Consumer Bankruptcy Committee
ABI Committee News
Volume 4, Number 1 / January 2006
In This Issue:
2005 Bankruptcy Reform: What the Courts Have Done So Far
by: Dennis J. LeVine
Dennis LeVine & Associates,
P.A.; Tampa
The recent amendments to the Bankruptcy Code via the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) have provided a number of significant changes to the Code. This article will examine how the courts have been implementing the changes in the law.
Homestead Protection Is Devolving
by: Robert C. Meyer
Robert C. Meyer P.A.; Miami
Creditors have always feared states with large homestead protections. Florida, one of the five homestead-protective debtor states, was considered by many to be the ultimate “debtor’s haven” and was the target of a great deal of criticism. Stocking cash into real estate has never been disdained in Florida. Florida’s homestead protectionism was succinctly described by Southern District of Florida Bankruptcy Judge A. Jay Cristol, who told the New York Times, “You could shelter the Taj Majal in this state and no one could do anything about it.” The creditor community perceived this sheltering to be epidemic, especially in the Havoco decision, when the Florida Supreme Court allowed a debtor to deliver nonexempt cash to the homestead after a judgment creditor chased the debtor to Florida, where he avoided attachment by purchasing a large Florida homestead.
Reduction of Homestead Exemption under New Code §522(o),
Conversion of Nonexempt into Exempt Property
by: Harry D. Boul
Boul & Associates, P.C.;
Columbia, Mo.
In re Maronde, 332 B.R. 593 (Bankr. D. Minn. 2005) (N. Dreher), is a recent decision that interprets and discusses new §522(o) of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The debtor, Kim Morande, a resident of Minnesota, on the eve of filing a chapter 13 bankruptcy and while insolvent, planned to take cash advances on credit cards and then apply those funds to reduce his equity line of credit against his homestead, and thereby increase his exempt homestead. He planned to then sell a nonexempt truck and trailer to raise cash to offer his new creditors settlements at less than what he owed. Next, he took cash advances of $31,500 and used the money to pay down his equity line of credit, thereby increasing his exempt homestead property by that amount. He then attempted to take an additional $22,300 in credit card advances to further reduce his home mortgage debt, but those advances were denied. When the last-mentioned attempt failed, Mr. Morande sold his truck and trailer and applied $18,750 of the proceeds to further reduce his home mortgage lien (to zero). He then filed a chapter 13 bankruptcy petition.
Agenda for Annual Spring Meeting
The Consumer Committee will meet at ABI's Annual Spring Meeting on Saturday, April 22 at 9:30am and will review decisions being rendered by the courts under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). The presentation is designed to be both a case update on decisions on consumer-related issues and an analysis of the principles of statutory construction and interpretation emerging from those decisions. Thus, the panel will highlight both the substantive outcomes and the approaches being used by the courts in interpreting the sometimes unfamiliar and difficult language contained in some provisions of BAPCPA. The panel will include Hon. Bruce Markell, U.S. Bankruptcy Judge for the District of Nevada and Senior Fellow in Bankruptcy and Commercial Law at the William S. Boyd School of Law, University of Nevada Las Vegas; David L. Rosendorf, shareholder at Kozyak, Tropin & Throckmorton in Miami who maintains the ABI BAPCPA blog; and additional panelists to be named later.