Flint Bankruptcy Lawyer 235-1970

December 26, 2011

A Chapter 13 Bankruptcy sets up a 3 or 5 yr plan to pay certain debts ending with a discharge of remaining unsecured debt like credit cards. A chapter 7 Bankruptcy takes several months and ends with a discharge of your unsecured debt excluding things like taxes and student loans.
If you have Bankruptcy Questioins call Flint Bankruptcy Lawyer Terry R. Bankert 235-1970

BANKRUTPCY Issues: Chapter 13; Whether the bankruptcy court correctly concluded that the debtor has standing to pursue an avoidance action; Debtor’s “derivative” standing to pursue lien avoidance under 11 USC § 544; Countrywide Home Loans v. Dickson (In re Dickson); Realty Portfolio, Inc. v. Hamilton (In re Hamilton)(5th Cir.); Hyundai Translead, Inc. v. Jackson Truck & Trailer Repair, Inc. (In re Trailer Source, Inc.); Adhering to precedent; CSX Transp., Inc. v. McBride; Freedom to seek review in the Court of Appeals; Phar-Mor, Inc. v. McKesson Corp. (In re Phar-Mor, Inc.); Jurisdiction; Midland Asphalt Corp. v. United States; Drown v. National City Bank (In re Ingersoll); Standard of review; International Dairy Foods Ass’n v. Boggs; Perfection of the bank’s lien on debtor’s manufactured home; 11 USC § 541(a)(1); Lyon v. Eiseman (In re Forbes); Butner v. United States; Waiver; Bailey v. Floyd Cnty. Bd. of Educ.

Court: U.S. Bankruptcy Appellate Panel Sixth Circuit
Case Name: In re Barbee
e-Journal Number: 50351
Judge(s): Harris, Boswell, and McIvor

Following the holding in Dickson, the court affirmed the bankruptcy court’s determination that the Chapter 13 debtor had derivative standing to avoid the appellant-Bank’s lien pursuant to § 544. Thus, the court also affirmed the bankruptcy court’s order granting the debtor summary judgment.

DEBTOR TOOK LOAN FROM COUNTRY WIDE HOME LOANS

The relevant facts were undisputed. On 11/15/99, the debtor and G borrowed $75,558.93 from Countrywide Home Loans, repayment of which was secured by the grant of a mortgage lien in favor of Countrywide.

1999 MORTGAGE

The mortgage was dated 11/15/99, and was recorded on 12/1/99. The mortgage encumbered the real property and all improvements and fixtures located on it.

2009 THE COUNTYWIDE NOTE ASSIGNED TO BANK

On 10/22/09, the note and mortgage were assigned to the Bank. The debtor and G used the proceeds of the loan to acquire the real property. Located on the property is the debtor and G’s manufactured home.
DOUBLE WIDE TRAILER TURNED INTOI AN ACTUAL HOUSE

In the record was a letter from a loan officer to Countrywide as to the debtor’s loan from Countrywide advising that “[i]n 1997, this double wide mobile home was gutted and rebuild (sic) as an actual house.”
THE DEBTOR DID NOT GET A SEPARATE TITLE
The debtor and G did not acquire a separate title to the manufactured home and the record was unclear as to whether a certificate of title was ever issued for the manufactured home.
DEBTOR FILES FOR CHAPTER 13
On 11/11/09, the debtor filed a petition for relief under Chapter 13. The debtor later filed his adversary complaint, asserting that as a hypothetical lien creditor, he has superior title to the manufactured home located on the property, and that any interest the Bank has in the home was avoidable pursuant to § 544 because the Bank failed to perfect its lien on the manufactured home pursuant to Kentucky law.

The Bank asserted, inter alia, that the debtor did not have standing to bring the avoidance action. Citing Dickson, the bankruptcy court held that the debtor had derivative standing to pursue the lien avoidance under § 544. The Bank argued that the debtor lacked standing to bring the avoidance action because a debtor cannot be granted derivative standing to exercise the trustee’s strong arm powers as to consensual liens.

The debtor asserted that he had derivative standing to pursue lien avoidance under § 544 pursuant to the decision in Dickson. While acknowledging the holding in Dickson, the Bank argued that the debtor lacked standing to pursue avoidance of the lien based on the plain language of the Bankruptcy Code and the reasoning of courts which have found that a Chapter 13 debtor lacks standing to exercise the trustee’s avoidance powers. When the Bank filed its brief in this appeal, an appeal of the decision in Dickson was pending before the Sixth Circuit Court of Appeals. Thus, the court issued an order holding this appeal in abeyance pending a decision in Dickson. The Sixth Circuit issued a decision in Dickson on 8/26/11. However, the Court of Appeals never reached the issue of derivative standing. Instead, the Sixth Circuit held that the transfer at issue in Dickson was involuntary, so that the debtor had direct, statutory standing to seek avoidance of the creditor’s lien. “Without deciding whether a later panel must always follow the precedent of a prior panel,” the court saw no reason in this case to break with the principles of stare decisis and thus, followed the holding in Dickson. “Adhering to precedent promotes uniformity of case law” in the Circuit and “the goals of ‘stability’ and ‘predictability’ that the doctrine of statutory stare decisis aims to ensure.” The court noted that the Bank was free to seek review of its decision in the Court of Appeals, which is not bound by decisions of Bankruptcy Appellate Panels.


YOUR PERSONAL WALL STREET TYPE BAILOUT A CHAPTER SEVEN BANKRUPTCY -810-235-1970

November 15, 2011

WE HAVE WATCHED WALL STREET, BIG BANK AND BIG BUSINESS GET BAILED OUT. WHAT ABOUT YOU? The Bankruptcy code was written for you and can be your own personal bail out. Flint BankruptcyAttorney Terry Bankert  presents on Flint D ivorce and Flint Bankruptcy 810-235-1970.

Basic Bankruptcy options available.

