NEW CASE UPDATE
Initially prepared by John Gustafson, Staff Attorney for Anthony B. DiSalle, Trustee; Revised by Jerry Mylander for Glenn Stearns, Trustee
BAPCPA ND IL:
In re Farrar-Johnson, 353 B.R. 224 (Bankr. N.D. Ill. 2006). Judge Goldgar. Above-median Chapter 13 debtors could deduct standard expenses in means test in calculating disposable income regardless of actual expenses in schedule J.
In re Curry, 2007 WL 549360 (Bankr. N.D. Ill 2007). Judge Schmetterer. Termination of stay under §362(c)(3)(A) terminates the stay in all respects to the property.
In re Morales, 2007 WL 92414 (Bankr. N.D. Ill 2007). Judge Schmetterer. Hanging paragraph in §1325(a) does not allow surrender of vehicle in full satisfaction on entire claim of 910 creditor in Chapter 13 plan.
In re Blanco, 06 B 13223 (Bankr. N.D. Ill. 2007), Judge Squires. Hanging paragraph in §1325(a) does not allow surrender of vehicle in full satisfaction on entire claim of 910 creditor in Chapter 13 plan.
In re Randle, 2007 WL 3734351 (Bankr. N.D. Ill 2006). Judge Doyle. Above-median debtors may deduct secured debt payments in means test in collateral that is being surrendered. (affirmed by the District Court on 7/20/07)
In re Nevitt, 2006 WL 2433491 (Bankr. N.D. Ill 2006). Judge Barbosa. Form B22C does not apply for below median debtors. Also, commitment period is temporal not monetary.
In re Wiggs, 2006 WL 2246432 (Bankr. N.D. Ill 2006). Judge Barbosa. Above-median-income debtors may not take vehicle ownership expenses, even though they own their vehicles outright (only those standard expenses that are “applicable”).
In re Demonica, 345 B.R. 895 (Bankr. N.D. Ill 2006). Judge Barbosa. Debtor’s current income, as opposed to historical average, should be used to determine “projected disposable income. A debtor is allowed to deduct the full amounts listed in National and Local Standards for the categories of expenses that fall within those standards. Additional expenses are only proper if they fall within the additional expense provisions as specified by the IRS or as defined in the Code.
In re Gossett, 2007 WL 1226629 ( Bankr. N.D. Ill 2007). Judge Squires. Credit counseling briefing must be concluded ONE CALENDAR DAY PRIOR to the filing of the petition. Also, in the event of ineligibility, dismissal is the appropriate remedy.
In re Mathis, 2007 WL 1320740 (Bankr. N.D. Ill. 2007) Judge Doyle. The applicable commitment period is a multiplier, determining the minimum amount that the debtors must pay the unsecured creditors.
In re Williams, 2007 WL 1206738 (Bankr. N.D. Ill 2007) Judge Hollis. When the debtor is not entitled a discharge, payment of the underlying debt determined under non-bankruptcy law under §1325(a)(5)(B)(i)(I)(aa) means that the debtor must make payment as required by the contract (at the contract rate of interest). Compare In re Hopkins, 2007 WL 2028799 (Bankr. N.D. Ill 2007) Judge Goldgar. Method of full payment of balance of 910 secured debt not determined by the contract.
In re Robson, 2007 WL 1531610 (Bankr. N.D. Ill 2007). Judge Schmetterer. A debtor must provide monthly adequate protection to a creditor that is equal to the depreciation of the collateral the first month after the filing of the petition.
In re Wright, 2007 WL 1892502 (7th Cir. 2007). Post-petition surrender of 910 vehicle does not preclude a unsecured deficiency claim by a creditor.
GETTING IN, Credit Counseling, Payment Advices, Tax Returns, and Eligibility
In re Smith, 352 B.R. 729 (Bankr. W.D.N.Y. 2006). Chapter 7 case was automatically dismissed for debtor’s failure to provide "all of the information" on his payment advices.
