Section 109 of the Bankruptcy Code has requirements that define who may be a debtor. In consumer cases, a debtor may be ineligible for chapter 7 if he/she has significant income; more specifically, if the debtor has failed the means test set forth in § 707(b).
Until 1994, three options existed for the disposition of plan contributions held by the chapter 13 trustee upon conversion to chapter 7: The funds could be given to (1) the chapter 7 estate, (2) to the debtor or (3) to creditors. Since the 1994 amendments to the Bankruptcy Code revised § 348(f), the first option for the disposition of funds from a converted chapter 13 case after confirmation of the plan was resolved: The chapter 7 estate is not a recipient of the funds unless the conversion to chapter 13 was made in bad faith.
In an opinion written by Justice Thomas, the Court declined to limit its prior opinion in Dewsnup v. Timm, 502 U.S. 410 (1992), to partially underwater liens, reversing the Eleventh Circuit in two cases and holding that chapter 7 debtors cannot use § 506(d) to void wholly unsecured junior liens. The amounts owing on first mortgage liens exceeded the current market values of the debtors’ homes, leaving the junior liens with no supporting value.
Petitioner Wellness International had a long history of chasing debtor Sharif, including obtaining default judgment against him as a plaintiff in Texas, which led to discovery in aid of collection efforts. Sharif allegedly evaded answering discovery and ultimately filed a chapter 7 petition in Illinois. The debtor failed to list assets that he contended were the assets of a trust that his mother created and for which the debtor served as trustee and his sister as the beneficiary.
Affirming the First Circuit, the unanimous opinion of the Supreme Court, written by Chief Justice Roberts, held that an order denying confirmation was not a final order that the debtor could immediately appeal. The bank holding a mortgage on a multi-family house objected to the chapter 13 debtor’s proposed plan to bifurcate the debt and pay only $5,000 on the $101,000 unsecured portion, while paying the regular mortgage payments to satisfy the secured portion over the life of the original loan.
In the January 2015 edition of the ABI Journal, Kathleen Furr and Brett Switzer (hereinafter “the authors”) lauded the decision in In re Rose.[1] In that decision, the court rejected the concept of providing for the vesting of property of a chapter 13 estate in an entity other than the debtor, based solely on state la
[1]Most chapter 7 clients are looking for the quickest and easiest way to discharge their debts, retain or protect their assets and move on with their lives. Difficulties in achieving these results can arise when assets are disclosed or discovered after the bankruptcy filing.
Theoretically, an individual bankruptcy debtor may amend property claimed as exempt on his or her Schedule C at any time until the close of the bankruptcy proceeding.[1] The debtor must give notice of the amendment to the trustee and to “any entity affected thereby,” which is usually all creditors.
Following a nearly-three-year study, on Dec. 8, 2014, the ABI Commission to Study the Reform of Chapter 11 published a 400-page report containing recommendation and principles for policymakers. This article focuses on chapter 11 reform relating to professional retention and compensation.
