Randolph vs. IMBS Inc. et al. 368 F.3d 726 (7th Cir. 2004)

The Bankruptcy Code does not exist in a vacuum. Inevitably, there will be overlap between the Code and other federal and state statutes. Federal preemption resolves many of the conflicts that arise with state laws. However, where the Bankruptcy Code and another federal statute both address the same conduct, no clear guidelines exist to determine which prevails. Courts must look to principles of statutory construction and interpretation, as well as the underlying statutory policies and congressional intentions when there is a potential conflict among federal statutes, because, fundamentally, each federal statute has equal effect under the law. Baldwin vs. McCalla, Raymer, Padrick, Cobb Nichols amp; Clark LLC, 1999 WL 284788 at *7 (N.D. Ill.) citing United States v. Palumbo Bros. Inc., 145 F.3d 850, 862 (7th Cir. 1998).

One statute with the inherent potential for inconsistency with the Bankruptcy Code is the Fair Debt Collection Practices Act. 15 U.S.C. §1692 et seq. (“FDCPA”). The FDCPA “was designed to protect against the abusive debt collection practices likely to disrupt a debtor’s life.” Baldwin, supra at 11, citing Mace vs. Van Ru Credit Corp., 109 F.3d 338, 343 (7th Cir. 1997). To that end, the FDCPA provides a framework for debt collection that includes mandatory notices to debtors, prohibitions of certain practices designed to harass, confuse and coerce debtors, and strict liability damages for violations of the Act.

However, when a debtor files for bankruptcy protection, a troublesome conflict arises. Specifically, can a debt collector be held liable for damages pursuant to the FDCPA for actions taken during and after the bankruptcy case when the Bankruptcy Code already provides remedies for such actions? This question is important when considering that the FDCPA is a strict liability statute while the Bankruptcy Code’s automatic stay and discharge injunction provisions call for only “willful” violations to be penalized. Many previous decisions had held that Bankruptcy Code violations were properly and exclusively addressed by bankruptcy remedies, only. See e.g. Baldwin, supra; Cooper vs. Litton Loan Servicing et. al., 253 B.R. 286 (Bankr. N.D. Fla. 2000); Gray-Mapp vs. Sherman, et. al. 100 F.Supp.2d 810 (N.D. Ill. 1999); Hubbard vs. National Bond and Collection Associates Inc., 126 B.R. 422 (D. Del. 1991). But see, Peeples vs. Blatt, 2001 WL 921731 (N.D. Ill) (FDCPA claim for post-discharge collection activities can be determined without doing violence to the Bankruptcy Code’s purpose of adjudicating all claims in a single proceeding, citing Wagner vs. Ocwen Federal Bank, FSB, 2000 WL 1382222 (N.D. Ill. 2001)). See also, Molloy vs. Primus Auto. Fin. Servs., 247 B.R. 804 (C.D. Cal. 2000) (holding that a debtor discharged in bankruptcy is still in need of and entitled to protection under the FDCPA when acts complained of occurred after the discharge.)

In Randolph, the 7th Circuit addressed this superficially apparent tension between the automatic stay (11 U.S.C. §362) and injunction protections (11 U.S.C. §524) of the Bankruptcy Code, and the remedial provisions of the FDCPA. The lower court had ruled that §362 of the Bankruptcy Code “preempts” the strict liability provision of the FDCPA (11 U.S.C. §1692e(2)(A)). The 7th Circuit disagreed and noted that one federal statute cannot preempt another. Rather, “[w]hen two federal statutes address the same subject in different ways, the right question is whether one implicitly repeals the other—and repeal by implication is a rare bird indeed. …It takes either irreconcilable conflict between the statutes or a clearly expressed legislative decision that one replace the other.” 368 F.3d at 730.

The 7th Circuit found that, rather than these statutes presenting an irreconcilable conflict resulting in preemption of one statute by another (i.e., Bankruptcy statute trumps FDCPA), there exist operational overlaps that do not preclude the compliance with, and enforcement of, both statutes. “Overlapping statutes do not repeal one another by implication; as long as people can comply with both, then courts can enforce both.” Id. at 31.

This decision stands as a clear statement on the availability of FDCPA claims for violations of the provisions of the Bankruptcy Code. The 7th Circuit supported its conclusion by relating a long history of decisions by the U.S. Supreme Court permitting the coexistence of overlapping statutory coverages, even where not completely harmonious. Applying that concept to the facts of the case, the Court opined that, “[i]t would be better to recognize that the statutes overlap, each with coverage that the other lacks…. They are simply different rules, with different requirements of proof and different remedies.” 368 F.3d at 731–32. As a result, at least in the 7th Circuit, a cause of action for impermissible collection practices may be shown by a bankrupt debtor under either the Bankruptcy Code or the Fair Debt Collection Practices Act or, potentially, both, each with its own evidentiary requirements and remedies.

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An issue receiving much recent attention in the courts and among commentators is the nature and extent of the documentation required to be attached to proofs of unsecured claims based on credit card debt. Several courts have recently considered the issue in decisions reflecting mixed results. This subject has also been the focus of several recent articles in the ABI Journal. See, e.g., S. Andrew Jurs, Unsecured Claims and Rule 3001: How Much “Writing” or Supporting Information is Required?, ABI Journal, June 2004, p. 10; John Rao, Debt Buyers Rewriting of Rule 3001: Taking the “Proof” Out of the Claims Process, ABI Journal, July/August 2004, p. 16. This article briefly reviews the key holdings in several recent opinions. Those interested in a more thorough discussion should attend the meeting of the Consumer Bankruptcy Committee at the ABI’s Annual Spring Meeting which will focus exclusively on this topic.

Pursuant to §502(a), a proof of claim filed by a creditor in a bankruptcy case is deemed allowed unless objected to. The substantive grounds for disallowance of claims are specified in §502(b). Rule 3001 of the Federal Rules of Bankruptcy Procedure governs the form, content and effect of filing of a proof of claim. Among other things, the rule requires that a claim conform substantially to the relevant official form. Rule 3001(a). If the claim is based on a writing, the original or a duplicate must be attached. Rule 3001(c). Official Form 10 provides that if the documentation is voluminous, a summary may be provided. The form further provides that if the claim includes interest or other charges, an itemization of the charges must be supplied. In the context of claims based on the use of credit cards, these requirements raise several issues. If credit card debts are based on a writing, what is the relevant writing? What kind of documentation is required to itemize the involved charges? What is the effect of a failure to provide the required documentation? Many claims of this type are asserted not by the original lender but by an assignee or transferee which has purchased the claim. In addition to raising questions about the assignment and standing to file the proof of claim, the transfer often complicates the availability of documentation to establish the claim. One final dynamic often present in these cases is that debtors objecting to the claims have often scheduled the same claims in amounts similar to those shown in the claims with no indication that they are disputed.

