Category Archives: ch 13

In re Olde Prairie (ND IL ED)(J. Schmetterer)

In re Olde Prairie Block Owner, LLC, 10-022668
Opinion Issued by Judge: Jack B. Schmetterer

Click here to download and view the Opinion in .pdf format.

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In re Lisa C. Davis, 08-16025 (ND IL ED)(J. Wedoff)

In re Lisa C. Davis, 08-16025
Issued December 16, 2010
By Judge Eugene Wedoff

 

The Issue: 11 USC 1325(b), introduced by BAPCPA in connection with the notorious hanging paragraph at 1325(a) – states that a plan of reorganization in Chapter 13 must commit all the debtor‘s discretionary income each month or pay creditors in full; or face dismissal. The issue in this case was whether 1325(b) requires the debtor to commit all discretionary income or pay all creditors in full when seeking to modify their confirmed Chapter 13 Plan.

The Upshot: No. 11 USC 1325(b) does not require the debtor’s full commitment of discretionary income or full payment of creditors when a confirmed plan is under consideration. When a debtor sought to modify her plan due to a change in circumstances that would have permitted her to pay less at the outset of the plan and shorten the plan’s commitment period if it had occurred before the initial plan was drawn up, the Court allowed her to use those lower numbers going forward regardless of whether the use of those figures satisfied 1325(b).
Ed. Note: Booyah! Chapter 13 debtors win.

Click here to view and download the Opinion in .pdf format.

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.

 

Thanks for Everything!

The stats helper monkeys at WordPress.com mulled over how this blog did in 2010, and here’s a high level summary of its overall blog health:

Healthy blog!

The Blog-Health-o-Meter™ reads This blog is on fire!.

Crunchy numbers

Featured image

A helper monkey made this abstract painting, inspired by your stats.

A Boeing 747-400 passenger jet can hold 416 passengers. This blog was viewed about 12,000 times in 2010. That’s about 29 full 747s.

 

In 2010, there were 109 new posts, growing the total archive of this blog to 493 posts. There were 26 pictures uploaded, taking up a total of 2mb. That’s about 2 pictures per month.

The busiest day of the year was January 6th with 171 views. The most popular post that day was Recent Law School Grad? Open a Bankruptcy Practice!.

Where did they come from?

The top referring sites in 2010 were thebklawyer.com, bankruptcylawnetwork.com, mha-law.com, search.aol.com, and en.wordpress.com.

Some visitors came searching, mostly for do i qualify for bankruptcy, suburbs, bankruptcy blog, do i qualify for bankruptcy in florida, and do i qualify for bankruptcy in california.

Attractions in 2010

These are the posts and pages that got the most views in 2010.

1

Recent Law School Grad? Open a Bankruptcy Practice! December 2009
2 comments

2

do you qualify for bankruptcy? take the instant means test January 2009
4 comments

3

household size and median income (IRS v. Census Bureau) July 2007
1 comment

4

Buying Distressed Assets Under §363 of the Code March 2007
1 comment

5

how to get kicked out of your home or appartment March 2007
2 comments

New IRS Contact Information

IRS Logo

 

 

 

 

 

Effective January 1, 2011

Send Regular Mail directed to IRS to:

Internal Revenue Service

PO Box 7346 (replaces 21126)

Philadelphia, PA 19101-7346

Send Overnight Mail directed to IRS to:

Internal Revenue Service

2970 Market Street

Mail Stop 5-Q30.133

Philadelphia, PA 19104-5016

Toll-free # will remain the same (800) 913-9358 but

Facsimile transmission # changes to (267) 941-1015

I knew they Government was up to something …

 

Westlaw Case Updates

In re: Kleibrink (Cir. 5, Sep. 28)

In a debtor’s appeal from a district court‘s affirmance of a bankruptcy court’s ruling that a creditor held an enforceable security interest in a property of his, despite his having received a discharge in an earlier bankruptcy proceeding, the order is affirmed where the notice given to the creditor did not satisfy the due process standard for notice set forth in Mullane.

In re: NM Holdings Co., LLC (Cir. 6, Sep. 30)

In a bankruptcy trustee‘s suit against debtor-company’s former auditor, claiming that the auditor negligently performed its audits by failing to uncover and report unsound related-party transactions entered into by the company’s sole shareholder and CEO, as well as aided and abetted the CEO’s breach of his fiduciary duty to the company, district court’s grant of the auditor’s motion for summary judgment is affirmed where: 1) the trustee’s amended complaint does not allege reliance by the company or by the company’s fairness committee, and the alleged reliance by the company’s creditors cannot support a claim brought by the trustee on behalf of the company; and 2) district court did not err in holding that the residual statute of limitations applied to the trustee’s aiding-and-abetting claim.

In Re: Res. Tech. Corp. (Cir. 7, Oct. 1)

District Court affirmed Bankruptcy Court‘s rejection of Trustee’s proposed assignment of Debtor‘s contracts to a company managed by its former officers in exchange for that company paying debtor’s operating expenses because

1) Bankruptcy court carefully evaluated the assumption-and-assignment proposal under section 365(f)(2)(B), and its decision to deny the trustee’s motion was sound;

2) There was no reason to disturb Bankruptcy judge’s determination that the company failed to comply with its order requiring an escrow deposit; and

3) District Court’s contempt finding was fully supported by the record, and the court thoroughly considered and properly rejected the company’s defense to contempt.

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