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Full-Text Articles in Law
The Approval Of Retirement Contributions In Chapter 13 Payment Plans, Jennifer Hepner
The Approval Of Retirement Contributions In Chapter 13 Payment Plans, Jennifer Hepner
Bankruptcy Research Library
(Excerpt)
In the United States, employees often contribute a portion of their annual income to their 401(k) retirement plans. These contributions may fluctuate based on age, income, or additional contributions by employers. At the same time, chapter 13 debtors are often required to pay at least a portion of what is owed to creditors as part of their court-approved payment plans. A court will only approve a debtor's chapter 13 payment plan if a debtor contributes all of his "projected disposable income" to pay creditors over the "applicable commitment period." While disposable income is defined as the "current monthly income …
Determining When The Granting Of Relief Is Deemed Abuse Of The Bankruptcy Code Under Section 707, Angela Bonica
Determining When The Granting Of Relief Is Deemed Abuse Of The Bankruptcy Code Under Section 707, Angela Bonica
Bankruptcy Research Library
(Excerpt)
There is no constitutional right for an individual to have their debts discharged. A discharge is a privilege offered to the honest but unfortunate debtor pursuant to title 11 of the United States Code (the “Bankruptcy Code”). A bankruptcy court considers different standards and/or tests to determine when a debtor may be abusing the relief provided under the Bankruptcy Code. The specific provision that restricts relief because of abuse was originally enacted in 1984, and then amended in 2005 under the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”). A main purpose of the BAPCPA was to deter abuses …
Despite A Very High Income, Chapter 7 Debtor’S May Succeed, Pamela Frederick
Despite A Very High Income, Chapter 7 Debtor’S May Succeed, Pamela Frederick
Bankruptcy Research Library
(Excerpt)
Section 707 of the Bankruptcy Code governs when a court may dismiss a chapter 7 bankruptcy case. Under section 707(a), a court may dismiss a chapter 7 case “for cause.” In 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) and amended section 707(b) to include the so-called “means test,” which provides a formula for determining whether “cause” exists to dismiss (or convert with the debtor’s consent) the debtor’s case. Courts split as to whether this amendment to section 707(b) permits a court to consider the debtor’s income when deciding whether to dismiss the debtor’s chapter …
Second Circuit Sets A Low Bar For Foreign Debtors Seeking Chapter 15 Relief, Samantha Ruppenthal
Second Circuit Sets A Low Bar For Foreign Debtors Seeking Chapter 15 Relief, Samantha Ruppenthal
Bankruptcy Research Library
(Excerpt)
Continued globalization of trade and investment led Congress, through the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”), to amend the Bankruptcy Code (“the Code”) in 2005 to include chapter 15. Chapter 15 adopted UNCITRAL’s Model Law on Cross-Border Insolvency —both aim to guide parties through cross-border insolvency proceedings. In addition to the policy objectives for all bankruptcies, chapter 15 specifically aspires to foster cooperation between the United States and foreign countries involved in cross-border insolvency cases and promote greater legal certainty in global trade and investment. A chapter 15 case is generally meant to supplement the plenary case …
Forward Contracts Preference Exception Broadly Construed, Brian King
Forward Contracts Preference Exception Broadly Construed, Brian King
Bankruptcy Research Library
(Excerpt)
Derivative transactions and financial contracts are a critical component of the United States economy. There are three main types of derivative contracts executed in our markets: futures, options and forward contracts. Each of these instruments derives value from an underlying security or resource with focus on a possible change in its future value. These instruments can be used as speculative investments, as hedges on securities already owned, or as a means of mitigating risk on volatility within a specific industry. An essential attribute of trading in these derivatives is “the ability of the parties to value their transaction on …
In Re Pichhi; Modifications Of Multi-Family Home Mortgages, Patrick Mcburney
In Re Pichhi; Modifications Of Multi-Family Home Mortgages, Patrick Mcburney
Bankruptcy Research Library
(Excerpt)
In a decision with important implications for lenders in the real estate business, the Bankruptcy Appellate Panel for the First Circuit determined that debtors can strip down a creditor’s under-secured claim in a multi-family dwelling to the appraised value of the property. While the Bankruptcy Technical Corrections Act of 2010 (“BTCA”) were in effect at the time of the decision, the panel decided the issue under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) because both parties argued the issue under the BAPCPA definitions and declined to raise the applicability of BTCA to the issue. Specifically …
Applying The “Applicable” Standard Or The Actual Amount: Monthly Rent In A Debtor’S Chapter 13 Plan, Paola Chiarenza
Applying The “Applicable” Standard Or The Actual Amount: Monthly Rent In A Debtor’S Chapter 13 Plan, Paola Chiarenza
Bankruptcy Research Library
(Excerpt)