In what was apparently the first of a recent spate of opinions addressing these issues, the Bankruptcy Court for the Western District of Washington in In re Henry, 311 B.R. 813 (Bankr. W.D. Wash. 2004), sustained objections to several claims based on credit card debt and struck the claims with leave to amend. In Henry, the creditors had filed claims with either no documentation or a one-page attachment containing the name of the debtor, the account number and the total amount of the debt. Debtors objected asking that the claims be stricken based on insufficient documentation. The court began its analysis by reviewing the relevant legal framework with regard to objections to claims. First, according to Rule 3001(f), a claim filed in conformity to the bankruptcy rules constitutes prima facie evidence of the validity and amount of the claim. The burden then shifts to the objector to produce evidence sufficient to negate the prima facie validity of the claim. Henry, 311 B.R. at 817. Rule 3001(c) requires that, for claims based upon a writing, the original or a duplicate be filed with the claim. The court noted that other courts considering the question had determined that failure to attach a required writing does not of itself support disallowance of the claim, but deprives the claim of entitlement to prima facie validity. Henry, 311 B.R. at 817. The court concluded that a claim based upon a credit card debt is based a writing—the credit card agreement. Henry, 311 B.R. at 817. Accordingly, the claimant must submit a copy of the agreement or a promissory note. In addition, if the agreement authorizes the creditor to charge interest and other fees and the claim contains such elements, the claimant must offer an itemization or breakdown of these charges. In this context, that means copies of account statements. Henry, 311 B.R. at 817.

Applying these principles to the situation before it, the court held that a creditor must, at a minimum file a sufficient number of monthly statements to permit a determination as to how the total amount claimed has been calculated and a copy of the agreement authorizing any charges and fees included in the claim. Absent that, the creditor’s claim would be disallowed. Henry, 311 B.R. at 818.

These issues were addressed again in In re Hughes, 313 B.R. 205 (Bankr. E.D. Mich. 2004), involving claims filed by an agent or assignee of the original creditor. They were accompanied by an attachment that included identifying information on the debtor, the account number and the claim amount. The debtor objected to the claim on the ground that the information filed with the claim was not sufficient to show the claimant’s entitlement to assert the claim. In response, the claimant filed documents evidencing the assignment of the claim from the original creditor. The court held that while the claims as originally filed did not invoke the presumption of prima facie validity, with the additional documentation filed on amendment, they did so. Hughes, 313 B.R. at 210–211.

Debtor’s objection had also asserted that the claims were otherwise insufficiently documented. The court noted the requirement that a claim based on a writing required production of the writing and held that a credit card claim is one based on a writing. Hughes, 313 B.R. at 210. The claims included references to statements which had been provided to the debtor prepetition and a summary of the claims with identifying information on the debtor, the account number, the account balance and an explanation as to the source of the information. The court held this to be sufficient to establish the validity of the claims, noting that the debtor did not identify a dispute as to liability and had scheduled the debts in amounts similar to those included in the claims. Hughes, 313 B.R. at 211. Underlying its ruling was the court’s observation that the purpose of the rules is to secure the just, speedy and inexpensive determination of each proceeding. That purpose is satisfied in the proof of claim context when the claimant provides enough information to permit the debtor to identify the creditor and match the filed claim with the amount scheduled. The court felt that requiring an assignee to provide voluminous account information of the kind apparently sought by the debtor would impose an unnecessary burden on the claimant. Hughes, 313 B.R. at 212.

A slightly different approach is reflected in In re Cluff, 313 B.R. 323 (Bankr. D. Utah 2004), in which the court also overruled the debtors’ objections to claims filed based on credit card debt. The debtors had objected that the claims were not properly documented because only a summary was provided and not the writing on which the claims were based. Debtors had identified no dispute as to liability or amount and had originally listed the claim as undisputed. After the creditor made this observation in its response to the objection, debtors amended their schedules to designate the claims as disputed, a tactic which the court questioned. After observing the substantive rules set forth in §502(b) and the procedural requirements of Rule 3001 and their effect on evidentiary requirements and the burden of proof, the court held that Rule 3001 does not provide an independent basis for objecting to claims and the grounds set forth in §502(b) are the exclusive justifications for disallowance of a proof of claim. Since it is not identified in §502(b), the absence of sufficient documentation is not grounds for disallowance of the claim. Cluff, 313 B.R. at 331. The effect of such insufficiency is to deprive the claim of its prima facie validity. Cluff, 313 B.R. at 337; See also In re Kemmer, 315 B.R. 706, 713 (Bankr. E.D. Tenn. 2004). Even in the absence of the presumption, although the claimant has the burden of producing evidence to establish the validity of the claim, once some evidence has been presented, the objector must then respond. Cluff, 313 B.R. at 337–338; Kemmer, 315 B.R. at 713. The objector must assert in writing some legal or factual basis demonstrating that the debtor should not have to pay the claim. If the debtor fails to do so, the claim should be allowed. Cluff, 313 B.R. at 338.

As to the requirement for attachment of a writing, the court concluded, as had the other courts considering the question, that a claim based on a credit card debt is based on a writing. The Cluff court, however, took a closer look at the question of what writings establish claims based on the usage of credit cards and determined that the writing is not the underlying agreement which does not itself create the debt, but merely establishes the line of credit and the terms of its usage. The documents generated when the credit card is actually used constitute the writings on which the claim is based. Cluff, 313 B.R. at 334; Kemmer, 315 B.R. at 714. The court, concluded as had the court in Hughes, that requiring the agreement and all such receipts would be unduly burdensome. A summary of those documents is therefore sufficient, a result the court considered to be consistent with the instruction in Official Form 10 as well as with Federal Rule of Evidence 1006, which authorizes the use of summaries in lieu of voluminous documents. Cluff, 313 B.R. at 335; Kemmer, 315 B.R. at 715. According to the court, that summary should contain the amount of the claim, the debtor’s name and account number, appear to be a business record and if the claim includes charges like interest, late fees or the like, include a breakdown of such charges. Cluff, 313 B.R. at 335; Kemmer, 315 B.R. at 715. A monthly account statement of the kind routinely sent to the debtor satisfies this requirement. In addition, the underlying documents should be made available on request.

