Category Archives: 528(a)

7th Cir. Opinions

7th Circuit Opinion Summaries courtesy of

United States v. Rogan

Bankruptcy, Criminal Law, Government, White Collar Crime

River Road Hotel Partners, LLC v. Amalgamated Bank


Bloomfield State Bank v. United States

Bankruptcy, Real Estate & Property Law, Tax Law

Costello v. Grundon

Bankruptcy, Commercial Law, Securities Law

CDX Liquidating Trust v. Venrock Assocs., et al

Bankruptcy, Business Law, Securities Law

Reedsburg Util. Comm’n v. Grede Foundries, Inc.

Bankruptcy, Utilities Law

Kimbrell v. Brown

Bankruptcy, Injury Law


Ransom v. FIA Card Services (U.S. S.Ct.)

Ransom v. FIA Card Services, N.A., f/k/a MBNA America Bank, N.A.
Certiorari from the U.S. Court of Appeals for the 9th Cir., Case 09–907
Argued October 4, 2010—Decided January 11, 2011

The Issue: Here the question was whether a Chapter 13 debtor could deduct the allowable auto payment from his monthly budget even though he did not have a car payment (i.e the vehicle was paid for). Put another way, is it fair for all debtors to be entitled to the maximum allowable deduction from their monthly disposable income, or must debtors establish what they actually pay?

The Answer: The Court ruled 8 to 1 (Scalia J. dissenting) that if a debtor makes more than the median income for his State then he must establish that he incurrs the amounts deducted from his monthly living expenses. No more automatic deductions if debtor cannot prove what he pays.

The Gist: To determine “disposable income” BAPCPA gave us the Means Test, which starts with gross monthly income then deducts living expenses – i.e. “amounts reasonably necessary for maintenance or support” of the debtor. In a Chapter 13 case the expenses considered “reasonably necessary” are identified in 11 U.S.C. §1325(b)(2)(A)(i) and include “applicable monthly expense amounts” as specified in National and Local IRS standards. Since BAPCPA was adopted, it has become common practice to include expenses at the maximum allowable level even if the debtor does not have, or pay for, that type of asset. This case appears to say that the party is over for Chapter 13 debtors.

See Also: this post from Chicago Attorney Steve Jacobowski on the Bankruptcy Litigation Blog regarding the Scalia dissent.


Supreme Court to Consider Revising Code

Last week, the U.S. Supreme Court heard oral arguments on a case with the potential to radically change current bankruptcy law. At issue are three provisions of the 2005 amendments to the Code.

Petitioner, Milavetz, Gallop & Milavetz, alleges that an attorney is not a “debt-relief agency” and therefore §526(a), which prohibits attorneys from encouraging clients considering filing bankruptcy to take on more debt, is a violation of free speech. Petitioners claim that §528(a)(4) and §528(b)(2)(B), which require attorneys to make certain disclosures when advertising, also violate the 1st Amendment.

The Justices are set to make their decision in about 90 days.

case updates – hometown, cir 3, cir 8

3rd cir

Windt v. Qwest Communications, 06-4662, 06-4808 [June 10, 2008]
In a lawsuit brought by bankruptcy trustees of a Dutch company asserting various claims against defendants who were allegedly responsible for the company’s insolvency, judgment dismissing trustee-plaintiff’s complaint on forum non-conveniens grounds is affirmed where the district court did not abuse its discretion in: 1) affording low deference to plaintiffs’ choice of forum in view of Netherlands’ substantial interest in resolving a dispute concerning alleged mismanagement of a Dutch company by board members and officers of that Dutch company; 2) concluding that avoiding problems in the application of foreign law favored dismissal; 3) balancing the public and private interest factors implicated in the case; and 4) determining that the convenience of litigating the dispute in New Jersey was outweighed by the oppressive or vexatious effect on defendants.


