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THE CONSUMER BANKRUPTCY LETTER
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In This Issue:
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Jan. 12, 2004
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King's FEES & ETHICS IN CONSUMER BK CASES
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CASES ON CONVERSION, DISMISSAL, PROPERTY OF THE ESTATE
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TRUSTEES PRESS SEARCH FOR ABUSE
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PRESS RELEASES / EVENTS
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CALIFORNIA GOES AFTER SECURITIES FRAUD
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The One-Stop site for Consumer Bankruptcy Lawyers
Books / Software / Periodicals
FEATURED -
King's FEES & ETHICS IN CONSUMER BANKRUPTCY CASES
This is the only book on these sensitive subjects written for lawyers who regularly represent debtors in consumer and small business bankruptcy cases. Protect and enhance your compensation . . . shield yourself from ethical problems, disgorgement orders and unfair fee restrictions. Recover lost revenue and hidden costs. Contents:
The law of compensation explained - Surveys of billing rates and billing practices around the country - Sample fee applications and motions; Recoverable costs - Retainer agreements . . . what's proper, what's not. - Traps for the unwary, and how to avoid them - History, public policy and case law on compensation of the debtor's bar.
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King's DISCHARGING TAXES IN BANKRUPTCY ed. 2000
5th ed. • 915 pages • 75 exhibits and checklists • over 1,000 cases cited • indexed $95 - 2002 Supplement available, plus Gold's Tax Discharge Chronometer
This book has been called "the bible" for discharging taxes in consumer bankruptcy cases. Used by thousands of lawyers, trustees, judges and other tax professionals across the country, it explains in simple yet comprehensive terms what kinds of taxes can be erased, when they can be erased, and how they can be erased in chapter 7, 13, or 11. It covers all the issues and traps for the unwary. This book is even used by revenue officers!
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CD TimeValue, TValue5 Interest Calculator $149.00
CD Gold, Tax Discharge Chronometer $139.00
CD Collier TopForm Bankruptcy System $700
OVER 100 SELECTIONS TO CHOOSE FROM
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TRUSTEES SEARCH FOR ABUSE
By Tom McGhee
Denver Post Business Writer
As bankruptcy caseloads grow across the nation, courts are wringing more cash from debtors who once might have escaped paying their debts.
Court-appointed trustees who oversee cases are scouring bankruptcy petitions for signs that debtors can pay off more of their obligations, said Jane Limprecht, a spokeswoman for the U.S. Trustee Program.
The increased scrutiny began in 2001, which happened to coincide with a big jump in bankruptcy filings nationally and in Colorado.
The heightened vigilance that marks the new enforcement effort is complicating the lives of some who have filed for personal bankruptcy.
In the six months ended March 2003, bankruptcy court trustees nationally took 13,125 actions aimed at helping creditors reclaim more money. Those actions ranged from telephone calls to a debtor's attorney to formal "substantial abuse motions," Limprecht said. Bankruptcy trustees are pushing more people who file for Chapter 7 protection into restrictive Chapter 13 filings.
In the year ended October 2002, trustees took only 5,707 informal and formal actions, Limprecht said. Of that number, 1,400 cases either exposed the debtor or allowed voluntary conversion. Credit-card companies and banks have long sought federal legislation that would force more people into Chapter 13. But the industry has so far failed to win the support needed for passage.
Some believe the increasing number of conversions to Chapter 13 is the result of pressure from supporters of the bill.
Maureen Thompson
Senior Partner
The Hastings Group
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CREDIT CARD DELINQUENCIES SET NEW RECORD
WASHINGTON (Reuters) - The weak U.S. job market helped nudge credit card delinquencies to a record high in the third quarter of 2003, a banking trade association said in a report released Tuesday.
Credit card delinquencies rose to a seasonally adjusted 4.09 percent of all accounts in the period from 4.04 percent in the second quarter, the American Bankers Association said.
"The job market has been flying against strong headwinds, lengthening the time between jobs and intensifying financial stress," ABA Chief Economist James Chessen said.
The average length of unemployment surpassed 20 weeks during the third quarter, the Labor Department said.
Delinquency rates for direct auto loans and home equity loans also rose, the ABA said.
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CALIFORNIA NEAR BANKRUPTCY?
Californa Governor Schwarzenegger says Bond Needed to Avert `Bankruptcy' (Update2) Listen
California Governor Arnold Schwarzenegger said voters should approve a planned $15 billion bond sale to prevent the most populous state from facing ``bankruptcy'' in June.
``We put measures on the March ballot that, if passed by the people, will save our state from a June bankruptcy,'' Schwarzenegger said at the Capitol in Sacramento. ``June is the month when billions of dollars in past loans come due and the financial house of cards built over the last half decade is set to collapse.''
California has the highest borrowing costs and the lowest credit rating of U.S. states. Last month, Moody's Investors Service lowered the rating on $30 billion of state debt to Baa1, the third lowest of 10 investment grades. That gives the state, home to companies such as Intel Corp. and Cisco Systems Inc., the same credit rating from Moody's as Thailand.
SOURCE: Bloomberg.com
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MAX FACTOR HEIR TRANSFERS PROPERTY ON EVE OF BANKRUPTCY
Convicted heir files for bankruptcy protection
VENTURA, California (AP) -- The Max Factor cosmetics heir who was convicted of raping three women filed for bankruptcy protection after he was ordered to pay nearly $40 million to two victims.
Property records show that Andrew Luster, the 40-year-old great-grandson of cosmetics legend Max Factor, sold his beach house near Santa Barbara for $1,000 several days after he was caught in Mexico.
"That doesn't look like a sale to me," attorney Barry Novack, who won a $19 million verdict for one of the women, told the Los Angeles Times for its Friday's editions. Novack said it appeared Luster was trying to get rid of assets to avoid paying damages.
SOURCE AP & CNNmoney.com
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DEBTOR HAS RIGHT TO CONVERT TO CHAPTER 13
Debtor appealed an order of the United States Bankruptcy Court for the District of Utah that denied his motion to convert his Chapter 7 case to one under Chapter 13 of the Bankruptcy Code on the grounds that there were circumstances indicating an abuse of process.
Acknowledging that cases are split on this issue, the court held the statute governing conversion, 11 U.S.C. § 706, provides that the bankruptcy court does not have the discretion to deny conversion on any basis other than the requirements set forth in that statute. “We find that a bankruptcy court may not exercise its discretion to evaluate other circumstances when considering a motion to convert under § 706, but is restricted to considering whether the debtor meets the requirements delineated in the plain language of that statute.”
Prior to the involuntary petition being filed Mr. Miller had filed no less than 10 separate bankruptcy petitions since January of 1999. At least four of these cases were dismissed with prejudice to re-filing for 180 days. The different entities, all 20 had an interest in the same real property, each time statements and schedules were filed. The Chapter 11 case of Miller was converted to Chapter 7. Mr. Miller and his attorney were sanctioned in at least one case for an improper filing. None of the proposed Chapter 13 plans were ever confirmed.
In re Miller, __ B.R. __ (10th Cir BAP 2003)
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TRUSTEE'S FAILURE TO TIMELY OBJECT TO EXCESS DISPOSABLE INCOME BARS LATER OBJECTION TO CONFIRMATION OF CH 13 PLAN
Chapter 13 Trustee's failure to object to debtors' exemption of contingent and unliquidated claim within 30 days bars later objection, and failure to object to total exemption of such claims prior to confirmation of plan bars post-confirmation objection on basis of Section 1325(b) (disposable income).
In re Smith __ B.R. __ (W.D.Mo 2003)
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COURT COULD DISMISS CHAPTER 7 WHERE DEBTORS HAD $2,497.37 in DISPOSABLE MONTHLY INCOME
The first prerequisite to dismissal under section 707(b) is that the debtor have primarily consumer debt; the second requirement is a finding by the court that granting the debtor's petition would be a "substantial abuse" of Chapter 7. Zolg v. Kelly (In re Kelly), 841 F.2d 908, 912-13 (9th Cir. 1988). The court rejected the debtors' argument that the mortgage on their home should be counted as "consumer" debt.
Whether or not a particular secured debt is excluded from inclusion as "consumer debt" under § 707(b) depends on the purpose of the debt. Under the Bankruptcy Code, "consumer debt" is "debt incurred by an individual primarily for a personal, family or household purpose[.]" § 101(8). As we held in Kelly, this includes all secured debt incurred for personal, family, or household purposes. In this case, Price's personal residence was secured by two mortgages. The first, in the amount of $120,000, secured debt incurred to purchase the home; the second, in the amount of $21,511, secured debt incurred to finance household improvements. Thus, there is no question that the secured debt at issue was incurred "primarily for a personal, family or household purpose" and must be considered "consumer debt" for the purposes of § 707(b).
In re Price __ F.3d __ (9th Cir. 2004)
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CAUSE OF ACTION INCURRED AFTER CONVERSION FROM CH 13 TO CH 7 IS NOT PROPERTY OF THE ESTATE
Although, as a general matter, a Ch. 7 trustee has authority to conduct a Rule 2004 examination of a debtor's former employer to determine whether an employment discrimination claim exists, such authority requires that the potential claim belong to the Chapter 7 estate. Where the parties stipulate that the termination occurred after the conversion of the Ch. 13 case to Ch. 7, the claim belongs to the debtor individually, and there is no authority to conduct a Rule 2004 exam.
In re Rosenberg __ B.R. __ (8th Cir. BAP 2004)
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February 5-7, 2004
AMERICAN BANKRUPTCY INSTITUTE
Rocky Mountain Bankruptcy Conference
Westin Tabor Center, Denver, CO
Contact: 1-703-739-0800 or http://www.abiworld.org
March 5, 2004
AMERICAN BANKRUPTCY INSTITUTE
Bankruptcy Battleground West
The Century Plaza, Los Angeles, CA
Contact: 1-703-739-0800 or http://www.abiworld.org
March 18-19, 2004
BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT
Healthcare Transactions
The Millennium Knickerbocker Hotel, Chicago
Contact: 1-800-726-2524; 903-592-5168.
April 23-25
NACBA Annual Convention -
Sheraton Boston Hotel (Copley Place) Boston, MA. For info go to NACBA.org or e-mail maureent@nacba.org.
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THIS E-LETTER goes to nearly 3,000 bankruptcy professionals; help get the word out for your news or event by submitting a press release here. Your item will appear in the next issue of this letter.
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