Applying these principles to the claims before it, the court held that the objections did not rebut the presumption for those claims that were entitled to that benefit. The claims that did not itemize charges were not entitled to the presumption, but even as to those claims, because the debtor did not effectively rebut the evidence that was provided to establish the validity of the claims, the objections were overruled.

The only appellate level court to consider these questions is the Eighth Circuit Bankruptcy Appellate Panel in Phyllis Michele Dove–Nation v. eCast Settlement Corporation, 318 B.R. 147 (8th Cir. B.A.P. 2004), an appeal of the bankruptcy court’s denial of objections to claims filed on credit card debt. The debts in question were listed in the schedules of assets and liabilities and not designated as disputed. The scheduled amounts were virtually identical to the amounts set forth in the claims to which the debtor objected. Each claim was accompanied by a one page summary including identifying information on the debtor and the account, the balance and a statement of the source and verification of the data upon which the claim was based. An additional paragraph noted that prepetition statements setting forth the amounts of which the claim was comprised had been mailed to the debtor prepetition and would be made available upon request. The debtor objected, alleging that the documents attached to the claim did not satisfy the requirements of Rule 3001 and in particular that the writing upon which the claims were based was not attached. As had occurred in several other cases, after the exchange of objection and response, the debtor amended her schedules to designate the claims as disputed. In addition, the creditors filed amended claims, in one case including several months of account statements.

The court held that sustaining the objection would exalt form over substance and would have the effect of elevating the provisions of Bankruptcy Rule 3001 over the language of the Bankruptcy Code in contravention of 28 U.S.C. §2075. Dove–Nation, 318 B.R. at 151–52. The court felt that, even considering just the requirements of the rule upon which the objection was predicated, it could not be sustained. The rule is not as rigid as the debtor suggested, providing for example that the claim form used need only conform substantially, not strictly, to the official form. Likewise, exceptions exist to the requirement of attachment of a writing, such as the option to provide a summary if the documents are voluminous. The court held that the claimants had substantially complied, the claims were in amounts almost exactly as scheduled by the debtor and the debtor had offered no evidence to dispute the validity or the amount of the claims or establish a basis for disallowance under §502(b). Id. As did the court in Cluff, the Bankruptcy Appellate Panel observed that even if the claim is not entitled to prima facie validity, the claimants had offered some evidence of the validity of the claims, which the debtor did not attempt to controvert. Finally, the court observed that the debtor’s scheduling of the claims was itself some evidence of their validity and amount. See also, In re Mazzoni, 318 B.R. 576, 578–79 (Bankr. D. Kan. 2004) (failure to attach writing did not invalidate claim, but only deprives claim of prima facie validity; claimant satisfied initial burden by supplying creditor name, account number and amount of claim).

There appears to be no disagreement among these courts as to most of the fundamental legal principles upon which these claims objections are based, but some difference of opinion as to how some of the requirements must be satisfied. While a creditor has the burden of establishing an entitlement to payment, a claim filed in conformity with the bankruptcy rules is entitled to a presumption of prima facie validity. Once that presumption is invoked, the objector then has the burden of coming forward with evidence for a legal argument to negate some essential element of the claim. The ultimate burden of persuasion, however, remains on the claimant. The rule requires that claims based upon a writing require the production of the writing or a copy. These courts seem to be in agreement that a debt based upon credit card usage is a claim based upon a writing, but differ somewhat as to what writing or writings comprise the basis of the claim. It is clear that if interest and other charges are a part of the claim, some itemization must be supplied, but these courts differ as to the nature and extent of the required itemization. Failure to supply all of the required documentation does not justify disallowance of the claim, but deprives the claim of prima facie validity. Even if a claim is not entitled to the presumption of prima facie validity, if some evidence is offered in support of the claim, the objector must respond to that evidence and may not merely assert in conclusory fashion the invalidity of the claim. The debtor’s scheduling of the claims as undisputed and in amounts virtually identical to those set forth in the claim constitutes at least an evidentiary admission which provides additional evidence of the claim’s validity. This and the absence of any identified dispute as to the validity or amount of the claim has influenced the outcome in some of these cases. Perhaps the only thing that is clear is that absent some amendments to Rule 3001, these issues will continue to be fertile ground for litigation.

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In re Maronde, 332 B.R. 593 (Bankr. D. Minn. 2005), (N. Dreher), is a recent decision that interprets and discusses new §522(o) of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The debtor, Kim Morande, a resident of Minnesota, on the eve of filing a chapter 13 bankruptcy, and while insolvent, planned to take cash advances on credit cards and then apply those funds to reduce his equity line of credit against his homestead, and thereby increase his exempt homestead. He planned to then sell a nonexempt truck and trailer to raise cash to offer his new creditors settlements at less than what he owed. Next, he took cash advances of $31,500 and used the money to pay down his equity line of credit, thereby increasing his exempt homestead property by that amount. He then attempted to take an additional $22,300 in credit card advances to further reduce his home mortgage debt, but those advances were denied. When the last-mentioned attempt failed, Mr. Morande sold his truck and trailer and applied $18,750 of the proceeds to further reduce his home mortgage lien (to zero). He then filed a chapter 13 bankruptcy petition.

Mr. Maronde unfortunately filed his petition on April 20, 2005, the day the president signed the BAPCPA.  Therefore, his case was subject to 11 U.S.C. §522(o), which became effective on that day.  However, at that time he was still able to seek an eventual discharge of the unpaid balances of his credit card debts obtained by fraud, since the addition of that exception to discharge under chapter 13 did not become effective until Oct. 17, 2005.

The Minnesota homestead exemption is limited to $200,000. The debtor claimed home equity of $69,572 as exempt homestead property and proposed a plan that would pay general unsecured creditors $13,678, less than half of what he owed them. The trustee objected to the debtor’s claim of homestead exemption based on §522(o), and also objected to confirmation of the debtor’s chapter 13 plan.

Section 522(o) provides that “the value of an interest in...property” the debtor “claims as a homestead” shall be reduced to the extent that “such value is attributable to” any property the debtor “disposed of” in the 10-year period ending on the date of the filing of the petition “with the intent to hinder, delay or defraud a creditor and that the debtor could not exempt...if on such date the debtor had held the property so disposed of.”

