptcy Case Practice Under the BAPCPA of 2005,” at the 2005 Winter Leadership Conference in Indian Wells, Calif., on Friday, Dec. 2, at 3:45 p.m. This timely program will address the various ethical issues that arise in consumer bankruptcy cases and the new challenges posed by the 2005 amendments to the Bankruptcy Code. The panel, which will include debtor and creditor counsel as well as a representative of the Office of the U.S Trustee, will discuss various present practices of counsel, new approaches to old issues and questions raised by the new consumer provisions.