Types of Bankruptcies. The four main types of bankruptcies are as follows:
Chapter 7—Liquidation: In a Chapter 7 the debtor turns over all non-exempt property to the Chapter 7 Trustee: this Trustee sells or liquidates the property and distributes the proceeds to creditors according to the priority scheme set forth in the bankruptcy code, and usually in a small one-time payment. The debtor will be released (discharged) from the unpaid portion of many types of debt unless a creditor objects to the debtor’s discharge, or unless a creditor objects to the dischargeability of its particular claim. The Chapter 7 Trustee is always appointed by the United States Trustee and is usually a member of a panel of Trustees.
Chapter 11—Reorganization: The purpose of Chapter 11 is to allow the debtor a breathing spell from creditors, thereby enabling the debtor to reorganize its financial affairs. This is the most expensive and complicated type of bankruptcy and can last for years. If successful, a plan of reorganization would be proposed which is subject to the vote of creditors.
Chapter 12—Family Farmer Bankruptcy: Chapter 12 can only be filed by a family farmer with regular annual income. This proceeding is similar to a Chapter 13, described below.
Chapter 13—Adjustment of Debts: Chapter 13 can only be filed by individuals with regular income (filing with or without a spouse) and with unsecured debts of less than $336,900 and secured debts of less than $1,010,650—See ll U.S.C. § 109(e). (These dollar limits are adjusted at 3-year intervals: the most recent adjustment was effective April 1, 2007.) The purpose of a Chapter 13 is for the debtor to pledge part of his or her income over a period of time (usually 3 to 5 years) to pay all or a portion of the debt. Once this portion of the debt is paid, the debtor is released (i.e. discharged) from the unpaid portion of the debts. Soon after the case is commenced, the debtor must propose a plan which fits within the strict requirements of the Bankruptcy Code. Priority debts must be paid in full. (See 11 U.S.C. §1322(a)(2).) Pursuant to §507(a)(1), a debt for a domestic support obligation (defined below) is a first priority unsecured claim

.
PERSONAL BAILOUT OR Discharge: The main reason why any individual files bankruptcy is to try to get a discharge from debts which are owing to creditors. 11 U.S.C. § 727 says that all individual debtors are eligible to receive a discharge unless he or she committed one of the “bad acts” described in 11 U.S.C. § 727.

III. WHAT IN BANKRUPTCY IS A DOMESTIC SUPPORT OBLIGATION.

The Bankruptcy Reform Act gives us a new term—“domestic support obligation”—which is defined in 11 U.S.C. § 101(14A), as follows:
(14A) The term “domestic support obligation” means a debt that accrues before, on, or after the date of the order for relief in a case under this title, including interest that accrues on that debt as provided under applicable nonbankruptcy law notwithstanding any other provision of this title, that is—
(A) owed to or recoverable by—
(i) a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible relative; or
(ii) a governmental unit;
(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child’s parent, without regard to whether such debt is expressly so designated;
(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of—
(i) a separation agreement, divorce decree, or property settlement agreement;
(ii) an order of a court of record; or
(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and
(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child’s parent, legal guardian, or responsible relative for the purpose of collecting the debt.
Nondischargeability of Domestic Support Obligations: 11 U.S.C. § 523(a)(5) provides that a DSO cannot be discharged in Bankruptcy.
§ 523. Exceptions to discharge
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt—…
(5) for a domestic support obligation;
Special Impact of Domestic Support Obligations in Chapter 13 Cases:

IV. Nondischargeability of Property Settlement
Before the Bankruptcy Reform Act, 11 U.S.C. § 523(a)(15) provided that property settlement debts were nondischargeable unless the debtor lacked the ability to pay it according to the criteria described in the statute, or unless discharging the property settlement would result in a benefit to the debtor that outweighed the detriment to the non-debtor spouse, former spouse or child. The old law also required that the non-debtor spouse commence an adversary proceeding in bankruptcy court to determine the nondischargeability of the property settlement and, pursuant to 11 U.S.C. § 523(c) the complaint in that adversary proceeding was required to be filed within 60 days after the first date set for the meeting of creditors pursuant to 11 U.S.C. § 341. If a nondischargeability complaint was not timely filed, the property settlement was automatically discharged under 11 U.S.C. § 727. 11 U.S.C. § 523(c) often resulted in non-debtor spouses having to spend limited funds in order to “protect” their property settlements.
11 U.S.C. § 523(a)(15) was oddly written. Courts, attorneys, and litigants consistently struggled with it. The Bankruptcy Reform Act resolves the difficulty by revising § 523(a)(15) so that it reads as follows:
§ 523. Exceptions to discharge
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt—…
(15) to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record or, a determination made in accordance with State or territorial law by a governmental unit;…
Thus, under the Bankruptcy Reform Act, even if a debtor’s obligation in a divorce decree does not come within the definition of “domestic support obligation” so as to be nondischargeable under § 523(a)(5), it is still nondischargeable under § 523(a)(15) if it is a property settlement debt to a spouse, former spouse or child.
In applying the Bankruptcy Reform Act, bankruptcy judges are now more likely to view any obligation in a divorce decree as being nondischargeable by a party to that divorce who later winds up in bankruptcy.
Also, the Reform Act amends 11 U.S.C. § 523(c) so that the non-debtor spouse is not required to file an adversary proceeding in order to preserve the nondischargeability of the debtor’s obligations that fall within the scope of 11 U.S.C. § 523(a)(15). This is an important change in the law, designed to protect non-debtor spouses and children by eliminating the need for them to spend precious resources trying to “protect” the property settlement by commencing an adversary proceeding in the bankruptcy court.
Taken together, the Reform Act’s changes to 11 U.S.C. § 523(a)(5) and (15) operate to exempt from discharge all alimony, maintenance, support, property settlements, hold-harmless obligations, etc. to a spouse, former spouse or child so long as they are incurred in the course of a divorce or separation, or in connection with the divorce decree, separation agreement or other order.

V. Are There Any Remaining Differences Between Nondischargeable Domestic Support Obligation Under 11 U.S.C. § 523(A)(5) and Nondischargeable Property Settlement Under the Reform Act’s 11 U.S.C. § 523(A)(15)? The Answer Remains “Yes”—Even Under the Bankruptcy Reform Act
A debt which is nondischargeable under 11 U.S.C. § 523(a)(15) (e.g., a property settlement that is not in the nature of alimony, maintenance or support) is dischargeable in a Chapter 13 under the Reform Act if the debtor makes all payments under the Chapter 13 plan. However, a domestic support obligation which is nondischargeable under 11 U.S.C. § 523(a)(5) is nondischargeable even under Chapter 13, even if the debtor makes all of its payments due under the plan and receives a super-discharge. See 11 U.S.C. § 1328(a).
In Chapter 13 cases, domestic support obligations get better treatment than do property settlements. For example, the failure of a Chapter 13 debtor’s failure to pay a domestic support obligation post-petition is grounds for denial of confirmation of the Chapter 13 plan (11 U.S.C. § 1325(a)(8)), and if the failure occurs post-confirmation, it is a ground for dismissal or conversion of the Chapter 13 case (see 11 U.S.C. § 1307(c)(11)). Debts for property settlement are not given similar protection. Furthermore, the debtor’s plan is required to cure all domestic support obligation arrearages during the life of the Chapter 13 plan, unless the recipient agrees to a different treatment.
First Priority for Domestic Support Obligations: Another difference between domestic support obligations and property settlement debts is that 11 U.S.C. § 507 makes unsecured claims for domestic support obligations first priority, subject only to the fees and expenses incurred by a trustee in collecting them. Property settlement does not enjoy this high priority. The pertinent section of the Bankruptcy Reform Act reads as follows:
VI. Exceptions to the Automatic Stay

