Consumer Bankruptcy

The bankruptcy court can divide marital property, but just because it can doesn’t mean it should, Judge Thuma says.

The Fourth Circuit declined to follow the First and Sixth Circuits on preemption of automatic stay violations by expanding the ban to redress for discharge violations.

Looking beyond the label assigned by the Affordable Care Act, three circuits have now held that failure to pay the ‘individual mandate’ for purchasing health insurance gave rise to a tax entitled to priority in bankruptcy.

Congress’s decision to use the passive voice has cost at least one debtor the discharge of a significant debt. The U.S. Supreme Court in Bartenwerfer v. Buckley ended a long journey through the Ninth Circuit for a debtor whose husband committed fraud and when she sought to discharge the debt that resulted from a judgment for that fraudulent action.[1] Instead of analyzing whether the debtor was culpable in the fraud, the Supreme Court instead held that the debt — not the debtor — was the subject of 11 U.S.C. § 523(a)(2)(A), and since the debt itself resulted from fraud, it could not be discharged.

Consumer and business bankruptcy attorneys alike have been conditioned to feel fear or awe, depending on the circumstances, at hearing the name Clifford White for almost 20 years. When White announced in 2022 that he would retire, consumer practitioners had been looking forward to the announcement of the new director, mostly to identify the focus that the U.S. Trustee Program would take. Could we anticipate a director with a business focus as interest rates grow and the controversial Texas Two-Step is in limbo, or a consumer-experienced director with the anticipated rise in consumer filings and the struggles of inflation coming to light?

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]

By Bradley D. Pack, Aaron M. Kaufman and Christina Sanfelippo Debtor Must Pay Default Rate Interest to Cure Defaulted Debt; Takes Deep Dive into Difficult Issue While plenty has been written on the issue of what a debtor must do to “cure” and reinstate an accelerated