Consumer Bankruptcy

This panel will explore common (and uncommon) examples of UCC liens in consumer cases. The panelists will discuss goods covered by Article 9, perfection issues, valuations and chapter 7 redemption issues, and will highlight key cases that are shaping the UCC landscape.

CommitteesThe Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was implemented on Oct. 17, 2005. This panel of experts will provide their perspectives on the impacts of the law on consumer and business bankruptcies in the 20 years since the law went into effect. John Penn of Perkins Coie (Dallas), who served as ABI's president when BAPCPA became law, will be joined by two former bankruptcy judges who were on the bench at the time of the law's implementation to discuss the developments brought about by BAPCPA, and to share their views on potential bankruptcy law reforms moving forward.

A client calls his lawyer after receiving his chapter 7 discharge. He’s pleased; after all, a discharge is “the holy grail” of chapter 7. [i] But there’s an unexpected adversary proceeding pending that alleges that the client owes a debt for a willful and malicious injury. [ii] The client believes in his defenses but understands that this debt won’t be discharged if the claim succeeds. [iii] After the lawyer mentions that a chapter 13 discharge covers such debts after full plan performance, [iv] the client asks whether he should file a new chapter 13 case.

Section 522(f)(2) of the Bankruptcy Code allows debtors to avoid certain liens, including judicial liens, that impair debtors’ exemptions. [i] But § 522(f)(2)(C) says that “this paragraph shall not apply with respect to a judgment arising out of a mortgage foreclosure,” leaving courts to decide whether debtors can avoid mortgage deficiency judgments under § 522(f). Recently, the U.S. Bankruptcy Court for the District of Connecticut’s In re Gramigna [ii] opinion has joined an overwhelming majority of cases that have said that debtors can avoid mortgage deficiency judgments. These majority courts have relied on three predominant rationales.

Retailers everywhere appear to be filing chapter 22 — even chapter 33 — bankruptcies. This results in multiple litigation questions, the most recent of which pertain to Rite Aid.

Hannah Hutman and Jeff Fraser, co-chairs of the ABI Consumer Bankruptcy Committee, thank all committee members for their participation this year.

The committee once again played a vital role in ABI’s Consumer Practice Extravaganza (CPEX), which held a successful Part 1 in November 2024 and is gearing up for a robust Part 2 in January 2025. They partnered with ABI’s professional staff, Advisory Board Co-Chairs Jeff Fraser (also co-chair of the Consumer Committee) and Summer Shaw, and the CPEX judicial board.

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.