The court stated that the issue is “whether the debtor acted with intent to hinder, delay or defraud a creditor when he sold his truck and trailer and used the proceeds to increase the equity in his homestead by $18,750.” The court held that the debtor acted with the requisite intent, and sustained the trustee’s objections.  In explaining its decision, The court stated that the words, “intent to hinder, delay or defraud a creditor” contained in §522(o) should be interpreted the same as in the fraudulent conveyance provisions [§548] and the denial of discharge provisions [§727(a)(2)] of the Code, as developed in the body of case law construing those sections.  This intent may be inferred from the presence of several or more “badges of fraud.”  There is no need to prove all of them and there is no weighing system applicable.  The court then itemized 11 badges of fraud.

The court stated that in this case, the inference of intent to hinder, delay and defraud creditors is “inescapable” because (1) the debtor essentially transferred property to himself (2) at a time when he was insolvent and (3) the transfers constituted substantially all his nonexempt assets. The court acknowledged that debtors are permitted to convert nonexempt assets into exempt assets on the eve of bankruptcy, but indicated that the conversion must not be done with intent to defraud creditors, citing In re Holt, 894 F.2d 1005, 1008 (8th Cir. 1990).  The court stated that although the conversion of the debtor’s truck and trailer into exempt homestead property, in and of itself, might not have been objectionable, it became objectionable in this case because it was “part and parcel” of his original scheme to defraud creditors, to wit: to take cash advances on credit cards and apply the funds to increase exempt equity in debtor’s homestead, to liquidate the truck and trailer to raise cash to offer to creditors to settle for less than he owed, and not to make an honest attempt to pay creditors in full.  The fact that this original scheme did not work does not erase the original intent of the scheme.

Since the debtor’s conversion of vehicles into homestead property was done with intent to hinder, delay and defraud his creditors to the extent of $18,750, the debtor’s homestead exemption was therefore denied to that extent, and the trustee’s objection to claim of homestead exemption sustained.  Having denied the claim of the homestead exemption, the debtor’s plan did not satisfy the best-interests-of-creditors test and confirmation was denied.  This opinion raises some interesting questions.

The court’s comment that the debtor “transferred assets to himself” was in the context of finding the existence of a badge of fraud; however, neither a transfer of property to oneself nor a conversion of property is listed among the 11 badges of fraud mentioned in the opinion (or anywhere else, for that matter).  So is a transfer of assets to oneself, or a conversion of nonexempt property into exempt property, a new badge of fraud?  Can a person actually transfer property to himself?  Could the transferor, who ends up owning the equivalent of the property transferred and who has therefore not altered his financial position, be said to have “disposed” of assets?

What is the requisite intent of §522(o)?  There is only one reason to convert nonexempt property into exempt property on the eve of bankruptcy – to place it beyond the reach of creditors and enable the debtor to keep it.  Placing property beyond the reach of creditors hinders and delays their collection efforts.  Yet, as The court indicated, conversion is permitted.  Therefore, an intent to hinder and delay creditors, which necessarily accompanies such a conversion, cannot be a forbidden motive.  In fact, since conversion is legal and in the debtor’s best interests, it arguably ought to be the intent of a competent bankruptcy attorney preparing a client to file bankruptcy.  So what is the forbidden motive?  Is it fraud?  Deception is universally regarded as an element of fraud. However, no deception is involved in the conversion of assets, and the conversion therefore could not have defrauded creditors.  If there was no fraudulent intent involved in the conversion, does the conversion itself actually qualify as a ground for objection to the debtor’s homestead exemption under §522(o)?

Speaking of fraud, the debtor in this case clearly defrauded unsecured creditors by taking cash advances of $31,500 and using the funds to pay down his home mortgage debt, thus increasing his exempt homestead property by $31,500.  According to the opinion, this was actual fraud (perhaps criminal, as well as tortious).  Why then did these transactions not result in a reduction of the debtor’s allowed homestead exemption?  If converting nonexempt vehicles and trailers into exempt homestead property qualifies under §522(o), why would converting nonexempt cash, obtained by fraud, into exempt homestead property not qualify?

How should debtor’s counsel advise his or her client insofar as pre-bankruptcy planning is concerned?  Should counsel advise clients that they should not convert nonexempt assets into exempt assets?  Not according to this case.  In view of the Maronde rationale, perhaps good advice would be that although conversion of nonexempt property into exempt homestead property is permitted, the exemption may be denied or reduced if the debtor has engaged in other fraudulent activity in anticipation of the bankruptcy because, under those circumstances, The court may conclude that the conversion was tainted by an overall scheme to defraud creditors.

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Creditors have always feared states with large homestead protections. Florida,¹ one of the five homestead-protective debtor states,² was considered by many to be the ultimate “debtor’s haven”³ and was the target of a great deal of criticism. Stocking cash into real estate has never been disdained in Florida. Florida’s homestead protectionism was succinctly described by Southern District of Florida Bankruptcy Judge A. Jay Cristol, who told the New York Times, “You could shelter the Taj Majal in this state and no one could do anything about it.” ⁴ The creditor community perceived this sheltering to be epidemic, especially in the Havoco decision, when the Florida Supreme Court allowed a debtor to deliver nonexempt cash to the homestead after a judgment creditor chased the debtor to Florida, where he avoided attachment by purchasing a large Florida homestead.⁵

Federal Congressional Reaction to Homesteads in Bankruptcy

Before April 20, 2005 – the date President Bush signed into law the, Bankruptcy Abuse Prevention and Consumer Protection Act⁶ (BAPCPA) – bankruptcy exemption law for debtor havens was relatively straightforward: If the state prohibited the federal exemptions, called “opt out” legislation, its state exemption would dictate what property was or was not exempt in the federal bankruptcy proceeding. The Bankruptcy Code allows a state to opt out of the federal scheme of exemptions in favor of state-established exemptions.⁷ For example, Florida, by virtue of §222.20, opted out of the federal scheme.⁸ Three of the four other homestead-protective states similarly opted out of the federal exemptions. ⁹

In 2005, the “opt out” states¹⁰ with large homestead exemptions were the concern of Congress, whose attention was alerted by the creditor lobbyists who perceived severe debtor abuse in the five homestead-protective states.¹¹ This concern spurred Congress to prevent the alleged bankruptcy abusers from being unrightfully protected.¹² Quasi-“opt-in”¹³ legislation ensued. Now, in the opt-out states, a debtor may be limited in his or her homestead if he or she has not resided in the homestead-protective state’s home for the prescribed time recited by Congress.

The post-April 20, 2005, the Code allegedly stamped out the ability to easily migrate from outside jurisdictions to homestead-protective states.¹⁴ The basic formula is that anyone who resides in a state less than 730 days prior to filing bankruptcy will not be entitled to the homestead-protective state’s exemptions.¹⁵ Debtors who reside in a homestead-protective state at least 730 days but less than 1,215 days may have an exemption limitation (cap) for their homestead of $125,000.¹⁶ The majority of debtors who have resided continuously in the homestead for 1,215 days will not be affected by the new legislation.

As of April 20, 2005, Florida’s Supreme Court’s protections recited in Havoco – where the homestead’s sanctity will not be disturbed irrespective of its purchase after creditor pursuit or even judgment – certainly should not apply in the bankruptcy forum if the debtor moved into a Florida homestead (as a resident) within 1,215 days.¹⁷

BAPCPA created a dichotomy between those who are in bankruptcy and those who are not. In the homestead-protective states, a nonfiler who moves to the state between one day and 1,215 days can enjoy the entire homestead to be exempt. Alternatively, a bankruptcy filer whose residency is also less than 1,215 days¹⁸ may be limited to a homestead of a certain amount.¹⁹ Federal law clearly hampers state homestead protections at least until the debtor’s residency reaches 1,215 days.

Two Views on §522(p)

McNabb

Just when the homestead-protective states were about to throw in the towel and allow the homestead cap to affect the unlimited homestead, an Arizona bankruptcy judge granted a reprieve. Judge Randolph J. Haines issued an opinion that Congress poorly drafted BAPCPA’s limit on the homestead exemption to $125,000 for those who resided in the state between 730 days and 1,215 days.²⁰

The argument is simple, but requires review of complex clauses of the Code. Judge Haines demands a reading of the statute as a whole as opposed to a narrow reading of the homestead-cap section.²¹ In Arizona, the limitations of homestead described above presently do not apply in “opt-out” states – including homestead-protective states. In re McNabb, 2005 WL 1525101 (Bankr. D. Ariz. 2005).

The McNabb court required the $125,000 exemption to be seen through the wording of the new bankruptcy provisions. First, the $125,000 cap on homestead refers to §522(b)(3)²² as incorporated by §522(p).²³ Before the cap of §522(p) applies, one must read §522(b)(2), which states: “Property listed in this paragraph is property that is specified under subsection (d), unless the state law that is applicable to the debtor under paragraph (3)(A) specifically does not so authorize” (emphasis added).

The McNabb court showed that the Code, as a whole, reads differently than a section by itself. First, “the $125,000 cap applies only ‘as a result of electing under subsection (b)(3)(A) to exempt property under state or local law.’ Code §522(b)(1) allows debtors to elect to exempt property listed in either paragraph 2 [§522(b)(2)] or alternatively in paragraph 3 [§522(b)(3)].”²⁴ The McNabb court concluded that the limitations of §522(p) cannot apply because “the election ostensibly made available by §522(b)(1) may be taken away by a combination of state law and §522(b)(2).”²⁵ The McNabb court concluded that without the debtor’s ability to elect exemptions (Arizona is an “opt out” state where the debtor has no right to elect federal as opposed to state exemptions – the §522(b)(3)(A) election) the debtor cannot be limited to the $125,000 cab, which arises only “as a result of electing under subsection (b)(3)(A) to exempt property under state and local law”²⁶ (emphasis added).

The term “elect” arises in 11 U.S.C. §522(p) as well as §522(b)(3)(A). The prefatory language limiting the homestead to $125,000 in §522(p) specifically requires the debtor’s election, as it states that “as a result of electing under subsection (b)(3)(A) to exempt property under state or local law, a debtor may not exempt any amount of interest that was acquired by the debtor during the 1,215-day period preceding the date of the filing of the petition that exceeds in the aggregate $ 125,000 in value in [the debtor’s] residence.”²⁷ McNabb concludes that because opt-out states prohibit election, debtors in opt-out states cannot elect between federal or state exemption law. As Arizonans cannot elect, then neither §522(b) nor 522(p) can limit their exemptions.

Clear and unambiguous, this apparent glitch of the new Code may upset creditors as it appears §522(p) only applies in the minority of states that did not opt out. The McNabb court concluded that the statute cannot be second-guessed: “[H]ere there is no ambiguity nor absurdity in result. The language is unambiguous in stating that the cap is imposed only ‘as a result’ of an election, so if there is no election there can be no cap. And the result can hardly be deemed absurd when it is consistent with 163 years of bankruptcy law.” ²⁸

Kaplan

Just when homestead-protective states caught their breath after rejoicing over the McNabb ruling, Florida reviewed this issue and disagreed. Utilizing the “election theory” of McNabb, a Florida debtor sought to prohibit the imposition of a limitation on homestead to $125,000 under §522(p). The debtor received an opposite decision.

Judge Robert A. Mark, who strongly disagrees with McNabb, rules for the trustee in Kaplan and chastised the Arizona court’s McNabb decision.

• The shaky platform supporting the McNabb decision collapses unless the phrase “as a result of electing under subsection (b)(3)(A) to exempt property under state law” unambiguously means the statute only applies to debtors who can choose between federal and state exemptions. This court does not agree that the language is unambiguous . . .²⁹

Judge Mark further wrote:

• To arrive at this result [McNabb decision to allow non-opting states to still use the unlimited homestead] based on a strained and convoluted use of statutory interpretation in the face of this unambiguous legislative intent is simply wrong. ³⁰

Where Next?

As of November 2005, the courts could either side with Florida’s Kaplan or Arizona’s McNabb. In Nevada, where the court had to choose between the two conflicting decisions, the court sided with Judge Mark as it concluded that the legislative intent was to limit the homestead exemption: “Congress clearly intended to apply the provisions of [§522](p) to all debtors and not merely those citizens of states that permit the use of federal exemptions.”³¹ No other decisions had been entered as of November 2005.

At present, one can only speculate whether the other courts will agree with Judge Mark’s directive to cease litigation over this issue.³² If that happens, then the mansion loophole should finally be closed for the new residents of the homestead-protective states. Until then, this issue and the many other ambiguous clauses of BAPCPA will be the subject of future jurisprudence.

¹160 acres of unlimited exemption for homestead [Article X, §4, Fla. Const.], all of IRA , all of ERISA plans, and all of life insurance and annuities.

