Consumer Bankruptcy

In many common nondischargeability claims, the plaintiff creditor must prove the debtor defendant’s intentional misconduct. A default judgment for an underlying breach of contract or tort is insufficient on its own to support nondischargeability. The creditor must put on specific evidence of the debtor’s intent. This constitutes black-letter law under the Bankruptcy Code.

Recent decisions from Michigan and Georgia have cast further confusion on the issue of exclusivity of “bankruptcy-specific” exemption statutes. Under 11 U.S.C. § 522(b), a debtor filing for bankruptcy is provided with two sources from which to claim property as exempt. The debtor may choose from those exemptions enumerated under 11 U.S.C.

Recent decisions from Michigan and Georgia have cast further confusion on the issue of exclusivity of “bankruptcy-specific” exemption statutes. Under 11 U.S.C. § 522(b), a debtor filing for bankruptcy is provided with two sources from which to claim property as exempt. The debtor may choose from those exemptions enumerated under 11 U.S.C.

Each year, thousands of debtors file for relief under chapter 13 between Jan. 1 and April 15. A certain number will then timely file tax returns for the prior year, and find that they have a tax liability. These “straddle” liabilities—liabilities for tax years preceding the year in which the chapter 13 is commenced but before the deadline for filing the tax return—pose serious problems for debtors who need and deserve the fresh start promised in chapter 13. How can a debtor deal with these tax liabilities in the chapter 13, if at all? Four recent decisions from Michigan illustrate the difficulties in analyzing and treating these straddle liabilities.

Many consumers find that despite the fact that they receive a discharge creditors still attempt to collect debts and report false derogatory information on their credit reports.

Due to the recent recession, there has been a substantial increase in bankruptcy filings.

Nadejda Reilly never thought her kitchen equipment would become part of a federal case that eventually made its way to the Supreme Court. Her bankruptcy attorney in central Pennsylvania assured her that her property would be exempt and never be at risk. He scheduled its value at just over $10,000 and claimed that entire amount exempt. The trustee did not pay much attention. When he found out that the equipment was worth almost twice as much, he figured that he could sell the equipment for fair-market value, pay the amount that the debtor claimed as exempt and administer the balance as part of a small bankruptcy estate, but it did not work out that way.

As those who regularly practice consumer bankruptcy law may have already figured out, change is afoot in Rule 3001. The increased examination of the content of and basis for mortgage proofs of claim elevated a long-running discussion about claims procedure to the national spotlight, and sparked a series of proposed changes to Rule 3001 that led to an unusually high level of formal comment by the consumer bankruptcy and credit industry practitioners. These proposals touched not only mortgage proofs of claim, but also applied new requirements to consumer credit card claims. As a result of the public comments, the Advisory Committee on Bankruptcy Rules has now revised the proposed language of the new Rule 3001.

Most people have had no difficulty meeting the debt limitations for chapter 13. As of April 1, 2010, an individual was eligible for chapter 13 with no more than $1,081,500 in secured debt and no more than $360,525 in unsecured debt.