In re French, 354 B.R. 258 (Bankr. E.D. Wis. 2006). BAPCPA provision required debtor to file income tax returns before they were due under the tax laws. The court held that debtors who filed Chapter 13 cases between January 1st and April 15th, were required, no later than one day before the first meeting of creditors, to file with taxing authorities income tax returns for the preceding tax year.
In re Sawyer, 2007 WL 1725627 (Bankr. E.D. Va. 2007). Failure to provide income tax returns according to §1308 is cause for dismissal, regardless if the tax authority has granted an extension.
In re Spears, 355 B.R. 116 (Bankr. E.D. Wis. 2006). BAPCPA does not impose a minimum one-day waiting period between receipt of credit counseling and the filing of the petition.
In re Lackey, 352 B.R. 769 (Bankr. N.D.W.Va. 2006). Credit counseling is required of Chapter 7 and Chapter 13 debtors. (Pro se debtor’s argument.)
In re Jones, 352 B.R. 813 (Bankr. S.D. Tex. 2006). Court had no discretion but to grant motion to dismiss case filed by debtors who obtained credit counseling 190 days earlier.
In re Postlethwait, 353 B.R. 428 (Bankr. W.D. Pa. 2006). Chapter 13 debtor was not entitled to “exigent circumstances” waiver of credit counseling requirement.
In re Afolabi, 343 B.R. 195 (Bankr. S.D. Ind. 2006). Impending foreclosure sale is not an exigent circumstance (“self-created emergency”) See also, In re Rodriguez, 336 B.R. 462 (Bankr. D. Idaho 2005).
In re Dixon, 338 B.R. 383, 385-88 (B.A.P. 8th Cir. 2006) Upheld Bankruptcy Court’s finding that immediacy of foreclosure sale was not an “exigent circumstance”
In re Grydzuk, 353 B.R. 564 (Bankr. N.D. Ind. 2006). Case converted from Chapter 13 to Chapter 7 was “filed under” Chapter 7 for Chapter 13 eligibility purposes.
In re Parker, 351 B.R. 790 (Bankr. N.D. Ga. 2006). Debtor eligibility requirements, including the credit counseling requirement, are non-jurisdictional in nature.
In re Hudson, 352 B.R. 391 (Bankr. D. Md. 2006). Debtor need not obtain credit counseling a minimum of one day prior to the petition date (as some courts have held).
In re West, 352 B.R. 482 (Bankr. E.D. Ark. 2006). Two years Chapter 13 discharge bar added by the BAPCPA had to be interpreted according to its plain terms as seldom applicable – court says the two year bar is measured from filing-to-filing. Not discharge to filing.
In re Sours, 350 B.R. 261 (Bankr. E.D. Va. 2006). Debtors were subject to four year time restriction for receiving a Chapter 13 discharge, after their earlier Chapter 13 was converted to Chapter 7 – for Section 1328(f)(1) purposes, the converted case was a Chapter 7, with the four years counted from the date the Chapter 13 petition was filed.
AUTOMATIC STAY
In re Ruona, 353 B.R. 688 (Bankr. D.N.M. 2006). Stay terminated as to motor vehicle securing claim due to debtor’s failure to make proper election – putting “retain and pay” in the Statement of Intentions, rather than surrender, redeem or reaffirm.
In re Haisley, 350 B.R. 48 (Bankr. E.D. La. 2006). BAPCPA provisions limiting or eliminating the automatic stay must be applied separately as to each debtor in a joint case. Thus, where only debtor-husband had filed two prior Chapter 13 cases within the past year, the automatic stay still went into effect as to the debtor-wife.
In re Pope, 3512 B.R. 174 (Bankr. D.R.I. 2006). Stay terminated only as to one-time Chapter 13 repeat filers and their property, and not as to property of the estate
THE MEANS TEST
In re Hartwick, 352 B.R. 867 (Bankr. D. Minn. 2006). Debtor performing means test calculation could claim vehicle ownership expense even though she was making no payment on her car. See also, In re Grunert, 353 B.R. 591 (Banrk. E.D. Wis. 2006). Above-median-income debtors may take vehicle ownership expenses, even though they own their vehicles outright.