Bankruptcy’s automatic stay is a comprehensive injunction that stays actions against the debtor, property of the debtor and/or property of the bankruptcy estate.[1] The automatic stay is embodied in 11 U.S.C. §362(a), but there are 28 statutory exceptions to the automatic stay: those exceptions are set forth in 11 U.S.C. §362(b)(1)–(28).
The Bankruptcy Reform Act amended the exceptions to the automatic stay which pertain to family law matters. These changes in the Bankruptcy Code clarify that a broader range of family-law proceedings can continue even when one spouse files bankruptcy. Consequently, the following activities do not constitute a violation of bankruptcy’s automatic stay:
§ 362. Automatic Stay…
(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay—
(1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor;
(2) under subsection (a)—
(A) of the commencement or continuation of a civil action or proceeding—
(i) for the establishment of paternity;
(ii) for the establishment or modification of an order for domestic support obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of a marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or
(v) regarding domestic violence;
(B) of the collection of a domestic support obligation from property that is not property of the estate;
(C) with respect to the withholding of income that is property of the estate or property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute;
(D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or a recreational license, under State law, as specified in section 466 (a) (16) of the Social Security Act;
(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act;
(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or
(G) of the enforcement of a medical obligation, as specified under title IV of the Social Security Act.
The highlights of this new exemption from automatic stay are:
In addition to criminal proceedings, a wide variety of civil actions can proceed against a person who files bankruptcy including civil actions regarding paternity, civil actions to establish or modify domestic support obligations, civil actions regarding custody or visitation, civil actions regarding domestic violence, and civil actions to dissolve a marriage (but actions concerning property of the debtor’s estate are stayed).
Income/wage withholding orders can still proceed, even if they target the debtor’s property or property of the estate.
Suspension of driver’s license or professional license to the extent that state law provides for such a suspension, reporting of overdue support, can proceed.

VII. Can Property Settlements in Divorce Judgments Be Challenged as Fraudulent Transfers?
In and out of bankruptcy, there are various laws that generally enable creditors to avoid (i.e. undo) transfers made or obligations incurred that have the effect of improperly putting a debtor’s assets beyond the reach of his or her creditors. Generally, transfers made (or obligations incurred) are considered to be a “fraud on creditors” when they are “actually fraudulent” (e.g. with actual intent to hinder, delay or defraud a creditor: See MCL 566.34(a)) or “constructively fraudulent” (e.g. transfers made (or obligations incurred) in exchange for less than reasonably equivalent value and by one who is either: (i) insolvent or rendered insolvent by the transfer made or obligation incurred (See MCL 566.35(1)), or (ii) engaged (or about to engage) in a business or transaction with unreasonably small assets (See MCL 566.34(b)(i)) or (iii) who intends or reasonably should have known that he or she is about to incur debt that is beyond his or her ability to pay when the debt becomes due. (See MCL 566.34(b)(ii)). Outside of bankruptcy, creditors can use MCL 566.31, et seq., which is Michigan’s version of the Uniform Fraudulent Transfer Act (“UFTA”) to avoid and recover fraudulent transfers. In bankruptcy, the debtor or trustee can use 11 USC §§ 544 and 548 to recover fraudulent transfers (11 U.S.C. § 544 “incorporates” applicable non-bankruptcy law, including UFTA).

Basic Bankruptcy options available.
Types of Bankruptcies. The four main types of bankruptcies are as follows:
Chapter 7—Liquidation: In a Chapter 7 the debtor turns over all non-exempt property to the Chapter 7 Trustee: this Trustee sells or liquidates the property and distributes the proceeds to creditors according to the priority scheme set forth in the bankruptcy code, and usually in a small one-time payment. The debtor will be released (discharged) from the unpaid portion of many types of debt unless a creditor objects to the debtor’s discharge, or unless a creditor objects to the dischargeability of its particular claim. The Chapter 7 Trustee is always appointed by the United States Trustee and is usually a member of a panel of Trustees.
Chapter 11—Reorganization: The purpose of Chapter 11 is to allow the debtor a breathing spell from creditors, thereby enabling the debtor to reorganize its financial affairs. This is the most expensive and complicated type of bankruptcy and can last for years. If successful, a plan of reorganization would be proposed which is subject to the vote of creditors.
Chapter 12—Family Farmer Bankruptcy: Chapter 12 can only be filed by a family farmer with regular annual income. This proceeding is similar to a Chapter 13, described below.
Chapter 13—Adjustment of Debts: Chapter 13 can only be filed by individuals with regular income (filing with or without a spouse) and with unsecured debts of less than $336,900 and secured debts of less than $1,010,650—See ll U.S.C. § 109(e). (These dollar limits are adjusted at 3-year intervals: the most recent adjustment was effective April 1, 2007.) The purpose of a Chapter 13 is for the debtor to pledge part of his or her income over a period of time (usually 3 to 5 years) to pay all or a portion of the debt. Once this portion of the debt is paid, the debtor is released (i.e. discharged) from the unpaid portion of the debts. Soon after the case is commenced, the debtor must propose a plan which fits within the strict requirements of the Bankruptcy Code. Priority debts must be paid in full. (See 11 U.S.C. §1322(a)(2).) Pursuant to §507(a)(1), a debt for a domestic support obligation (defined below) is a first priority unsecured claim

.
PERSONAL BAILOUT OR Discharge: The main reason why any individual files bankruptcy is to try to get a discharge from debts which are owing to creditors. 11 U.S.C. § 727 says that all individual debtors are eligible to receive a discharge unless he or she committed one of the “bad acts” described in 11 U.S.C. § 727.

