Consumer Bankruptcy

Sometimes it is better for the trustee not to object to an “arguably” inapplicable claim of exemption. That’s one of the takeaways from the Sixth Circuit’s recent decision in Biondo v. Gold, Lange, Majoros & Smalarz P.C. (In re Biondo) [1].

In Biondo, a chapter 7 debtor listed an “auto accident” claim in her schedules with an unknown value. She sought an exemption for the claim under 11 U.S.C. § 522(d)(11)(D). The trustee did not raise a timely objection to the debtor’s exemption. Rather, the trustee pursued the claim for the benefit of the estate. The trustee was able to obtain two settlements related to the claim: The first settlement covered the debtor’s “medical expenses, attorney’s fees, ‘lost wages,’ and all ‘other forms of economic or non-economic loss.’” The second settlement simply covered the debtor’s “pain and suffering.” [2]

These overviews from ABI committee experts will arm you with vital information you can use in your practice well into the new year.

https://connect.abi.org/webmail/107412/928994665/0559c3a0f45ca40da3ece0…

One year ago, the value of cryptocurrencies exploded. Some invested their life savings to purchase crypto, [1] and some made lucrative, life-changing returns doing so. [2] By the summer of 2022, though, crypto had crashed. Many consumers had purchased and held their crypto using phone-based apps hosted by popular — and wildly successful — cryptoexchanges. However, as the value of crypto plummeted, so did the value of those exchanges, driving two exchanges to freeze customer accounts and file for bankruptcy soon after. What happens, then, to customers’ crypto when it is held by a bankrupt exchange? Unfortunately, there is no clear answer.

A chapter 13 bankruptcy allows a defaulted homeowner the unique benefit of saving real property, along with other secured debt. Given the benefits of chapter 13, this particular type of bankruptcy has the ability to help a large mass of people, and as such requires an orderly administration. Chapter 13 Trustees — guided by Code provisions and bankruptcy rules — are the gatekeepers for this administration. While these trustees do a remarkable job in ensuring that debtors, creditors and other entities comply with procedural requirements, occasional oversights are expected.

It has been two years since the Eighth Circuit Court of Appeals affirmed the BAP’s ruling [1] in In re Lerbakken [2] disallowing a debtor’s claimed exemption in retirement funds awarded by divorce dissolution under 11 U.S.C. § 522(b)(3)(C). The 2018 BAP opinion sent shockwaves throughout the bankruptcy community, drawing a clear distinction between an allowed exemption for funds placed in a retirement account created and contributed to by the debtor [3] versus funds placed in a retirement account created and contributed to by the debtor’s ex-spouse, but awarded to the debtor in a pre-bankruptcy divorce decree. The Eighth Circuit’s 2018 ruling employed the Supreme Court’s line of reasoning in Clark v.

As the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (the Act) works through its rebellious teenage years, courts continue to address debtor behavior through the provisions of the Act impacting the applicability of the automatic stay. Without limitation, courts have grappled with the substantive and procedural implications of the Act’s “repeat filer” provisions set forth in §§ 362(c)(3) and 362(c)(4). However, there has been somewhat less court activity with respect to the Act’s addition of § 362(d)(4).

Section 362(d)(4) allows for in rem relief from stay under certain circumstances evidencing a debtor’s abuse of the bankruptcy process. It provides: