Consumer Bankruptcy Committee Meeting Minutes
2006 Winter Leadership Conference
Hon. Dennis Dow,
co-chair of the committee, discussed several opportunities for the
members of the committee to become more active:
1.
Electronic newsletter – the committee always needs submissions. Judge Dow will
send out an email to members of the committee seeking
articles.
2. ListServe – for members to
participate in discussions.
3. Articles for Consumer Corner – members are encouraged to submit longer articles for
publication in the Consumer Corner section of the ABI Journal.
Please contact Timothy
Moratzka with Mackall, Crounse & Moore
in Minnesota,
612-305-1456 or tdm@mcmlaw.com.
Judge Dow discussed the
committee meeting at the Annual Spring Meeting (April 2007). The topic
will be §707(b), Income and Expense Issues in Chapter 7 and Chapter
13 Cases. Judge Eileen
Hollowell from Arizona will moderate.
Diane Kerns, a chapter 13 trustee, will be on the panel along with
Mark Redmiles of the U. S. Trustee’s Office, who is the chief of
enforcement.
A panel discussion was
held regarding the promulgation of new Bankruptcy Rules. The
distinguished panel was made up of Judge Keith Lundin, Judge Christopher Klein, Judge
Thomas Waldron, and Prof.
Allen Resnick. Judge Waldron reviewed
the process of promulgating new and amended rules by the Rules
Committee. Materials related to this process are available online. Judge
Waldron noted that the language in BAPCPA is “a mess,” and
it may be beyond the ability of the Bankruptcy Rules to address some of
the problems in the statute. Prof. Resnick also spoke about the
rule-making process. He formerly served on the Rules Committee. He noted
that the Rules Committee is a part of the Judicial Conference. The
Advisory Committee on the Bankruptcy Rules, which is a subcommittee of
the Rules Committee, is made up of 16 members.
There was discussion about the
work of the Rules Committee to promulgate interim rules after BAPCPA was
enacted. Since they had only four months to come up with draft interim
rules, these did not go through the standard rule-making process. This
process generally takes three years to promulgate both new rules and
forms.
In March 2006, a draft of
proposed rules were published and put out for public comment. The draft
rules are available for review online at http://www.uscourts.gov/rules. The deadline to submit comments is Feb. 15, 2007. In
addition, a hearing by the Rules Committee to consider testimony related
to the proposed amended rules is set for Jan. 22, 2007 in Washington,
D.C. Anyone can submit a request to testify at the
hearing.
There was discussion regarding
the official forms, which are promulgated pursuant to Bankruptcy Rule
9009. Putting together these official forms, and attempting to stay
neutral with regard to issues related to different interpretations of
the Bankruptcy Code, is sometimes a difficult process. There was
discussion of director forms, which are put out by the director of the
Administrative Office of the U. S. Courts. These forms do not go through
the standard rule-making process. One of these forms is the
reaffirmation form.
The panel then addressed issues
related to the Form 22, which is the form used to calculate current
monthly income (CMI) under the new “means test.” Judge
Lundin noted that Form 22 seems to be driving the case law. There was a
discussion regarding the continued relevance of Form 6 (schedules I and
J). There was a very lively discussion regarding issues related to the
calculation of CMI.
At the conclusion of the committee
meeting, David
Wheeler made a brief presentation on the survey
currently being taken by the ABI’s Rules Task Force. The Task
Force has requested all ABI members to fill out the survey, which is
available online at the ABI Web site (www.abiworld.org/source/auls_survey/loginpage). The information from the survey will be
compiled and used by ABI in submitting comments to the Rules Committee.
ABI has filed a request to testify at the upcoming hearing in January
2007.
2006 Annual
Spring Meeting
The program for
the meeting of the Consumer Committee consisted of a panel discussion
and review of decisions rendered by the courts to date interpreting
certain provisions of the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005. Entitled "BAPCPA Decisions: Temporary or
Timeless? – A Case Update With Emphasis on Emerging Themes and
Statutory Interpretation," the presentation was made by the Honorable
Bruce Markell, United States Bankruptcy Judge for the District of Nevada
and Senior Fellow in Bankruptcy and Commercial Law at the William S.
Boyd School of Law, University of Nevada Las Vegas, David L. Rosendorf,
shareholder at Kozyak, Tropin & Throckmorton in Miami and editor of
the ABI’s BAPCPA Blog and Christopher Lefebvre, a consumer
bankruptcy attorney in Pawtucket, R.I. The panel discussed the
interpretative challenges presented by several provisions of BAPCPA and
the principles of construction, drawn from opinions of the United States
Supreme Court, being used by courts to interpret these provisions. The
panel reviewed decisions rendered to date on credit counseling issues,
including the dispute among courts as to whether the appropriate
sanction for the failure of a debtor to obtain required prepetition
credit counseling is dismissal of the case or striking the petition.