²Florida, Kansas, Texas, South Dakota and Iowa. This list also includes the District of Columbia.

³Havoco of America Ltd. V. Hill, 790 So.2d 1018 (Fla. 2001).

⁴Rohter, Larry. “Rich Debtors Finding Shelter Under a Populist Florida Law,” N.Y. Times A-1 (July 25, 1993).

⁵Havoco of America v. Hill, 790 So.2d 1018 (Fla. 2001).

⁶The President said at the time of the signing:

Thank you all. Please be seated. Welcome. Thank you very much for coming today. Today we take an important action to strengthen -- to continue strengthening our nation's economy. The bipartisan bill I'm about to sign makes common-sense reforms to our bankruptcy laws. By restoring integrity to the bankruptcy process, this law will make our financial system stronger and better. By making the system fairer for creditors and debtors, we will ensure that more Americans can get access to affordable credit.
White House Press Page: www.whitehouse.gov/news/releases/2005/04/20050420-5.html.

⁷See 11 U.S.C. §522(b) (1994).

⁸Owen v. Owen, 500 U.S. 305, 309 (1991).

⁹Another exemption is for rural property in Oklahoma.

¹⁰Only Texas chose not to opt out. As will be discussed below, this subjects Texas to the $125,000 of §522(p).

¹¹ This does not include the rural exemption allowed in Oklahoma.

¹²Concern existed in Congress about the large homesteads. Representatives stated that BAPCPA "restricts the so-called 'mansion loophole,' " which it identified as permitting "debtors living in certain states [to] shield from their creditors virtually all of the equity in their homes." It did not identify those "certain states." H. Rep. 109- 31, 109th Cong., 1st Sess., text accompanying footnote 71.

¹³Better coined “compelled in.”

¹⁴See new 11 U.S.C. §522(b).

¹⁵11 U.S.C. §522(b)(3)(A).

¹⁶There are exceptions for bank defrauders and adjudicated DUI offenders.

¹⁷An exception for certain felons prohibits the exemption scheme even after 1,215 days of residency. 11 U.S.C. §522(q)(1).

¹⁸The residency must be 730 days in the state before the date of the filing. 11 U.S.C. §522(b)(3)(A). If less than 730 days, then the state exemptions of the state where he came from apply. If a resident for 730 days, but less than 1,215 days, then the exemption is $125,000 of real property acquired by the debtor within 1,215 days of the filing – if the debtor elects to use the state exemption as allowed under §544 and as elected under §522(b)(3)(A). See 11 U.S.C. §522(p).

¹⁹See footnote 20 for restrictions.

²⁰In re McNabb, 2005 WL 1525101 (Bankr. D. Ariz. 2005); 326 B.R. 785 (Bankr. Ariz. 2005).

²¹11 U.S.C. §522(p).

²²522(b)(3) Property listed in this paragraph is-

• (A) subject to subsections (o) and (p), any property that is exempt under federal law, other than subsection (d) of this section, or state or local law that is applicable on the date of the filing of the petition at the place in which the debtor's domicile has been located for the 180 days immediately preceding the date of the filing of the petition, or for a longer portion of such 180-day period than in any other place….

²³(p)(1) Except as provided in paragraph (2) of this subsection and §§544 and 548 [11… §§544 and 548], as a result of electing under subsection (b)(3)(A) to exempt property under state or local law, a debtor may not exempt any amount of interest that was acquired by the debtor during the 1,215-day period preceding the date of the filing of the petition that exceeds in the aggregate $ 125,000 in value in-

• (A) real or personal property that the debtor or a dependent of the debtor uses as a residence….

²⁴In re McNabb, 2005 WL 1525101 (Bankr. D. Ariz. 2005); 326 B.R. 785, 788 (Bankr. D. Ariz. 2005). Also look to footnote 7 for interesting analysis how the new Code authorizes some sections interpreted herein, but the related provisions will not become effective until Oct. 15, 2005, thereby making the reading slightly blinded.

²⁵In re McNabb, 2005 WL 1525101 (Bankr. D. Ariz. 2005); 326 B.R. 785, 788 (Bankr. D. Ariz. 2005).

²⁶In re McNabb, 2005 WL 1525101 (Bankr. D. Ariz. 2005); 326 B.R. 785, 788 (Bankr. D. Ariz. 2005). citing 11 U.S.C. §522(b)(1).

²⁷§522(p).

²⁸In re McNabb, 2005 WL 1525101 (Bankr. D. Ariz. 2005); 326 B.R. 785, 789 (Bankr. D. Ariz. 2005).

²⁹In re Kaplan, 331 B.R. 483, 486 (Bankr. S.D. Fla. 2005).

³⁰In re Kaplan, 331 B.R. 483, 488 (Bankr. S.D. Fla. 2005).

³¹In re Virissimo, 2005 Bankr. LEXIS 2085 (Bankr. D. Nev. 2005).

³²Judge Mark wrote:

• Over the coming months, or years, courts will need to wrestle with some interpretation issues in calculating the available exemptions under the cap in §522 (p) and (q), including, for example, how to handle appreciation in the property. Courts should focus on these issues and the scores of other issues arising under the Reform Act that will engender bona fide debate. This issue, however, should not engender such debate. Determining whether the homestead caps apply in Florida should not be in dispute and should not distract us further.

  In re Kaplan, 331 B.R. 483, 488 (Bankr. S.D. Fla. 2005).

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A chapter 7 debtor seeking to retain personal property secured by a lien has several options available, one of which is redeeming the property from the lien pursuant to §722 of the Bankruptcy Code. Although there remains a split of authority on the question, the prevailing view is that the appropriate measure of value for a contested redemption is the liquidation value of the property. This favorable valuation standard has made redemption motions increasingly popular. Another development making the option more accessible to chapter 7 debtors is the emergence of companies willing to finance the redemption payment. The financing package often includes a provision for payment of fees to debtors’ counsel in connection with the redemption. This fee for preparation of the redemption motion is included in the amount that the debtor finances, which is therefore paid over time with interest. This arrangement raises several ethical questions for debtor’s counsel, including whether acceptance of the fee poses a conflict of interest. Several recent cases address these issues.

In In re Miller, 312 B.R. 626 (Bankr. S.D. Ohio 2004), Judge Vincent Aug, ruling on objections filed by the U.S. Trustee, held that the structure of the fee arrangement created a conflict of interest requiring disgorgement of the fees received. In Miller, the initial fee disclosure filed by debtors’ counsel said nothing about whether the services counsel agreed to provide to the debtors included redemption motions. The motion to redeem did not disclose that the financing obtained to make the redemption payment included a fee of $600 to debtors’ counsel. A supplemental disclosure, filed subsequent to the U.S. Trustee’s objection, revealed that counsel was paid $400 for work related to the redemption. The U.S. Trustee contended the fee was excessive and asked the court, pursuant to its authority under §329(b), to order its return to the debtors. Counsel had already taken a $750 fee for the other services related to the case.

The court held that the fee was excessive, observing that the motion was a “boilerplate” one, involved no novel issues of law and was unopposed. The court did not, however, determine what amount might be reasonable in light of its alternative holding that debtors’ counsel had a conflict of interest requiring disgorgement of the fee. The court cited as a general principle that debtors’ counsel should not accept a fee from a third party if that third party is benefitting from the transaction. The problem, according to the court, is that the arrangement creates concerns about whose interest is being served. The court was particularly concerned about the lack of disclosure to the court and the debtors’ apparent unawareness that the amount financed was increased by the amount of counsel’s fee for the redemption.

A similar fate befell debtors’ counsel in In re Griffin, 313 B.R. 757 (Bankr. N.D. Ill. 2004), in which counsel was required to disgorge a $600 fee received for work relating to a redemption. In Griffin, counsel disclosed an initial fee of $1,150, $100 of which was paid before filing, with the balance to be paid in installments thereafter. Counsel filed a motion to redeem a vehicle, but did not file anything indicating any additional fee had been received for the redemption. The court raised this question on its own motion and requested additional information on the issue. Counsel then filed a supplemental application, which revealed that counsel had received a fee of $600 for work on the redemption from the proceeds of a loan made by the redemption financer.

After holding that counsel could not collect this additional fee from the estate after Lamie v. U.S. Trustee, 540 U.S. 526 (2004), and could not collect it from the debtors because the claim would be discharged and therefore unenforceable, following Bethea v. Robert J. Adams and Associates, 352 F.2d 1125 (7th Cir. 2003), the court held that counsel’s failure to file a supplemental disclosure was an independent ground for ordering disgorgement of the fee. The court began by observing that §329(b) requires the filing of a statement of compensation paid or promised in connection with the case (regardless of whether an application for such compensation is filed with the court) and the source of the compensation. That provision is implemented by Rule 2016, which requires the filing of a supplement within 15 days of any payment or agreement not previously disclosed.

Turning to another issue, the court agreed with the holding in Miller that the funding arrangement created a conflict of interest for debtors’ counsel. The court observed that demanding an additional fee for post-petition work performed on a redemption might be inconsistent with the pre-petition retention agreement between the parties. Even if it were not, the court shared the concern expressed in Miller (based on the Illinois version of Rule 1.7(b) of the Model Rules of Professional Responsibility) that this arrangement may place the lawyer’s interest in the fee offered in conflict with the client’s and impair the lawyer’s independent judgment. Since the court felt that the agreement to take a fee for the redemption was a prepetition one and subject to discharge under Bethea, it opined that it may not be in the client’s best interest to agree to fund it in the redemption loan. Under Rule 1.7(b), a lawyer may not continue to represent a client if that representation may be limited by the lawyer’s own interest unless the lawyer reasonably believes the representation will not be adversely affected and the client consents after disclosure. The irony of the court’s holding in Griffin is that the law firm representing the debtors in that case was the same one that represented the debtors who prevailed in Bethea.

A different view is reflected in the court’s opinion in In re Ray, 314 B.R. 643 (Bankr. M.D. Tenn. 2004). In that case, the court consolidated for hearing similar disgorgement motions filed by the U.S. Trustee in three otherwise unrelated cases. All involved a redemption fee taken by debtors’ counsel and funded by the lender financing the redemptions. The U.S. Trustee argued that disgorgement was required because debtors’ counsel had a conflict of interest under both the applicable ethical rules and the Bankruptcy Code and that the amount of the fee in each case was unreasonable.

The U.S. Trustee first argued that a conflict existed based on the principle espoused in Miller that counsel should not accept a fee from a third party if that third party will also benefit from the transaction. Citing Rule 1.7(b), the U.S. Trustee contended the conflict was between counsel’s loyalty to his clients and his loyalty to the redemption lender to use its services to obtain his fee. After an extensive review of the evidence in each case, the court rejected this position, finding that each client was fully aware of and understood the arrangement (as well as his or her other options), benefitted substantially from the transaction and was fully satisfied with counsel’s services.

The court rejected the U.S. Trustee’s alternative conflict argument, based on the Bankruptcy Code, by observing that counsel for a chapter 7 debtor, unlike chapter 11 debtor’s counsel, need not be “disinterested.” Section 327(c), the court observed, tolerates some kinds of conflicts, providing that counsel is not disqualified solely by reason of representation of a creditor unless on objection the court finds there is an actual conflict of interest. Here, the court held, even this section was not truly applicable because counsel for the debtors did not represent and had no contractual relationship with the redemption lender.

Finally, the court also rejected the U.S. Trustee’s contention that counsel’s $300 fee for the redemption was not reasonable. The court reviewed the circumstances of each case and held that based on counsel’s estimate of the actual attorney and staff time expended in each matter and the applicable hourly rates, the fee was reasonable. Further supporting the fee were debtor’s counsel’s experience, the unique circumstances of each case, the results produced and the client’s satisfaction with those results.

Several lessons can be learned from these cases, some of which are suggested in guidelines offered by Judge Aug in Miller. See Miller, 312 B.R. at 629. First, debtor’s counsel is not entitled to an additional fee for the redemption if the fee agreed to when the case was taken includes such work. If the fee agreement and the initial disclosure clearly specifies that such post-petition work is extra, counsel may be entitled to an additional fee. Second, any additional fee to be taken must be described in a supplemental disclosure filed with the court. Third, counsel must be satisfied that the fee is reasonable given the work required and the time expended. Finally, and perhaps most important, the client must be fully advised of all options for dealing with the property subject to the redemption and fully aware of all the details of the financing, including the additional fee to debtor’s counsel.

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rst time that the bankruptcy court lacked jurisdiction over the claim raised in the untimely amended complaint upon which the bankruptcy court had based its decision. In denying that motion, the bankruptcy court held that Rule 4004(a)'s time bar was not jurisdictional and that the debtor had waived any untimeliness claim by failing to raise it before the court reached the merits. Both the district and circuit courts affirmed.