In re Hicks 2007 WL 1594289 (Bankr. E.D. Mo. 2007). Debtor could not deduct expense under line 35 for 21-year-old who is capable of self-support.
In re Ross-Tousey, 2007 WL 1466647 (E.D. Wisc. 2007). District court reversed bankruptcy court to hold that a debtor may not deduct ownership expenses for vehicles when autos are owned free and clear.
In re Tranmer, 355 B.R. 234 (Bankr. D. Mont. 2006). Above median debtors who commuted 130 miles per day to and from work were limited to standard transportation expense allowance.
In re Jackson, 353 B.R. 849 (Bankr. E.D.N.C. 2006). Below-median income Chapter 13 debtors, in determining their disposable income, could not double count business expenses when using the Alexander method for determining disposable income (applying Schedule J to Means Test income – which for business income, is already a “net” figure).
In re Sorrell, 2007 WL 211276 (Bankr. S.D. Ohio 2007). Chapter 7 case. 1) Unemployment compensation is benefit under Social Security Act so is excluded from current monthly income; 2) A debtor may deduct secured debt payment and local operating expense for a vehicle that is being surrendered. (Contrary view: In re Skaggs, 349 B.R. 594 (Bankr. E.D. Mo. 2006), In re Singletary, 2006 WL 2987945 Bankr. S.D. Tex 2006))
In re Harris, 353 B.R. 304 (Bankr. E.D. Okla. 2006). Means Test calculations may only include actual monthly vehicle expenses.
In re Hanks, 2007 WL 60812 (Bankr. D. Utah 2007). Form B22C is dispositive with respect to an above-median debtor’s required return to general unsecured creditors even though the debtor’s current income is substantially less.
In re Travis, 353 B.R. 520 (Bankr. E.D. Mich. 2006). Decision in Chapter 7 denying dismissal for substantial abuse discusses the marital adjustment calculation.
In re Wayman, 351 B.R. 808 (Bankr. E.D. Tex. 2006). Just because an IRA distribution first became taxable within six months of the petition date did not mean that it had to be used to calculate the debtor’s CMI.
In re Love, 350 B.R. 611 (Bankr. M.D. Ala. 2006). Chapter 13 debtors could not deduct secured debt payments they would not have to make (because the property was being surrendered) in calculating disposable income.
In re Oliver, 350 B.R. 294 (Bankr. W.D. Tex. 2006). Debtor’s free and clear vehicle could not claim an “ownership expense” for purposes of the BAPCPA “Means Test”.
In re Edmunds, 350 B.R. 636 (Bankr. D.S.C. 2006). Court rejects mechanical application of BAPCPA’s means test in determining Chapter 13 debtors’ projected disposable income.
In re Wilbur, 344 B.R. 650 (Bankr. D. Utah, 2006). Holding that the unsecured creditors referred to in § 1325(b) only includes the non-priority unsecured creditors. See also In re Alexander, 344 B.R. 742, 753, 56 (Bankr.E.D.N.C., 2006).
In re Whitaker 2007 WL 2156397 (Bankr. N.D. Ohio 2007) A Chapter 7 debtor may not deduct 401(k) loan payments on means test.
DISPOSABLE INCOME
In re Benson, 352 B.R. 740 (Banrk. E.D.N.C. 2006). “Projected disposable income” requirement was not triggered in the absence of an objection, so court confirmed Plan crafted after negotiation regarding the treatment of various issues between the debtor and the Chapter 13 trustee.
In re Grant, 2007 WL 858805 (Bankr. E.D. Tenn. 2007). The term “projected disposable income” is not synonymous “disposable income”. Projected disposable income must be based on the debtor’s anticipated income during the term of plan.