Also reviewed were the cases interpreting the new limitations on the
duration of the automatic stay for debtors with previous bankruptcy
filings. The panel also discussed recent decisions on exemption
limitations, including the differing opinions on whether those
limitations apply in opt out states. The final topic was new
restrictions on debtors’ ability to restructure claims held by
creditors financing automobiles purchased within the 910-day period
prior to the filing of the petition.
Brief mention was
made of the Committee’s ListServ, which has seen increased
activity since the effective date of BAPCPA. The Committee’s
ListServ moderators are Alane Becket and Christopher Lefebvre. Judge
Dow, the editor of the Committee’s electronic newsletter, also
solicited volunteers to author articles for the newsletter. Anyone
interested in writing an article for the newsletter or with ideas for
topics for articles should contact Judge Dow. The deadline for
submission of material for the next edition of the electronic newsletter
is June 27.
Finally, Ann vom
Eigen, Deputy Executive Director and General Counsel of ABI, presented a
proposal for a lender handbook on BAPCPA to be produced and published
jointly by the ABI and the Mortgage Bankers Association and
America’s Community Bankers. The handbook would include basic
information for lenders on key issues arising in cases under the
Bankruptcy Code, including the recent changes effected by BAPCPA. Anyone
interested in participating in the project should contact Ann vom
Eigen.
2005 Winter Leadership
Conference
The Joint
Committee Meeting of the Ethics and Consumer Bankruptcy Law Committees
of the ABI featured a lively panel discussion on the effects of BAPCPA
on the practices of consumer bankruptcy lawyers for both debtors and
creditors. The distinguished panel consisted of Professor Jean Braucher
(Univ. of Arizona), Steven Jay Katzman (UST for Regions 15 and 16
(acting)), Richard Nelson (Cohen, Todd, Kite & Stanford, LLC,
Cincinnati, OH), and Thomas Yerbich (Rules Atty, D. AK). The discussion
was moderated by outgoing Ethics Committee Co-Chair Richard Carmody
—(Adams and Reese LLP, Birmingham, AL). Many of the approximately
fifty attendees participated in the discussion with questions and
comments.
The panel’s
presentation focused upon consideration of the designation "Debt Relief
Agency" and the ethical problems created by attorneys and petition
preparers being so designated. Steve Katzman provided a helpful
power-point presentation concerning the salient provisions of the new
Act involving "DRAs". From those provisions there flowed a discussion of
the Act’s impact on the attorney-client privilege, the impact on
state ethics requirements, advertising and possible suits against
DRA’s by "assisted persons". The panel focused, in particular, on
the potential for litigation by "assisted persons", which has attracted
the attention of malpractice insurers.
The panel next
discussed the duties of, and risks to, Debt Relief Agencies who must
advise their clients on disclosure, values and the incurring of
additional debt. This led to observations on the retention letter
process as a way of clarifying responsibilities for clients and their
counsel. Several comments were made, and a colloquy ensued, on the
ability of attorneys to "unbundle"; their services in an a la
carte fashion. The consensus of the panel was that the core
debtor representation should not be allowed to be unbundled, although
some federal districts would apparently allow the practice.
Finally, the panel
discussed the effect of the Act on the pro bono practices
of historically non-consumer firms. Since a pro bono case
does not involve charging a fee for services to an "assisted person", it
was posited that the firms should not bear the DRA designation. However,
the panelists generally agreed that if such work can be done under the
auspices of a §501(c)(3) entity, attorneys could achieve greater
assurance of non-DRA status.
Two observations
merit further attention. The new Act is going to increase the workload
on both debtor’s counsel and bankruptcy case trustees. However,
while counsel can increase their fees, the trustee’s fees were not
increased by BAPCPA. In addition, it is expected that US Trustee
enforcement of the Act’s provisions will focus on those
practitioners who are seen as trying to shirk their responsibilities in
representing debtors and creditors in consumer case
The meeting
concluded with remarks by Co-Chairs for both the Ethics and Consumer
Bankruptcy Law Committees and requests that committee members "get
involved" . To that end, ABI members interested in writing, programming
and/or other activities of the Ethics Committee are urged to contact
Ethics Co-Chairs, Rick
Meth (973-966-8319) and/or Terri
Gardner (919-783-1037); those interested in the Consumer
Bankruptcy Law Committee should contact the Hon. Dennis R. Dowor Hon.Thomas F.
Waldron.
