Consumer Bankruptcy Committee

ABI Committee News

Credit Counseling Requirements under §109(h)

by: John Rao
National Consumer Law Center; Boston

Form of “Certification” for Credit Counseling Waiver
The term “certification,” which had never been used in the Bankruptcy Code prior to 2005, appears in the 2005 Act on at least 26 occasions, in §109, 362, 524, 707, 1228 and 1328.  No definition for the term was included in §101, and the Rules Committee elected not to address the requirements of a certification in the Interim Bankruptcy Rules. A division in the opinions has developed in regard to the term’s application in §109.

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The Automatic Stay and Serial Filings: How the Courts Have Interpreted §362(c)(3) and (4)

by: Hon. Eugene R. Wedoff
U.S. Bankruptcy Court; Chicago

Section 302 of BAPCPA, titled “Discouraging Bad-Faith Repeat Filings,” seeks to accomplish this purpose by limiting the operation of the automatic stay.  Its general operation seems simple enough:

  • A new §362(c)(3) provides that if a chapter 7, 11 or 13 case is filed within one year of an earlier dismissed case (other than a chapter 11 or 13 case filed after a §707(b) dismissal), the automatic stay in the second case terminates 30 days after the filing, unless a party in interest demonstrates that the second case was filed in good faith with respect to the creditor sought to be stayed. 
  • If a second repeat filing takes place within the one-year period, then, under a new §362(c)(4), the automatic stay will not go into effect (and the court is required promptly to enter an order confirming the inapplicability of the stay on request of a party in interest).  Similar to the situation with §362(c)(3), a party in interest may obtain imposition of the stay by demonstrating that the third filing is in good faith with respect to any creditor sought to be stayed. 
  • For both second and third filings within one year, circumstances are described that generate a presumption that the new filing was not made in good faith, and such a presumption must be rebutted by clear and convincing evidence. 

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Conversion . . . or Convolution: The Effect of Conversions Between Chapter 7 and Chapter 13

by: Joseph B. Collins
Hendel & Collins, PC; Springfield, Mass.

The conversion of a bankruptcy case between chapter 7 and 13 can be perilous for both debtors and creditors. From a debtor's perspective, there are a multitude of reasons to move from one chapter to another. For example, chapter 13 debtors that have confirmed a plan that commits future income in excess of the liquidation value of their assets may prefer the chapter 7 process. Also, a chapter 7 debtor that has been unable to negotiate the reinstatement of a home mortgage loan or a repayment plan for nondischargeable taxes may need to convert to chapter 13 to preserve his or her home or to avoid post-petition tax levies. It is the author’s experience, however, that most conversions are not motivated by such considerations. Rather, the motions to convert that appear most frequently in bankruptcy court seem to be motivated by a debtor’s desire to escape the pursuit of an aggressive chapter 7 or 13 trustee. These materials will explore some of the cases that have dealt with the issue of a debtor’s "right" to convert a case, and will also consider the effect of conversion on objections to exemptions, time limitations for certain avoidance actions and the determination of property of the estate.

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