In re Thicklin, 355 B.R. 856 (Bankr. M.D. Ala. 2006). Below-median-income debtor could not deduct standard IRS allowances in calculating his disposable income.
In re Balcerowksi, 353 B.R. 581 (Bankr. E.D. Wis. 2006). In calculating “disposable income”, Chapter 13 debtor must deduct an amount equal not to taxes withheld each month, but debtor’s best estimate of actual monthly tax expense. See also In re Lawson, 2007 WL 184733 (Bankr. D. Utah 2007).
In re McPherson, 350 B.R. 38 (Bankr. W.D. Va. 2006). Confirmation of above-the-median debtors’ proposed Chapter 13 Plan was denied because it did not satisfy the “projected disposable income” requirement where debtors deducted contractual secured debt payments for full amount of debt even though the claim was bifurcated into secured and unsecured portions.
In re LaSota, 351 B.R. 56 (Bankr. W.D.N.Y. 2006). Chapter 13 debtors could not pay unsecured creditors less than 100% while accumulating savings during the Plan, even though the Plan proposed to pay all CMI shown on the their B22C into the Plan.
In re Starkey, 2007 WL (Bankr. D.Neb. 2007). Rent that exceeds the Local Standard for housing is not a “special circumstance”. (‘Living in an expensive area is not a sufficient special circumstance”).
In re Tuss, 2007 WL 442051 (Bankr. D.Mont. 2007). Additional food expenses when the debtor is away from home working out of town do not satisfy the special circumstances requirement.
In re LaPlana, 2007 WL 431627 (Bankr. M.D.Fla. 2007). Projected disposable income is a forward reaching term therefore includes post-filing income tax refunds received by the debtor. The requirement of turning over tax refunds to the Trustee is to correct the debtor’s error of over-estimating their tax liability.
In re Mullen, 2007 WL 1452234 (Bankr. D. Or. 2007). The presumption that the debtors’ “disposable income” determines their “projected disposable income” can be overcome by contrary evidence. Also, tax refunds which the debtors receive during the case are a component of their projected disposable income unless sufficient controverting evidence.
In re Shelton, 2007WL 1856949 (Bankr. N.D. Ga 2007). Although §541(7) excludes contributions to retirement plans, the court may still consider such deductions under a good faith/totality of the circumstances test.
In re McGillis, 2007 WL 1549071 (Bankr. W.D. Mich. 2007). The fact that the debtors have complied with the means test does not preclude the court from considering good faith issues, whether the debtors are actually incurring those expenses, and whether such expenses are reasonably necessary.
APPLICABLE COMMITMENT PERIOD
In re Girodes, 350 B.R. 31 (Bankr. M.D.N.C. 2006). “Applicable commitment period” is a temporal requirement. A below-the-median debtor’s plan that proposed $151 per month for 16 months, and then $0 per month for 20 months, could not be confirmed.
In re Cushman, 350 B.R. 207 (Bankr. D.S.C. 2006). “Applicable commitment period” as used in BAPCPA, is a time period and not simply a multiplier.
In re Grant, 2007 WL 858805 (Bankr. E.D. Tenn. 2007). Applicable commitment period is temporal, an above median debtor’s plan must not be less than five years.
In re Mullen, 2007 WL 1452234 (Bankr. D. Or. 2007). The plain meaning of “applicable commitment period”, the purposes of the statute, and the legislative history of BAPCPA support the finding that the applicable commitment period fixes a time period.
THE “HANGING PARAGRAPH”, 910 VEHICLE CLAIMS
In re White, 352 B.R. 633 (Bankr. E.D. La. 2006). Court looked to state law to determine the meaning of “purchase money” loan. Under Louisiana law, 910 car loan was secured as to the purchase price and taxes, but not as to the extended warranty or an insurance contract. Till was applied to reduce the interest rate on the purchase money secured claim.
In re Henry, 353 B.R. 261 (Bankr. D. Or. 2006). Motor vehicle lender holding “910 claims” still hold “secured claims”, so interest must be paid, but the percentage can be altered using Till.
