Consumer Bankruptcy Committee

ABI Committee News

Section 522(o): Can You Change The Law if You Leave the Language The Same?

Section 522(o) of the Bankruptcy Code seems to have the potential to significantly restrict pre bankruptcy exemption planning for prospective debtors who choose state exemptions (in states that opted out of federal exemptions, bankruptcy debtors are stuck with §522(o and p)). Prior to the passage of “BAPCPA”, there was no magic language in §522 to indicate what a trustee had to prove if she sought to show that a transfer of non-exempt property into exempt property was improper. Section 522 merely provided that property that fits the definition of exempt property held by a debtor at the time she files bankruptcy can be claimed as exempt.

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Florida Bankruptcy Courts Split On The Negative Equity Issue Related To 910-Day Claims

Congress added a provision to BAPCPA that appeared to be designed to protect auto lenders who financed cars for debtors within 910 days of the bankruptcy filing. This provision sought to prevent the cramdown of these so-called “910-day loans” in chapter 13 cases and was included in a section of the legislation entitled “Giving Secured Creditors Fair Treatment in Chapter B.” H.R. Rep. No. 109-31 at 72 (2005). Unfortunately, this provision was unnumbered and simply added at the end of §1325(a). Now known as the “hanging paragraph,” the apparent misplacement of this provision, together with its confusing language, has created extensive litigation on a number of issues.

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Mortgage Crisis Requires Attention of Consumer Bankruptcy

The typical consumer bankruptcy attorney is knowledgeable about bankruptcy law and property rights in general. Today, more than ever, mortgage foreclosure is the event which precipitates bankruptcy filings. Most of the mortgages that are now being foreclosed upon are subprime mortgages originated within the past three years. Many of these subprime mortgage transactions were refinancing transactions. The overwhelming majority of bankruptcy attorneys are unaware of the fact that refinancing transactions within three years prior to the bankruptcy case may be subject to substantial claims or defenses under the federal Truth in Lending Act (TILA) and Regulation Z. Trustees, as well as debtors, have the right to pursue TILA and TILA related claims. In re Smith, 640 F.2d 888, 890 (7th Cir. 1981) quite explicitly holds that the chapter 7 trustee has the sole standing to pursue a TILA claim for a debtor in chapter 7. To the same effect, see In re Polis, 217 F.3d 899 (7th Cir. 2000). The existence of a TILA claim or a pendent state law claim arising from the fraudulent or improper origination of a consumer mortgage, may be the difference between a debtor losing his house or keeping it pursuant to a chapter 13 plan, e.g In re Ramirez, 329 B.R. 727 (D. Kan. 2005).

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Post-Petition Rent as an Administrative Expense In a Chapter 13 Plan?

In a chapter 13 bankruptcy, a debtor in default under a residential lease may assume the lease but the debtor’s plan must provide a cure provision for the pre-petition default. 11 U.S.C. §365. If the debtor later rejects the post confirmation assumed lease, is the lessor entitled to an administrative expense claim for post-petition rents?

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Using Non-Dischargeability As A Remedy Against Financial Abusers Of The Elderly

Bankruptcy Judge Donald Steckroth, recently handed down an unpublished decision that declared nondischargeable a debt for money taken by a caregiver-daughter from her elderly mother. Buttimore as Executor for the Estate of Helen C. Buttimore, Plaintiff v. Carole Wolke. Defendant Adversary Case Number 07-01756(DHS). (Bankr. D.N.J. Feb. 13, 2008). The decision interpreted Bankruptcy Code §523(a)(4), which renders nondischargeable a debt owed for the return of funds taken from an elderly parent’s assets without consent. The decision is noteworthy because there was not previous state court ruling finding the daughter’s actions wrongful.

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Making Sense out of Mortgage Mayhem: Primer on Subprime and Predatory Lending Problems

“Subprime Mortgage Crisis!” “Predatory Loans!” These are headlines that have dominated financial news for months. Unfortunately, although the terms are used loosely and frequently, the stories have done little to educate the public—people whose homes may be lost in a foreclosure action—about what the terms mean. More importantly, there are few explanations being given for the current problems. This article will attempt to define the terms and explain the causes for these now-common problems.

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Committee News and Announcements

ABI’s Third Consumer Bankruptcy Webinar Stops in Houston to Examine Discharge, Attorney Fees and Related Issues under BAPCPA

On April 30, ABI’s “Consumer Bankruptcy in Practice Webinar Series” stops in Houston. ABI will be here to look at discharge, debtor and creditor attorney fees, plan modifications and other issues under BAPCPA. Moderator Felicia S. Turner, ABI’s Deputy Executive Director and a former U.S. Trustee, will be joined by Bankruptcy Judge Marvin A. Isgur (S.D. Texas); Standing Chapter 13 Trustee David G. Peake (Houston); Chapter 7 Trustee and attorney Janet Northrup of HughesWattersAskanase (Houston) and Ramona D. Elliott, Deputy General Counsel for the Executive Office for U.S. Trustees (Washington, D.C.). The two-hour program is only $75 for members. Click here for details and registration.

Central States Workshop Presents Consumer Programming

The 15th Annual Central States Bankruptcy Workshop at the Grand Traverse Resort and Spa in Grand Traverse, Mich., on June 12-15, 2008, continues its tradition of having a substantial menu of consumer programming. A sample of this year’s offerings include: Cramming for the Means Test: How to Pass It Line by Line; Chapter 13 This Way, That Way, Which Way? and Bringing Down the House: Residential Mortgages and Paying the Piper: Taxes in Consumer Cases among others. Join the ABI at this fantastic resort on the shores of Lake Michigan. Click here for details and registration.

15th Annual Northeast Bankruptcy Conference—Consumer Forum

As part of this annual event, the ABI presents its third annual Consumer Forum at the Ocean Edge Resort and Club in Brewster, Mass. July 10-12. This year, mortgages and auto loans are the focus of day one. Day two gets practical, with panels discussing how BAPCPA has changed the practice of consumer bankruptcy law. The Northeast Bankruptcy Conference includes a host of optional events for the whole family to enjoy! Click here for details and registration.

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