Consumer Bankruptcy Committee
ABI Committee News
Volume 4, Number 5 / September 2006
In This Issue:
- Disposable Income vs. Projected Disposable Income: Identical Twins or Distant Relatives?
- “Assisted Person” Status and §526(a)(4)’s Limits on Complete & Competent Legal Representation
- Projected Disposable Income under BAPCPA
- Bankruptcy Courts Reject Chapter 13 Plans that Do Not Comply with the Bankruptcy Code
Disposable Income vs. Projected Disposable Income: Identical Twins or Distant Relatives?
by: Kevin R. Anderson
Chapter 13 Trustee; Salt Lake City
Since its inception, the foundation of chapter 13 has been to provide wage-earning debtors with a means to reorganize their debts over a 3- to 5-year period by taking their monthly income, deducting reasonably necessary expenses, and using the resulting “excess income” to pay creditors. After approximately 25 years of practice and refinement, the calculation of a debtor’s excess income and the amount to be paid into the plan and to unsecured creditors became a fairly predictable process within the local legal culture of each district. However, with the recent enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the calculation of a debtor’s excess income has become complicated, confusing and arguably unfair.
“Assisted Person” Status and §526(a)(4)’s Limits on Complete & Competent Legal Representation
by: James H. Cossitt
Attorney & Counselor at Law; Kalispell, Mont.
This article explores some of the issues that have arisen or will arise as a result of the interplay between the application of (1) “assisted person” (AP) in §101(3) and (2) the limitations on Debt Relief Agencies (DRAs) in §526(a)(4). In particular, these sections create new obligations on debtor’s counsel to carefully identify, examine, analyze and determine, at the outset of any engagement (or potential engagement), whether or not the client is an AP or not.
Projected Disposable Income under BAPCPA
by: William Andrew McNeal
Becket & Lee LLP; Malvern, Pa.
Disparate Effects of a Single Word
In order to gain confirmation of a chapter 13 plan if it faces objection by the trustee or the holder of an unsecured claim, a debtor must pay in full each allowed unsecured claim, 11 U.S.C. §1325(b)(1)(A), or devote to the plan all projected disposable income to be received during the applicable commitment period, 11 U.S.C. §1325(b)(1)(B). Thus confirmation rests, if allowed unsecured claims are not completely satisfied, on a qualifying amount of money paid over a qualifying span of time.
Bankruptcy Courts Reject Chapter 13 Plans that Do Not Comply with the Bankruptcy Code
by: Dennis LeVine
Dennis LeVine & Associates, PA; Tampa, Fla.
Occasionally, a debtor may place a provision in a chapter 13 plan that is contrary to the Bankruptcy Code and the plan is confirmed without objection. It has been a long-held belief that a creditor’s failure to object to the confirmation of a chapter 13 plan waives any objection to the plan once the plan is confirmed. This position is supported by the legal concept of res judicata (i.e., the binding effect of a court order), and the language in §1327.