In re Vagi, 351 B.R. 881 (Bankr. N.D. Ohio 2006). Anti-bifurcation “910” provision applies to acquisition of a vehicle by debtor for use of co-debtor spouse. And, Till’s formula for calculating interest applies to 910 loans.
In re Hill, 352 B.R. 69 (Bankr. W.D. La. 2006). Debtors’ “mixed use” pickup truck was not acquired for “personal use”.
In re Trejos, 352 B.R. 249 (Bankr. D. Nev. 2006). Case holds that 910 car loan is still a “purchase money” loan, even though it has been assigned. The 910 “hanging paragraph” has five requirements for the anti-bifurcation provision to apply: 1) the creditor must have a purchase money security interest; and, 2) the purchase money security interest must secure a debt that is the subject of the claim; and, 3) the debt must be incurred no more than 910 days before the date of the debtor’s filing; and, 4) the collateral for the debt must be a “motor vehicle” (defined in 49 U.S.C. §30102(a)(6)); and 5) that motor vehicle must have been acquired for the personal use of the debtor.
In re Murray, 352 B.R. 340 (Bankr. M.D. Ga. 2006). Creditor was a purchase money creditor, protected by the anti-bifurcation provision, despite the fact that the loan included monies for an extended service contract. The court held that the service contract was inextricably related to the purchase of the vehicle itself, and therefore the cost would be considered part of the “price” of the vehicle.
In re Johnson, 350 B.R. 712 (Bankr. W.D. La. 2006). Vehicle purchased for commute to work was not acquired for debtors’ “personal use” based on totality of the circumstances, therefore the Chapter 13 Plan bifurcating the 910 day loan claim could be confirmed.
In re Brill, 350 B.R. 853 (Bankr. E.D. Wis. 2006). “910” creditor was entitled to Till interest, though its prepetition contract with the debtors was for 0% interest.
In re Ross, 355 B.R. 53 (Bankr. W.D. Tenn. 2006). Creditor with 910 claim was not limited to cramdown interest at 0% rate specified in parties’ contract, but rather was entitled to a Till interest rate, because Chapter 13 Plan modified the creditor’s rights. See also, In re Grunau, 355 B.R. 334 (Bankr. M.D. Fla. 2006). Any modification of motor vehicle lender’s contractual rights triggered Till’s “prime-plus” requirement, even if it increases the interest rate.
DEBT RELIEF AGENTS AND ASSISTED PERSONS:
Olsen v. Gonzales, 350 B.R. 906 (D. Or. 2006). Section 526(a)(4) of the BAPCPA is unconstitutional.
In re Hennerman, 351 B.R. 143 (Bankr. D. Colo. 2006). Principal of internet-based bankruptcy petition preparation business rendered “legal advice” in violation of the Code, as amended by the BAPCPA.
In re Reyes, 2007 WL 136934 (Bankr. S.D. Fla 2007). Bankruptcy statutes addressing debt relief agencies are unconstitutional as applied to attorneys; bankruptcy statutes addressing debt relief agencies do not apply to attorneys; attorney providing pro bono representation is not a debt relief agency according to Florida Bar Rules.
Milavetz, Gallop & Milavetz, P.A. v. U.S., 355 B.R. 758 (D. Minn. 2006). BAPCPA provisions regulating advertising and advice about eve-of-bankruptcy debt are unconstitutional as applied to attorneys.
DISCHARGE:
In re Ybarra, 2007 WL 273130 (Bankr. S.D. Ill 2007). Debtor barred from receiving discharge in case that was converted from Chapter 13 to Chapter 7 under 1328(f) based on the chapter in which the debtor actually received a discharge, not that the case was originally filed under.
In re Knighton, 355 B.R. 922 (Bankr. M.D. Ga. 2006). Chapter 13 debtor was eligible for discharge upon completion of her pending case. Discharge lookback period runs from filing to filing, and conversion of earlier case from Chapter 13 to Chapter 7 didn’t change the filing date of the prior case, just the Chapter under which the debtor received her discharge.