The Supreme Court's opinion characterizes the time limitations in Bankruptcy Rules 4004 and 9006(b)(3) as claim-processing rules that do not delineate what cases bankruptcy courts are competent to adjudicate. Kontrick v. Ryan, 124 S.Ct. at 914. The debtor's jurisdictional argument was not that the bankruptcy court actually lacked subject-matter jurisdiction; rather, the argument was that the term jurisdiction was used as a shorthand to indicate a nonextendable time. Kontrick v. Ryan, 124 S.Ct. at 914 (Citing Transcript of Oral Argument 9-10). With respect to the debtor's argument that the Rules time bar is so binding as to permit it being raised, like true jurisdictional arguments, at any time in the litigation, the Court distinguished between rules governing subject-matter jurisdiction and what it calls a claim-processing rule. The Court acknowledged that its prior opinions and those of other courts had frequently been less than meticulous in its use of the term jurisdictional. Kontrick v. Ryan, 124 S.Ct. at 915. And, the Court admonished that clarity would be facilitated if courts and litigants used the label, jurisdictional, not for claim-processing rules, but only for prescriptions delineating the classes of cases (subject-matter jurisdiction) and the persons (personal jurisdiction) falling within a court's adjudicatory authority. Kontrick v. Ryan, 124 S.Ct. at 915.

Specifically looking at Rules 4004(a) and 9006(b)(3), the Court outlined three purposes of those Rules: (1) to inform the objecting creditor of the time within which to file a complaint; (2) to instruct the court on its discretionary limits for enlarging that time; and (3) to afford an affirmative defense to a complaint filed outside the time limit set forth in Rule 4004(a) and (b). The Kontrick case involved the third purpose.

The Court assumed that had the debtor timely asserted the untimeliness of the complaint, the debtor would have prevailed, although the debtors timely motion could have been met by equitable arguments from the creditor to support an untimely filing. The Court did not address the validity of an equitable exception to an untimely filing since that was not an issue in the case. The focus of the opinion is on the sole question, whether Kontrick forfeited his right to assert the untimeliness of Ryan's amended complaint by failing to raise the issue until after that complaint was adjudicated on the merits. Kontrick v. Ryan, 124 S.Ct. at 918. The Court agreed with the Seventh Circuits application of FED. R. CIV. P. 8(c), a rule generally requiring that time bar defenses must be raised in an answer or responsive pleading. See FED. R. BANKR. P. 7008(a), incorporating FED. R. CIV. P. 8(c). Kontrick did not do that, nor did he ask the bankruptcy court to strike the untimely amended complaint's new allegation. The ordinary application of the Bankruptcy and Civil Procedure Rules would result in loss of a defense that is not itself timely raised. Only lack of subject-matter jurisdiction is preserved post-trial. Kontrick v. Ryan, 124 S.Ct. at 918 (citing FED. R. CIV. P. 12(h)(3)). In closing, the Court held: No reasonable construction of complaint-processing rules, in sum, would allow a litigant situated as Kontrick is to defeat a claim, as filed too late, after the party has litigated and lost the claim on the merits. Kontrick v. Ryan, 124 S.Ct. at 918.

So, we now know that Rule 4004, and Rule 4007 by implication, does not impose subject-matter jurisdictional limits on the bankruptcy court's authority to hear untimely filed complaints concerning objections to discharge or to the dischargeability of debts.

What is not answered?

The Court's opinion specifically says that the case involves no issue of equitable tolling or any other equity-based exception. Kontrick v. Ryan, 124 S.Ct. at 916. And, the opinion's footnote 11 cites some of the conflicting lower-court opinions on whether Rules 4004(a) and 4007(c) are subject to equitable exceptions. Thus, such opinions as the Sixth Circuit's Nardei v. Maughan (In re Maughan), 340 F.3d 337 (6th Cir. 2003) (discussed in the November 2003 Adviser article cited above), that permit equitable tolling of the discharge and dischargeability time limits are still controversial.

Moreover, footnote 12 of the Kontrick opinion says that it does not suggest that a debtor and a creditor may stipulate to the assertion of time-barred claims when such an accommodation would operate to the detriment of other creditors. Kontrick v. Ryan, 124 S.Ct. at 914 n. 12. Here, the footnote cites as an example Community Bank v. Dollar (In re Dollar), 257 B.R. 364, 366 (Bankr. S.D. Ga. 2001), where the debtor and one creditor attempted to stipulate to the substitution of an untimely 523(a)(6) cause of action for a timely 727(a)(2) claim, the result of which would be harmful to other creditors that might benefit by a general discharge denial.

Litigation will continue on the trial and appellate levels as to those case-specific reasons why an untimely filed discharge complaint may nevertheless proceed to litigation on equitable grounds. But, in light of the Kontrick holding that the rules do not impose subject-matter jurisdictional limits on the trial court, there is less reason to expect outright rejection of such arguments.

Compensation of debtor's counsel in consumer cases was the focus of the Consumer Committee meeting held on April 16, 2004, at the Annual Spring Meeting in Washington, D.C., and attended by approximately 50 members. The program featured a panel discussion led by the Honorable Jennie Latta of the Western District of Tennessee, Diane Livingstone, an Assistant United States Trustee from Region 7 and Marjorie Payne Britt, a bankruptcy practitioner in Houston, Texas. Topics included recent holdings by the United States Supreme Court in Lamie v. United States Trustee and the Seventh Circuit's decision in Bethea v. Adams & Associates and their implications for debtor's counsel and the provision of legal services to debtors in chapter 7 cases.

Judge Latta prepared an analysis of these decisions and their impact, which is included in the 2004 Annual Spring Meeting conference educational materials. In addition, articles on both cases appear in the first edition of the Consumer Committee's electronic newsletter on the ABI web site. Additional topics included the status of limited representation and unbundling of legal services as reflected in revisions to various state codes of ethics and professional responsibility and decisions of both state and federal courts. Also discussed were the varying approaches taken to compensation of debtor's counsel in chapter 13 cases across the country, including the concept of a presumptive or a "no look-at" fee available to counsel in some jurisdictions and the requirements for earning that fee. These latter two topics are discussed in detail in a comprehensive outline prepared by the Honorable David Kennedy of the Western District of Tennessee and included in the conference materials. A reprint of Tom Yerbich’s article on limited representation appearing in a recent edition of the ABI Journal was also made available to those who attended the meeting.

Reprinted with permission of Norton Bankruptcy Law Advisor