III. WHAT IN BANKRUPTCY IS A DOMESTIC SUPPORT OBLIGATION.

The Bankruptcy Reform Act gives us a new term—“domestic support obligation”—which is defined in 11 U.S.C. § 101(14A), as follows:
(14A) The term “domestic support obligation” means a debt that accrues before, on, or after the date of the order for relief in a case under this title, including interest that accrues on that debt as provided under applicable nonbankruptcy law notwithstanding any other provision of this title, that is—
(A) owed to or recoverable by—
(i) a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible relative; or
(ii) a governmental unit;
(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child’s parent, without regard to whether such debt is expressly so designated;
(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of—
(i) a separation agreement, divorce decree, or property settlement agreement;
(ii) an order of a court of record; or
(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and
(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child’s parent, legal guardian, or responsible relative for the purpose of collecting the debt.
Nondischargeability of Domestic Support Obligations: 11 U.S.C. § 523(a)(5) provides that a DSO cannot be discharged in Bankruptcy.
§ 523. Exceptions to discharge
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt—…
(5) for a domestic support obligation;
Special Impact of Domestic Support Obligations in Chapter 13 Cases:

IV. Nondischargeability of Property Settlement
Before the Bankruptcy Reform Act, 11 U.S.C. § 523(a)(15) provided that property settlement debts were nondischargeable unless the debtor lacked the ability to pay it according to the criteria described in the statute, or unless discharging the property settlement would result in a benefit to the debtor that outweighed the detriment to the non-debtor spouse, former spouse or child. The old law also required that the non-debtor spouse commence an adversary proceeding in bankruptcy court to determine the nondischargeability of the property settlement and, pursuant to 11 U.S.C. § 523(c) the complaint in that adversary proceeding was required to be filed within 60 days after the first date set for the meeting of creditors pursuant to 11 U.S.C. § 341. If a nondischargeability complaint was not timely filed, the property settlement was automatically discharged under 11 U.S.C. § 727. 11 U.S.C. § 523(c) often resulted in non-debtor spouses having to spend limited funds in order to “protect” their property settlements.
11 U.S.C. § 523(a)(15) was oddly written. Courts, attorneys, and litigants consistently struggled with it. The Bankruptcy Reform Act resolves the difficulty by revising § 523(a)(15) so that it reads as follows:
§ 523. Exceptions to discharge
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt—…
(15) to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record or, a determination made in accordance with State or territorial law by a governmental unit;…
Thus, under the Bankruptcy Reform Act, even if a debtor’s obligation in a divorce decree does not come within the definition of “domestic support obligation” so as to be nondischargeable under § 523(a)(5), it is still nondischargeable under § 523(a)(15) if it is a property settlement debt to a spouse, former spouse or child.
In applying the Bankruptcy Reform Act, bankruptcy judges are now more likely to view any obligation in a divorce decree as being nondischargeable by a party to that divorce who later winds up in bankruptcy.
Also, the Reform Act amends 11 U.S.C. § 523(c) so that the non-debtor spouse is not required to file an adversary proceeding in order to preserve the nondischargeability of the debtor’s obligations that fall within the scope of 11 U.S.C. § 523(a)(15). This is an important change in the law, designed to protect non-debtor spouses and children by eliminating the need for them to spend precious resources trying to “protect” the property settlement by commencing an adversary proceeding in the bankruptcy court.
Taken together, the Reform Act’s changes to 11 U.S.C. § 523(a)(5) and (15) operate to exempt from discharge all alimony, maintenance, support, property settlements, hold-harmless obligations, etc. to a spouse, former spouse or child so long as they are incurred in the course of a divorce or separation, or in connection with the divorce decree, separation agreement or other order.

V. Are There Any Remaining Differences Between Nondischargeable Domestic Support Obligation Under 11 U.S.C. § 523(A)(5) and Nondischargeable Property Settlement Under the Reform Act’s 11 U.S.C. § 523(A)(15)? The Answer Remains “Yes”—Even Under the Bankruptcy Reform Act
A debt which is nondischargeable under 11 U.S.C. § 523(a)(15) (e.g., a property settlement that is not in the nature of alimony, maintenance or support) is dischargeable in a Chapter 13 under the Reform Act if the debtor makes all payments under the Chapter 13 plan. However, a domestic support obligation which is nondischargeable under 11 U.S.C. § 523(a)(5) is nondischargeable even under Chapter 13, even if the debtor makes all of its payments due under the plan and receives a super-discharge. See 11 U.S.C. § 1328(a).
In Chapter 13 cases, domestic support obligations get better treatment than do property settlements. For example, the failure of a Chapter 13 debtor’s failure to pay a domestic support obligation post-petition is grounds for denial of confirmation of the Chapter 13 plan (11 U.S.C. § 1325(a)(8)), and if the failure occurs post-confirmation, it is a ground for dismissal or conversion of the Chapter 13 case (see 11 U.S.C. § 1307(c)(11)). Debts for property settlement are not given similar protection. Furthermore, the debtor’s plan is required to cure all domestic support obligation arrearages during the life of the Chapter 13 plan, unless the recipient agrees to a different treatment.
First Priority for Domestic Support Obligations: Another difference between domestic support obligations and property settlement debts is that 11 U.S.C. § 507 makes unsecured claims for domestic support obligations first priority, subject only to the fees and expenses incurred by a trustee in collecting them. Property settlement does not enjoy this high priority. The pertinent section of the Bankruptcy Reform Act reads as follows:
VI. Exceptions to the Automatic Stay

Bankruptcy’s automatic stay is a comprehensive injunction that stays actions against the debtor, property of the debtor and/or property of the bankruptcy estate.[1] The automatic stay is embodied in 11 U.S.C. §362(a), but there are 28 statutory exceptions to the automatic stay: those exceptions are set forth in 11 U.S.C. §362(b)(1)–(28).
The Bankruptcy Reform Act amended the exceptions to the automatic stay which pertain to family law matters. These changes in the Bankruptcy Code clarify that a broader range of family-law proceedings can continue even when one spouse files bankruptcy. Consequently, the following activities do not constitute a violation of bankruptcy’s automatic stay:
§ 362. Automatic Stay…
(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay—
(1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor;
(2) under subsection (a)—
(A) of the commencement or continuation of a civil action or proceeding—
(i) for the establishment of paternity;
(ii) for the establishment or modification of an order for domestic support obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of a marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or
(v) regarding domestic violence;
(B) of the collection of a domestic support obligation from property that is not property of the estate;
(C) with respect to the withholding of income that is property of the estate or property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute;
(D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or a recreational license, under State law, as specified in section 466 (a) (16) of the Social Security Act;
(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act;
(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or
(G) of the enforcement of a medical obligation, as specified under title IV of the Social Security Act.
The highlights of this new exemption from automatic stay are:
In addition to criminal proceedings, a wide variety of civil actions can proceed against a person who files bankruptcy including civil actions regarding paternity, civil actions to establish or modify domestic support obligations, civil actions regarding custody or visitation, civil actions regarding domestic violence, and civil actions to dissolve a marriage (but actions concerning property of the debtor’s estate are stayed).
Income/wage withholding orders can still proceed, even if they target the debtor’s property or property of the estate.
Suspension of driver’s license or professional license to the extent that state law provides for such a suspension, reporting of overdue support, can proceed.