In re Grice, 2007 WL 1140435 (Bankr. E.D. Wisc. 2007). In case converted from Chapter 13 to Chapter 7 and subsequently discharged, a debtor would not be eligible for a Chapter 13 discharge in a future case filed less than four years from the file date of the prior Chapter 13 case.
OTHER CASES OF INTEREST:
In re Andreas, 2007 WL 2404727 (Bankr. N.D. Ill 2007). Judge Squires. Debtor’s attorney took unauthorized fees in contravention of the model retention agreement. Court found attorney was in contempt of the fee order that awarded fees through conclusion of case. Attorney ordered to return fees receive in excess of the original fee order and to pay the Trustee’s costs and reasonable attorney fees for pursuing the action.
In re Barton, 2006 WL 3950178 (Bankr. N.D. Ill 2006). Judge Black. Will County is bound by amount of past due real estate tax claim as set forth in Chapter 13 plan.
In re Mangum, 2007 WL 495300 (N.D. Ill 2007). Early payoff of a plan with lump sum is permitted (appeal affirming Judge Doyle’s ruling) pre-BAPCPA.
In re Rizzo- Cheverier, 2007 WL 851234 (Bankr. S.D.N.Y. 2007). Mortgage lender violated the discharge by misapplying payments and erroneously treating the debtor as if she was in default.
In re Padilla, 2007 WL 891290 (Bankr. E.D. Pa. 2007). Motion to reopen case after nearly three years is appropriate to determine post-petition mortgage expenses and charges asserted post-discharge.
In re Nosek, 2007 WL 682581 (Bankr. D. Mass 2007). Mortgage company violated the debtor’s “cure and maintenance rights” under §1322(b) by improperly applying payments from the Chapter 13 Trustee and the court awarded sanctions under §105(a) in the amount of $250,000.00 for emotional distress and $500,000.00 for punitive damages.
In re Schuler, 354 B.R. 37 (Bankr. W.D.N.Y. 2006). Bankruptcy estate was not liable for the costs of debtor’s funeral.
In re Morgan, 352 B.R. 693 (Bankr. E.D. Ark. 2006). Chapter 13 Trustee’s distribution of tort settlement to unsecured creditors was more consistent with poorly drafted, inherently contradictory Plan, and the Bankruptcy Code, than distributing the funds to secured creditors first. Debtor had no recourse against the Trustee because of “unclean hands”.
In re Sledge, 352 B.R. 742 (Bankr. E.D.N.C. 2006). Attorney’s professional misconduct, including leaving Chapter 13 petition preparation almost exclusively to a paralegal and not giving debtors a copy of the petition documents, and the failure to properly disclose fees, warranted disgorgement order and attorney fees for bringing the disgorgement action.
In re Balsco, 352 B.R. 888 (Bankr. N.D. Ala. 2006). Postpetition negotiation, deposit, and presentment of for payment of payday loan check - which was a negotiable instrument under Alabama law - fell within an exception to the automatic stay. (Section 362(b)(11)).
In re Attorneys at Law and Debt Relief Agencies, 353 B.R. 318 (S.D. Ga. 2006). United States Trustee lacked standing to prosecute appeal from bankruptcy court’s sua sponte order, and the standing of the appellant must be determined prior to determining the issue of the bankruptcy court’s jurisdiction to enter the order.
In re Hughes, 353 B.R. 486 (Bankr. N.D. Tex. 2006). Debtor operating on a cash-only basis failed to justify complete lack of any financial records. See also, In re Wright, 353 B.R. 627 (Bankr. E.D. Ark. 2006). Debtors’ failure to maintain adequate financial records warranted denial of Chapter 7 discharge.
In re Cortez, 457 F.3d 448 (5th Cir. 2006). Post-petition events could be considered in a §707(b) motion. (pre-BAPCPA case)