Under The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) (S. 256, Pub. L. No. 109–8, 119 Stat. 23), debtors are subjected to a test in order to ensure their creditors are repaid as much as possible. Chapter 13 requires debtors in bankruptcy to file a plan indicting a monthly amount they will repay to creditors over a given set of years. The amount to be repaid is a debtor’s entire “disposable income,” which is income minus expenses. See 11 U.S.C. § 1325 (2007). Deductable expenses are to be calculated the same as a chapter 7 filing. …
Negligent Vehicular Homicide Caps A Debtor’S Homestead Exemption, Christine Knoesel
Negligent Vehicular Homicide Caps A Debtor’S Homestead Exemption, Christine Knoesel
Bankruptcy Research Library
(Excerpt)
In an expansive reading of the homestead exemption cap added by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the First Circuit Court of Appeals, in Larson v. Howell, held that criminal negligence is sufficient to trigger the section 522(q)(1)(B)(iv) homestead exemption cap. 513 F.3d 325, 328 (1st Cir. 2008). In Larson v. Howell, Larson was found guilty of negligent vehicular homicide. In Larson’s bankruptcy case, the homestead exemption cap was applied because the debt arose from a criminal act. Id. at 327. The Court of Appeals reasoned that the cap should apply …
Bapcpa’S Exception To The Absolute Priority Rule For Individual Chapter 11 Debtors, Christina Kormylo
Bapcpa’S Exception To The Absolute Priority Rule For Individual Chapter 11 Debtors, Christina Kormylo
Bankruptcy Research Library
(Excerpt)
Under the absolute priority rule of 11 U.S.C. § 1129(b)(2)(B)(ii), a reorganization plan that gives a junior class of creditors an interest in the estate will not be confirmed unless each senior class receives full payment or gives its consent. The absolute priority rule was amended in 2005 by the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) by adding an exception that allows individual chapter 11 debtors to retain property included in the estate under newly added section 1115. This amendment furthers the congressional intent of allowing chapter 11 to function more like chapter 13, under which there …
Ride Through Option For Real Property Survived Bapcpa, James Lynch
Ride Through Option For Real Property Survived Bapcpa, James Lynch
Bankruptcy Research Library
(Excerpt)
The Bankruptcy Abuse Protection Act of 2005 (“BAPCPA”) largely eliminated the so-called “ride through” option for security interests in personal property; however, for nearly two years there was no clear indication as to whether the ride through option still existed for security interests in real property. Recently, in In re Caraballo, the Connecticut Bankruptcy Court confronted this uncertainty head on and determined that the ride through option still exists for real property. 386 B.R. 398, 400 (Bankr. D. Conn. 2008). Importantly for bankrupt individuals, utilizing the ride through option allows them to “keep their property during and after bankruptcy …
Whether Negative Equity Is Part Of Purchase Money Security Interest?, Vitaly Libman
Whether Negative Equity Is Part Of Purchase Money Security Interest?, Vitaly Libman
Bankruptcy Research Library
(Excerpt)
The 2005 BAPCPA amendments have turned routine car purchases into a source of litigation in the federal courts. The litigation stems from the financing agreements made during the transaction. Today, these financing agreements often require the purchaser to repay loans over a term of five years or longer. See, e.g. In re Peaslee, 358 B.R. 545, 554 (Bankr. W.D.N.Y. 2006). During these long terms, cars rapidly depreciate in value. Consequently, many consumers are left with vehicles that have a market value less then the amount of debt still owed on them. This deficiency is called “negative equity.” Often, consumers …
Bapcpa Does Not Require The Chapter 13 Means Test In Individual Chapter 11 Cases, Steven Saal
Bapcpa Does Not Require The Chapter 13 Means Test In Individual Chapter 11 Cases, Steven Saal
Bankruptcy Research Library
(Excerpt)
The Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) was implemented in order to prevent debtors from unjustly shielding value in their estate from deserving creditors and thus abusing the functionality of the federal bankruptcy system. Specifically, one problem perceived to be very prevalent was a practice by individual debtors who would seek to avoid the stringent guidelines of the “means test” in Chapter 13 cases by running for the protection of the more relaxed standards in Chapter 11 cases. The BAPCPA Amendments to section 1129 of the Bankruptcy Code were adopted to institute stricter standards in Chapter 11 …
American Home Mortgage, Holdings, Inc. V. Lehman Brothers Inc., Valerie Sokha
American Home Mortgage, Holdings, Inc. V. Lehman Brothers Inc., Valerie Sokha
Bankruptcy Research Library
(Excerpt)
The derivatives provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) amendments greatly enlarged the scope of the financial contracts that are shielded from traditional bankruptcy limitations such as the automatic stay and the prohibition on ipso facto clauses. Those exceptions were reaffirmed in a strong anti-debtor opinion in Am. Home Mortg. Inv. Corp. v. Lehman Bros. (In re Am. Home Mortg. Holdings, Inc.), 388 B.R. 69 (Bankr. D. Del 2008). Although Lehman may now regret its victory since it is a debtor in its own bankruptcy case, it succeeded in defeating a number …