2005 Annual Spring Meeting
Documentation
requirements for proofs of claim, particularly those based upon credit
card usage, were the principal focus of the meeting of the Consumer
Committee at the ABI Annual Spring Meeting. The panel, consisting of
Alane Becket of Becket & Lee, David Lin of Robert J. Semrad &
Associates and Elizabeth Gibson, Professor of Law at the University of
North Carolina, analyzed a series of recent decisions discussing the
required documentation for these kinds of claims and the consequences of
failure to provide it. The panel also discussed recent developments in
this litigation as well as practical ways of dealing with these issues
through enhanced communication and cooperation between counsel for
debtors and creditors.
As was the case
with many other committee meetings at the Annual Spring Meeting, the
Consumer Committee also devoted a portion of its time to discussing
certain aspects of the new bankruptcy legislation. Tom Yerbich
highlighted those provisions of the act which had already become
effective as of that date, including certain limitations on the
debtor’s right to claim homestead exemptions. The committee then
spent some time advising members of various resources which were
available through ABI and elsewhere providing summaries and analyses of
the new legislation, including a synopsis prepared by Tom Yerbich and a
summary and analysis by Judge Eugene Wedoff, both of which are posted on
the ABI legislative page. Members were informed of the on-line seminar
sponsored by ABI on May 3 on the consumer provisions of the legislation
in which the committee leaders participated along with Sam Gerdano,
Executive Director of the ABI, and Professor Jeffrey Morris, ABI’s
current scholar-in-residence. The committee also discussed its plans to
publish a special series of newsletter articles over the next six months
on consumer aspects of the legislation. Mention was also made of the
second edition of ABI’s publication Fundamentals of Chapter 7
and Chapter 13 of the U.S. Bankruptcy Code, written by Tom Yerbich,
which is scheduled for publication in early fall.
2004 Winter Leadership
Conference
The committee
teamed up with Professional Compensation to present “Court
Oversight of Creditor Professional Fees in Consumer Bankruptcy Cases:
Urban Myth or Developing Practice Area,” a discussion of issues
relating to the allowance of creditor’s professional fees in
chapter 7 and chapter 13 cases. In light of the increasing frequency of
contracts that provide for attorney or “collection fees” in
the world of consumer finance and the growing trend toward
“nationalization” of consumer creditor practice in consumer
bankruptcy cases, this is a topic of increasing importance to both
debtor and creditor counsel. In addition, a review of “Waiver and
Disclosure Issues in Bankruptcy Proceedings: Fleming,
Jore, 11 U.S.C. §329 and Beyond,” was discussed, as
well as important developments in the “Area of Disclosure by
Court-appointed Counsel in Bankruptcy Proceedings,” which focused
on the obligations of debtor’s counsel in consumer cases under 11
U.S.C. §329 and the developing impact of the recent Decisions of
Fleming and Jore in business proceedings.
2004 Annual Spring Meeting
Compensation of
debtors’ counsel in consumer cases was the focus of the Consumer
Committee meeting held on April 16, 2004, and attended by approximately
50 members. The program featured a panel discussion led by Hon. Jennie
Latta of the Western District of Tennessee, Diane Livingstone, an
Assistant U.S. Trustee from Region 7, and Marjorie Payne Britt, a
bankruptcy practitioner in Houston. Topics included recent holdings by
the U.S. Supreme Court in Lamie v. U.S. Trustee and the
Seventh Circuit’s decision in Bethea v. Adams &
Associates and their implications for debtor’s counsel
and the provision of legal services to debtors in chapter 7 cases. Judge
Latta prepared an analysis of these decisions and their impact which is
included in the conference educational materials. In addition, articles
on both cases appear in the first quarterly edition of the Consumer
Committee’s electronic newsletter on the ABI web site. Additional
topics included the status of limited representation and unbundling of
legal services as reflected in revisions to various state codes of
ethics and professional responsibility and decisions of both state and
federal courts. Also discussed were the varying approaches taken to
compensation of debtor’s counsel in chapter 13 cases across the
country, including the concept of a presumptive or "no-look" fee
available to counsel in some jurisdictions and the requirements for
earning that fee. These latter two topics are discussed in detail in a
comprehensive outline prepared by Hon. David Kennedy of the Western
District of Tennessee and included in the conference materials. A
reprint of Tom Yerbich’s article on limited representation
appearing in a recent edition of the ABI Journal was also made
available to those who attended the meeting.
2003 Winter Leadership
Conference
The Consumer
Committee meeting was held on Dec. 5, 2003. An estimated 45
members attended (37 signed in). The meeting started with a brief
update on the status of H.R. 975 by Judge Eugene Wedoff,
co-chair. This was followed by a report on the quarterly committee
electronic newsletter by Judge Dennis Dow, co-vice-chair. An
educational program on hot issues in chapter 13 cases was presented
by Judge Thomas Waldron, Richardo Kilpatrick and John Rao with
significant participation by those in attendance. The subjects
included cramdown interest rates in chapter 13, residential mortgages
and the treatment of arrearages in the plan, including situations where
there is a conflict between the treatment in the plan and the proof of
claim filed by the creditor.