8th cir

US v. Mitchell, 07-3136 [June 10, 2008]
Conviction upon defendant’s retrial for knowingly and fraudulently making a false statement under penalty of perjury in a bankruptcy case is affirmed where the circuit court declines to revisit a double jeopardy issue, and there was sufficient evidence to sustain his conviction.


In re Weadley, 06-1854
Bibby Financial v. Weadley, 07-683
Issued June 11, 2008
Judge A. Benjamin Goldgar

BAPCPA Case Roundup

King Bankruptcy Media

Courtesy of King Bankruptcy Media

In re Robinson, 06-10618-SSM (Bankr. E.D.Va. 2007)
Fees Reduced: Failure to Provide ‘Clear’ Fee Agreement

Citing §528(a)’s ‘requirements for debt relief agencies’ the bankruptcy court severely reduced a chapter 13 attorney’s fees because his fee agreement, while ‘detailed and comprehensive’ was apparently too dense and hard to read (visually dense, small type, disorganized). The court basically held that if a consumer didn’t know what to expect they would probably think that the $3,000 fee prominently displayed in the document was all they would ever have to pay.

In re Gutierrez, 356 B.R. 496 (Bkrtcy.N.D.Cal. 2006)

Fees Disgorged: Failure to Follow BAPCPA Disclosure or Written Fee Agreement
Bankruptcy Court found that debtor’s attorney failed to provide ‘Bankruptcy Truthfulness Notice’ prescribed by §527(a)(2) within 3 business days of the first offer of bankruptcy assistance. Court ordered $700 retainer disgorged plus $675 in legal fees. Debtor’s attorney was also accused of failing to provide the disclosure required by §342(b)(1) (describing the difference between various chapters) within 3 days of first offering assistance, but the court ruled that disclosure was adequate as long as it was given prior to the filing. Finally, Court held that attorney failed to provide written fee agreement within 5 business days of first consulting with the client as required by §528(a)(1).

In re Ott, 343 B.R. 264 (Bkrtcy.D.Colo. 2006)
Case Dismissed Due to Attorney’s Failure to File Payment Advices

Debtor failed to file ‘payment advices’ within 45 days of filing the petition as required by per §§521(a)(1)(B)(iv) and 521(i). Debtor’s counsel informed court he may have inadvertently failed to inform debtors of the requirement. Case was nonetheless automatically dismissed (as required by the BAPCPA). Debtor moved for relief based on counsel’s mistake. The Court observed that by passing the BAPCPA Congress had determined that debtors in bankruptcy were “the moral equivalent of shoplifters” so the Court could not extend the 45-day deadline (See Judge Keith Lundin’s treatise on Chapter 13 — dismissal is automatic and requires no action).

In re Ginsberg, 354 B.R. 644 (Bkrtcy.E.D.NY 2006)
Case Dismissed Due to Attorney’s Failure to Order Credit Counseling
Debtor filed a Chapter 7 case but was not advised by Counsel to complete credit counseling as required by §109(h) or, in the alternative, to file a certificate of exigent circumstances to extend the time in which to get counseling or seek a permanent exemption based on disability, etc. On the date the Court issued an order to show cause why case should not be dismissed, the Debtor completed credit counseling and filed a certificate. The Court nonetheless dismissed the case and promptly hung the Attorney out to dry, noting that: “… if a debtor suffers adverse legal consequences as a result of attorney error the debtor’s recourse is against the attorney …”  Ouch.

In re Nichols, 2007 WL 456635 (Bkrtcy.S.D.N.Y.)
Debtor Not Punished For Attorney Failure to Seek Waiver of Credit Counseling Requirement
Attorney filed debtor’s petition using outdated forms and failed to indicate that debtor had completed pre-petition credit counseling; attorney then failed to seek extension to complete counseling. Trustee moved to dismiss. Court said that it construed §109(h) to provide that credit counseling must be completed and submitted within 45 days of filing and debtors had reasonably relied on their counsel (which had misconstrued the provision).