VII. Can Property Settlements in Divorce Judgments Be Challenged as Fraudulent Transfers?
In and out of bankruptcy, there are various laws that generally enable creditors to avoid (i.e. undo) transfers made or obligations incurred that have the effect of improperly putting a debtor’s assets beyond the reach of his or her creditors. Generally, transfers made (or obligations incurred) are considered to be a “fraud on creditors” when they are “actually fraudulent” (e.g. with actual intent to hinder, delay or defraud a creditor: See MCL 566.34(a)) or “constructively fraudulent” (e.g. transfers made (or obligations incurred) in exchange for less than reasonably equivalent value and by one who is either: (i) insolvent or rendered insolvent by the transfer made or obligation incurred (See MCL 566.35(1)), or (ii) engaged (or about to engage) in a business or transaction with unreasonably small assets (See MCL 566.34(b)(i)) or (iii) who intends or reasonably should have known that he or she is about to incur debt that is beyond his or her ability to pay when the debt becomes due. (See MCL 566.34(b)(ii)). Outside of bankruptcy, creditors can use MCL 566.31, et seq., which is Michigan’s version of the Uniform Fraudulent Transfer Act (“UFTA”) to avoid and recover fraudulent transfers. In bankruptcy, the debtor or trustee can use 11 USC §§ 544 and 548 to recover fraudulent transfers (11 U.S.C. § 544 “incorporates” applicable non-bankruptcy law, including UFTA).


GET YOUR PERSONAL BAILOUT!

November 6, 2011

WHAT DO YOU HAVE IN COMMON WITH WALL STREET, BIG BUSINESS OR BIG BANKS? YOU ALL CAN GET A BAILOUT, YOURS IS CALLED A CHAPTER SEVEN BANKRUPTCY.

People , individual and small business owners, have a right to several types of Bankruptcy Chapters to pick from. Just like Wall Street, Big Business and Big Banks they are a personal type of Bail out.

Information by Flint Bankruptcy Lawyer Terry Bankert 810-235-1970 or email Bankruptcy Attorney at terry@attorneybankert.com

Most common in use by the individual or couples is a Chapter Seven Bankruptcy.This is commonly referred to as a full liquidation chapter. In Chapter 7 you must fully disclose your income, property and debts. The law requires that you disclose all of your financial activities over the last several years. Afer your case is filed you will go to a meeting with a bankruptcy trustee and your creditors may attend. If all goes well and it most ofter does you will receive your bankruptcy discharge 3 months later.

At the end you will receive a discharge or elimination of your listed debt. Most people get to keep all of their possessions. The most common exceptions are luxury items and investment real estate.

A chapter eleven helps business to stay afloat. A chapter 12 is a reorganization for farmers.

A chapter thirteen is a reorganization plan to help you pay in full certain debt and discharge the remainder. It involves a 3 or 5 yr payment plan.

I will focus my information on chapter seven. Nationally 10% of the people who file under chapter 7 will be found to have too high of an income. and will have to file a chapter 13.

There is a credit counseling requirement . It is two onilne classes. One before you file and another after you file. They cost about $60.00 dollars. Your filing fee is $306.00 a credit report is $45 and the attorney fees range from $1,000.00 to $1,500.00. My firm charges $1,000.00.

After your petition for bankruptcy is filed your creditor must stop harrassing you. You creditors will be violating Federal Law if they attempt to collect a debt while you have an open bankruptcy petition.

This powerful shield is called an automatic stay.If your creditor contacts you after a bankruptcy filing just give them your filing number.

There are exceptions to the automatic stay . They are collection of child support, spousal support (alimony) and certain enforcement actions by the IRS. Generally you will get 100% relief.

If you have additional questions contact me at 235-1970, terry@attorneybankert.com or http://www.attorneybankert.com


IT’S NO JOKE BEING BROKE, BANKRUPTCY 235-1970

October 25, 2011

ON 10/25/2011 AT 8:45 LIVE RADIO “ ITS NO JOKE BEING BROKE! [radio phone 239-5733] hosted by Flint Bankruptcy Attorney Terry Bankert 810-235-1970 . www.attorneybankert.com

 Downtown Flint Office. Contact us today or a free appointment.

I talk to many people who say “ I need help now. This phone has to stop ringing. I work two jobs,
have kids, no place to turn when unpaid bills face me at the end of the month. How do I get out of this debt?

CHAPTER SEVEN BANKRUPTCY is a way. The process is you have to income qualify. You disclose all your assets, income and your debt. In your Bankruptcy papers all your financial activities for the past several years are disclosed.Three months later you receive a discharge (cancellation) of most types of debts and emerge with all or most of your property except things like luxury items and real estate investments.

Are you suffering from loss of income, garnishment, creditor harassment, repossession, foreclosure, lawsuit, medical bills or loss of governmental support ? Following is how you stop creditors from harassing you on the phone.

Once you file a bankruptcy which takes usually a week or more after our first meeting you have a powerful protection its called an automatic stay. This stay stops any efforts by your creditors to collect debts from you. When they call just give them your bankruptcy filing number, the name of the court, and the date of filing. They will back off . If they do not they are violating Federal Law.

Everything aimed at you, except taxes, student loans , child support and spousal support, will stop. This includes garnishment of wages, repossess cars and foreclosure of your home will stop.

It is our logo but It’s no joke being broke. We know it. This is Michigan in a depression in the beginning of an era that will later be called the de-industrialization of America. Our government is bailing out Wall Street, big business and Big Banks. A personal bankruptcy will bailout you out.

You qualify for a Chapter 7 Bankruptcy if you make less than $42,562 in a one person household, $50,738 in a two person household.

Most pensions and retirements are exempt from bankruptcy. The rest of your property becomes part of your Bankruptcy estate and is under the control of a bankruptcy trustee.

Problems may arise if you have unloaded property at less than market value in the previous two years. All of your property is included even marital property. The trustee will look at all your property, its value and the categorical exemptions to see if there is property to sell and give the proceeds to creditors after keeping 8% for the trustee.

The trustee will have no interest in your property that is protected by exemptions ( dollar amounts of vale) or that will not have a net profit after sale and payment of liens and trustee costs. Most people in bankruptcy keep their personal belongings. If you owe more on your house than what it is worth the trustee in bankruptcy will have no interest in it.

CAN I KEEP MY HOUSE AND CAR

Yes in the following circumstances .

You have to be current on your mortgage and car note. You have no significant non exempt value in your house or car. Exempt values, $21,000 plus change in your house and $3,400 plus change in your car. Example. You car is paid off and if you sold it today you could get $3,000 for it. You get to keep your car. Make a no fee appointment with me and I will explain the exemptions to you.

You cannot repair your credit by paying your bills slowly. It is your right to get rid of your bills and have a fresh start. The Bankruptcy Laws will allow you to keep most of your personal possessions.

