Consumer Bankruptcy

The primary purposes of the bankruptcy process are to maximize the payments to a debtor’s creditors and provide debtors with a fresh start.[1] At first glance, the importance of firearm ownership appears unrelated to satisfy the purposes of the bankruptcy process. However, without the ability to exempt essential property from creditors, debtors would be left without the ability to achieve success with a renewed start. The next question then becomes, are firearms essential personal property? The answer to this question lies within subjective personal beliefs, with various degrees of an affirmation or refutation debated across the nation.

In In re Smith, [1] the Third Circuit reminded consumer bankruptcy practitioners of the wrath of res judicata. The debtor owned an encumbered rental property with an assignment of rents to her mortgage lender. The debtor’s proposed chapter 13 plan included a cramdown of the mortgage lender’s claim that reduced the secured portion of the claim from $150,000 to $95,000 — the value of the collateral. The plan further provided that the payment of rents would pay down the secured portion of the lender’s claim.

The lender objected to the $95,000 cramdown value, the application of rents to the secured portion of its claim, and feasibility. After the bankruptcy court sided with the debtor and held that the rents could pay down the secured portion of the lender’s claim, the lender agreed to the $95,000 cramdown value and abandoned its feasibility objections. The bankruptcy court confirmed the plan.

In a split decision, the Ninth Circuit majority held that a chapter 13 debtor has the right to dismiss under Section 1307(b) before the bankruptcy court decides whether the filing was in good faith.

President’s Column I am now halfway through my year as ABI President. Members tend to ask me two questions more than any others about this role: (1) How is all the travel going; and (2) is it worth it? The short answers are “great” and “yes,” but allow me to expand. ABI

Legislative Highlights Federal Reserve Proposes Scaled-Back Bank Capital Requirements Federal Reserve Vice Chair for Supervision Michael Barr on Sept. 10 unveiled changes to a proposed set of U.S. banking regulations that roughly cuts in half the extra capital that the

Online Law Firms: A Retrospective on Potential Pitfalls By Sabrina L. McKinney 1 The internet pervades all aspects of our society. Some jobs that previously required daily attendance are now commonly worked from the comfort of one’s home. The onset of the COVID-19

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Bankruptcy Fraud: Still a Threat to the Bankruptcy Process By Elise Mochizuki The recent increase in both consumer and corporate bankruptcy filings is expected to include significant bankruptcy fraud and/or abuse. With the goal of empowering stakeholders to assist the

Disclosures: Helping a Client (and Yourself) Stay Out of Hot Water By Andrew S. Erickson It is common for a chapter 7 panel trustee to review hundreds of pages of financial records along with the petition and schedules for any given consumer chapter 7 case prior to the

A chapter 11 plan may not impair the rights of a mortgage lender against a co-owner who is not in bankruptcy.