ITS NO JOKE BEING BROKE! hosted by Flint Bankruptcy Attorney Terry Bankert 810-235-1970 . www.attorneybankert.com

 Downtown Flint Office. Contact for a free appointment.


BANKRUPTCY, BANKRUPTCY CHAPTER 7, 235-1970

October 16, 2011

DO YOU NEED BANKRUPTCY? BANKRUPTCY CHAPTER SEVEN CALL 235-1970

In all Chapter 7 cases, the U.S. trustee appoints a trustee to administer the estate created by the filing of the debtor’s bankruptcy. 11 USC 701. The trustee is typically a member of a private panel of individuals appointed by the Office of the U.S. Trustee, although certain circumstances, such as a conflict of interest affecting all of the private panel trustees, may necessitate the appointment of an individual who is not a member of the standing panel. See 11 USC 702 (allowing for election of trustee).

In his or her capacity as trustee, the trustee is required to investigate, collect, and liquidate the debtor’s nonexempt property and distribute the proceeds to creditors according to the priorities established in the Bankruptcy Code. 11 USC 704(a). The trustee is charged with performing other duties as well, including, where appropriate, opposing an individual debtor’s right to receive a discharge. 11 USC 705. In a large number of Chapter 7 cases, trustees retain counsel to assist them in administering the estate. If you are requested to represent a trustee in a Chapter 7 case, you should first make certain that the bankruptcy court administering the case enters an order appointing you as counsel. 11 USC 327(a). Typically, court approval of the trustee’s employment of professionals is obtained on an ex parte basis; however, the process requires the concurrence of the U.S. trustee.

In the Eastern District of Michigan, LBR 2014-1 (ED Mich) governs the procedure for applications for the retention of professionals, including the attorney for a Chapter 7 trustee. In general, the application must be accompanied by a statement from the attorney that he or she is a disinterested person and holds no interest adverse to the estate. Bankruptcy Rule 2014; LBR 2014-1(a) (ED Mich); see also 11 USC 327(a). This statement must also disclose all connections of the attorney with the “debtor, creditors or any other party in interest, and their respective attorneys and accountants” as required by Bankruptcy Rule 2014. LBR 2014-1 (ED Mich); see also LBR 2014 (WD Mich). This application must be filed with the bankruptcy court, and a copy of the application, along with a proposed order of retention, must be served on the U.S. trustee. LBR 2014-1(b) (ED Mich). If the U.S. trustee concurs in the application, he or she will sign the proposed order. If the U.S. trustee fails to sign the order within seven days, the applicant must serve on the U.S. trustee a notice of a hearing for the entry of the retention order. Once the retention order is entered, it is deemed effective as of the date the application was filed, “unless the Court orders otherwise.” Id.


FLINT BANKRUPTCY

October 9, 2011

History of Bankruptcy Law

Flint Bankrutpcy Lawyer  posts here this overview of Flint Bankruptcy. See cite at the bottom.

§1.1 Laws that provide for the distribution of a debtor’s property among creditors have been a part of civil jurisprudence since ancient times. Under the Code of Hammurabi, an insolvent debtor was often sold into slavery. In Celtic Ireland, a creditor would often “fast on” a debtor by placing himself or herself before the debtor’s doorway until the debt was paid. See generally Louis Edward Levinthal, The Early History of Bankruptcy Law, 66 U Pa L Rev 223 (1918).

For help-Flint Genesee MI Attorney / Lawyer practicing in Family Law, Divorce, Bankruptcy. 810-235-1970
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The 2005 amendments changed over 100 years of bankruptcy law. Some of the important changes made by BAPCPA include the following:
requiring consumer debtors to undergo financial counseling before filing for bankruptcy, 11 USC 109(h), 521(b), and before discharge, 11 USC 727(a)(11), 1328(g)(1)
means testing for consumer debtors seeking to discharge debts under Chapter 7, 11 USC 707(b)
bars against repetitive filing through limitation of the automatic stay, 11 USC 362(c)(3)
elimination of the debtor’s ability to retain secured collateral without redemption or reaffirmation, 11 USC 521(a)(6)

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II. Sources of Bankruptcy Law: The Bankruptcy Code and Rules

A. Structure of the Bankruptcy Code

§1.2 Most of the operative provisions of the Bankruptcy Code are located in Title 11 of the United States Code. This title is divided into nine chapters—1, 3, 5, 7, 9, 11, 12, 13, and 15. Some of them offer separate forms of relief to financially distressed debtors. Chapter 7 provides for the automatic appointment of a trustee who will liquidate all of the debtor’s nonexempt property and distribute the proceeds to creditors. Chapter 9 permits troubled municipalities to reorganize their affairs under the protection of the bankruptcy court. Chapter 11 allows for the reorganization of distressed debtors; this form of relief is often selected by troubled businesses that need some time to restructure their financial affairs. Chapter 12 permits family farmers to reorganize their farming operations under the protection of the bankruptcy court. Chapter 13 provides for the adjustment of debts of persons with “regular income.” This chapter expands the scope of the old wage-earner provisions contained in Chapter XIII of the Bankruptcy Act of 1898. Finally, Chapter 15 deals with ancillary and cross-border cases.

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B. Rules Governing Bankruptcy Procedure: National and Local

§1.3 In 1983, the U.S. Supreme Court, acting pursuant to 28 USC 2075, adopted the Federal Rules of Bankruptcy Procedure (Bankruptcy Rules). These rules were drafted to conform with the provisions of the Code and govern procedure in all federal bankruptcy courts; they may not abridge, enlarge, or modify the substantive rights granted under the Code. 28 USC 2075. Recent revisions to the Bankruptcy Rules were made in 2003, 2008, 2009, and 2010 (effective December 1).

For help-Flint Michigan, Terry Bankert 810-235-1970 Flint Lawyer Attorney practicing in Family Law and Bankruptcy
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B. Core and Related Proceedings

1. The Significant Distinction

§1.6 When litigating in the bankruptcy court, the practitioner must be keenly aware of the distinction made in the jurisdictional provisions of the Bankruptcy Code between core and noncore (or related) proceedings. This distinction is important primarily because in related proceedings, bankruptcy judges may not enter final orders and judgments without the consent of the litigants.

2. Core Proceedings

§1.7 What’s New in this Section Bankruptcy judges may hear and decide all core proceedings and may enter orders and judgments in those proceedings subject to appellate review. 28 USC 157(b)(1). Examples of core proceedings are listed in 28 USC 157(b)(2) and include (1) motions to lift the automatic stay, (2) actions to recover fraudulent conveyances and preferences, and (3) determinations whether certain debts are dischargeable. Also included on the list are “other proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor or the equity security holder relationship.” 28 USC 157(b)(2)(O). For decisions construing the scope of core proceedings, see In re Pioneer Inv Servs Co, 946 F2d 445 (6th Cir 1991); Bliss Techs, Inc v HMI Indus (In re Bliss Techs, Inc), 307 BR 598 (ED Mich 2004); and In re Marshall, 118 BR 954 (WD Mich 1990).

For help-Flint DIvorce Family Law Attorney / Lawyer 810-235-1970
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E. Venue of Bankruptcy Cases and Proceedings
§1.17 In general, a debtor who seeks bankruptcy relief may file a bankruptcy petition in the court for the district in which the debtor’s domicile, residence, principal place of business, or principal assets have been located for 180 days before the date of filing. 28 USC 1408. In the Eastern District of Michigan, LBR 1071-1(a) (ED Mich) establishes three administrative units (Detroit, Flint, and Bay City) for cases filed in that district. If a case is filed in the wrong administrative unit—for example, if a corporation headquartered in Bay City files its petition in Detroit—the bankruptcy judge may transfer that case to the proper administrative unit. LBR 1071-1(c)(1) (ED Mich); see, e.g., In re Romzek, 50 BR 720 (Bankr ED Mich 1985). The Bankruptcy Court for the Western District of Michigan has adopted a similar local rule. See LBR 1014 (WD Mich).

For help-Divorce Lawyer in Flint Genesee MI 810-235-1970
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H. Electronic Filing of Cases and Pleadings
§1.20 On February 3, 2004, the U.S. Bankruptcy Court for the Western District of Michigan adopted Administrative Order No 2004-02, which provides for the electronic filing, signing, verification, and service of documents. This order provides that the electronic filing of a document in accordance with the Administrative Procedures “constitutes the filing of the document for all purposes.” On July 14, 2004, this court followed with Administrative Order No 2004-06, which requires “all petitions, pleadings and other papers filed in all cases and proceedings, whether pending or new,” to be filed electronically beginning on January 1, 2005. The Administrative Order was incorporated into and was superseded by the February 1, 2007, comprehensive revisions to the Western District Local Rules. Similarly, the Eastern District implemented electronic filing on a mandatory basis on January 1, 2006, and electronic filing is covered in the Eastern District’s local rules.

For Help-Bankruptcy Lawyer Flint, Owosso , Bay CIty, Saginaw Terry Bankert 810-235-1970
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IV. Parties in Interest in Bankruptcy Cases
A. In General
§1.21 In every bankruptcy case, there are certain persons, called parties in interest, who perform their statutory duties and attempt to enforce their rights and privileges. They are the debtor, the trustee, the U.S. trustee, secured creditors, unsecured creditors, and, in certain cases, creditors’ committees and equity security holders.

For help-Michigan Divorce Mediator Terry Bankert 810-235-1970
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B. Debtors
1. Chapter 7 Cases
§1.22 In Chapter 7 cases, a debtor may be an individual, a partnership, a corporation, or some other artificial person. However, only an individual may receive a discharge of debts in Chapter 7 cases; other entities may not. The 2005 amendments require that a debtor receive an individual or group briefing that outlines the opportunities available for credit counseling. The briefing must have been received within the 180-day period preceding the filing of the bankruptcy case. 11 USC 109(h)(1). This requirement is commonly referred to as the requirement for prefiling credit counseling.
Chapter 7 debtors must file certain documents with the bankruptcy court; must appear for questioning by creditors, the bankruptcy administrator, and the trustee at the meeting of creditors; and must perform other duties specified in the Code and the Bankruptcy Rules. If the individual debtor performs these duties and is not guilty of any bad acts as defined in the Code, the debtor will be granted a general discharge of prepetition debts and will retain exempt property to be able to make a fresh start in life.
After the debtor meets the duties specifically required under the Code, the debtor is required to complete an instructional course concerning personal financial management to obtain a discharge. 11 USC 727(a)(1). This is another requirement added by BAPCPA.

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2. Chapter 11 Cases
§1.23 Individuals, partnerships, and corporations all qualify for relief under Chapter 11 of the Code. A Chapter 11 debtor is normally retained as debtor-in-possession at the outset of the case and, as such, continues to operate its business as a fiduciary for all creditors within the guidelines prescribed by the bankruptcy court. The debtor, if not displaced by a trustee, then negotiates with its secured and unsecured creditors the terms of a plan calling for either the reorganization or the liquidation of the debtor’s assets and the adjustment of the rights of creditors and stockholders. This plan is sent to all creditors for a vote, and, after the votes are tallied, the plan may be confirmed and given effect by the bankruptcy court. Special rules apply for small businesses. See chapter 6.
In 2005, BAPCPA enacted comprehensive revisions to 11 USC 1112 and 1104, addressing conversion or dismissal and appointment of trustees. As amended, 11 USC 1112 provides that the courts “shall” rather than “may” convert or dismiss a case if it is in the best interests of creditors and if the movant establishes cause. Comprehensive examples of cause are set forth in the provision, and, in the event that the court decides that there is a basis or cause to dismiss or convert, the court has the alternative of appointing a Chapter 11 trustee or examiner.

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3. Chapter 12 Cases
§1.24 Only “a family farmer or family fisherman with regular annual income” may be the subject of a Chapter 12 case. 11 USC 109(f). The term family farmer includes individuals, partnerships, and corporations but does not encompass all entities that are engaged in farming operations. 11 USC 101(18). Family farmers who seek relief under Chapter 12 normally file their reorganization plans soon after their case has been commenced. Chapter 12 plans provide for payments to be made on secured and unsecured debt over a period that may last as long as five years. Confirmation of the plan does not result in the family farmer’s discharge; this is granted only when the debtor completes making payments under the plan or qualifies for a hardship discharge.
Although Congress retroactively extended Chapter 12 in 2004 ( Pub L No 108-369, 118 Stat 1749 (2004)), BAPCPA made Chapter 12 a permanent provision of the Code.

For help-Flint Divorce Lawyer Attorney *10-235-1970 Terry Bankert
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4. Chapter 13 Cases
§1.25 Only “individuals with regular income” may file Chapter 13 petitions and propose plans providing for the composition and extension of debts. Relief under this chapter is not available to artificial persons, nor is it available to individuals who do not receive regular income or are carrying heavy debt loads. 11 USC 109. A Chapter 13 debtor normally files, along with a voluntary petition, a proposed Chapter 13 plan, in which the debtor proposes to pay all or a portion of the debts over time with regular income. Unlike the Chapter 7 debtor, the Chapter 13 debtor is not required to surrender nonexempt property to the trustee for liquidation; the plan may propose that the debtor keep this property while he or she pays the debts. Unlike the Chapter 11 debtor, the Chapter 13 debtor does not receive a discharge once the plan is confirmed; discharge is granted only when the debtor performs all the obligations under the plan or otherwise qualifies for a hardship discharge.
As of April 1, 2007, the eligibility requirements for Chapter 13 debtors have been increased. Only individuals with regular income who have, on the date of filing a Chapter 13 petition, noncontingent and liquidated secured debts in an amount less than $1,010,650 and noncontingent and liquidated unsecured debts in an amount less than $336,900 are eligible for Chapter 13 relief. 11 USC 109(e). The debt limits are adjusted every three years, 11 USC 104(a), and increased to $1,081,400 and $360,475 effective April 1, 2010. See generally In re Pisczek, 269 BR 641 (Bankr ED Mich 2001); In re Faulhaber, 269 BR 348 (Bankr WD Mich 2001).

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C. Trustees
1. Chapter 7 Cases
§1.26 In Chapter 7 cases, the U.S. trustee appoints an interim trustee on the entry of an order for relief, which generally occurs when the bankruptcy petition is filed. The trustee is selected from the panel of trustees for the judicial district in which the Chapter 7 petition has been filed by or against the debtor. The U.S. trustee may serve as trustee in a Chapter 7 case if none of the panel trustees are able or willing to serve. At the meeting of creditors, the creditors may vote either to allow the interim trustee to continue as the permanent trustee or to replace that person with another from the panel. See generally In re Lindell Drop Forge Co, 111 BR 137 (Bankr WD Mich 1990). If no voting takes place, the interim trustee becomes the permanent trustee.
The trustee is a representative of the debtor’s estate and as such is required to investigate the debtor’s affairs and liquidate his or her nonexempt property for the benefit of creditors. The trustee may also seek to augment property of the estate by filing actions to recover preferences, fraudulent conveyances, and other voidable transfers made by the debtor to third parties. Once this property is collected and reduced to cash, the Chapter 7 trustee files a final report and account with the bankruptcy court in which the trustee proposes how these cash proceeds should be distributed. When the court approves this final report and account, the trustee distributes the cash to creditors and closes the Chapter 7 case. See chapter 5 for further discussion of the trustee’s role in Chapter 7 cases.

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SOURCE
Handling Consumer and Small Business Bankruptcies in Michigan ch 1 (Richardo I. Kilpatrick et al eds, ICLE 2009), at http://www.icle.org/modules/books/chapter.aspx/?lib=bankruptcy&book=2009550820&chapter=01

(last updated 09/30/2011


IN BANKRUPTYCY CAN YOU GET A BANKRUPTCY WITHOUT CREDIT COUNSELING? NO!

July 17, 2011
TODAYS BANKRUPTCY 07/17/11:
ISSUE-ORDER DENYING DEBTOR’S MOTION FOR EXTENSION OF TIME TO FILE DOCUMENTS, AND DISMISSING CASE

WHAT IS THE PROPER CAUSE FOR A BANKRUPTCY EXTENSION? ITS NOT STRESS

This post is by Flint Divorce and Bankruptcy  Attorney Terry Bankert. Divorce lawyer Terry Bankert  often is involved in child custody, child support, parenting time and grandparents rights.

Flint Matrimonial Lawyer Bankert’s articles on Family Law to include Divorce can be found at   http://terrybankert.blogspot.com/.  Flint Bankruptcy Lawyer Bankert also writes about chapter 7 bankruptcy at https://dumpmycreditors.wordpress.com/.

SOURCE- COURT-UNITED STATES BANKRUPTCY COURT,EASTERN DISTRICT OF MICHIGAN,SOUTHERN DIVISION,In re: Case No. 11-57645 ,QUIANA S. HUMPHREY, pro se, Chapter 7,Debtor. Judge Thomas J. Tucker. AND COMMENTS OF ATTORNEY BANKERT IN CAP’S OR [trb].This opinion has been modified for presentration

ISSUE-ORDER DENYING DEBTOR’S MOTION FOR EXTENSION OF TIME
TO FILE DOCUMENTS, AND DISMISSING CASE

This case is before the Court on a motion filed by Debtor for an extension of time to file
the following documents, which were due to be filed no later than July 11 2011: Credit
Counseling Certificate; Declaration Concerning Debtor(s) Schedules-Official Form B6; Chapter 7 Statement of Current Monthly Income and Means Test Form 22A; Statistical Summary; Statement of Financial Affairs; Summary of Schedules; Schedule B; Schedule D; Schedule E; Schedule F; Schedule H; Schedule I; and Schedule J (Docket # 11, the “Motion”).
DEBTOR SAID HE WAS LATE BVECAUSE OF STRESS

The Motion gives no specific reason why none of the missing documents was timely
filed, but rather generally alleges stress. Also, the Motion states, in relevant part, that Debtor has “borrowed monies to finish procedure Credit Counseling.”
DEBTOR DID NOT GET REQUIRED CREDIT COUNSELING

This statement implies that Debtor did not obtain credit counseling on or before the date of filing the bankruptcy petition.

YOU CANNOT BE A DEBTOR IS YOU DO NOT GET CREDIT COUNSELING

The Court will deny the Motion, and dismiss this case, because the Motion does not
demonstrate cause for an extension of time to file the missing documents, and because it appears that Debtor is not eligible to be a debtor in this bankruptcy case under 11 U.S.C. § 109(h)(1).

That provision provides in relevant part, that
an individual may not be a debtor under this title unless such
individual has, during the 180-day period ending on the date of
filing the petition by such individual, received from an approved
Nonprofit budget and credit counseling agency described in section
111(a) an individual or group briefing (including a briefing
conducted by telephone or on the Internet) that outlined the
opportunities for available credit counseling and assisted such
individual in performing a related budget analysis.
(italics added).

It appears that Debtor did not receive credit counseling as of the date of filing
the Motion (July 11, 2011), even though Debtor filed a voluntary petition for relief under
Chapter 7 on June 27, 2011. With exceptions not applicable here, 11 U.S.C. § 109(h)(1) requires a debtor to obtain credit counseling on or before the date of filing the bankruptcy petition.

Accordingly,
IT IS ORDERED that:
1. The Motion (Docket # 11), is denied.
2. This bankruptcy case is dismissed.
.
Signed on July 15, 2011

Bankert is active in his community and presents information on a wide variety of topice through his blog at http://goodmorningflint.blogspot.com/

You are invited to Join Bankert’s Face Book group “ Family Law and Bankruptcy Discussions” at
http://www.facebook.com/pages/Terry-R-Bankert-PC-Family-Law-and-Bankruptcy-Discussions/

You can join Bankert on facebook at  http://www.facebook.com/attorneybankert
Family Law attorney Bankert can be reached at http://www.attorneybankert.com
or 1-810-235-1970.