2003 Annual Spring Meeting
REMEDIES FOR ABUSIVE SERIAL FILINGS
FOCUS OF CONSUMER BANKRUPTCY COMMITTEE MEETING
AT ANNUAL SPRING MEETING
On
the agenda at the session of the Consumer Bankruptcy Committee at the
Annual Spring Meeting was a program on efforts to formulate effective
remedies for the problem of abusive serial filers. The program,
presented by the Honorable Audrey Evans of the United States Bankruptcy
Court for the Eastern and Western Districts of Arkansas and Pat Mears of
Dickinson, Wright in Grand Rapids, Michigan reviewed and analyzed the
ways in which courts and creditors have sought to deal with the problem
of debtors filing successive petitions for relief to invoke the
automatic stay and forestall creditor efforts to foreclose on
collateral. Starting with the statutory framework relating to serial
filings, the materials (click HERE for a link to outline) outline the history
of the judicial response to the issue starting with the development and
application of the concept of good faith in filing and conclude with a
discussion of conventional procedural remedies like annulment of the
automatic stay and more creative recent responses including the entry of
in rem orders granting prospective relief from the automatic stay and
binding upon any owner of the subject property. Also discussed are
ethical issues for consideration by debtor’s counsel.
2002 Winter Leadership
Conference
The Consumer
Bankruptcy Committee's meeting was attended by 39 members. Committee
co-chair Judge William Brown presided over the meeting and solicited
committee member involvement in two new committee projects: A
Consumer Bankruptcy Manual to be published by ABI and a
Consumer Committee Newsletter to be published on ABI's web site and sent
to the committee's listserve periodically. Several members expressed an
interest in participating in these projects. The committee's co-chairs
and vice chairs will select editors for the newsletter, with the
expectation that a new edition would appear at least quarterly on the
web site. Members who were not able to attend the Winter Meeting but who
are interested in helping to write or edit sections of the
Manual or the newsletter are encouraged to contact Judge
Brown.
As in past
meetings, it was suggested that if the bankruptcy bill is reintroduced
in the next Congress and is enacted, the committee's members would be
active in education on changes in consumer bankruptcy law.
Following these
discussions, Judge Jim Marlar of the Bankruptcy Court in Arizona and a
member of the 9th Circuit Bankruptcy Appellate Panel discussed appeals
of consumer cases and issues. His discussion focused upon five consumer
opinions issued by the 9th Circuit BAP in the past year.
After Judge
Marlar's presentation, Judge Steven Rhodes, Chief Judge of the
Bankruptcy Court for the Eastern District of Michigan and Chief Judge of
the 6th Circuit¹s Bankruptcy Appellate Panel, discussed his
empirical study of the omissions and errors in disclosure by individual
chapter 7 debtors of assets in their bankruptcy schedules. An initial
summary of his study appears in the May 2002 issue of Norton
Bankruptcy Law Adviser, which is available on WestLaw, and a
more complete law review article is expected in the future.
Following up on
Judge Rhodes's presentation, Committee Vice Chair Tom Yerbich discussed
the District of Alaska revision of its local rules, in part to address
obtaining more complete and accurate disclosure of assets in the
schedules.
Subsequent to the
committee's formal meeting, some of the members met with John Penn,
ABI's Vice President-Publications, to discuss the proposed Consumer
Bankruptcy Manual. There seemed to be a consensus that this
manual would be a primer suitable for introducing new attorneys and
their staffs to the basics of consumer bankruptcy. Moreover, the manual
might be used for debtor education. The possibility of using portions of
the manual for a brochure that attorneys might give to consumer clients
was suggested. Also, as a separate publication, some in attendance
suggested that a primer on consumer bankruptcy, written from the
perspective of creditors, might be a useful tool for creditor attorneys
to provide to their clients. Committee Vice Chair Tom Yerbich offered as
a substantial start on the consumer manual materials that he had
written, and Tom's primer will be circulated among interested members
and the Publications Committee for comment.
The goal of the
Publications Committee is to have the initial consumer manual in
publication by the Spring 2003 Meeting in order that it might be used as
a part of the material for the Boot Camp program planned by ABI for new
attorneys.
2002 Annual Spring Meeting
The Consumer
Committee met at 9:30 a.m. on Friday, April 19, 2002 at the 20th Annual
Meeting, with approximately 75 members attending. The meeting began with
a discussion of the status of the pending Bankruptcy Reform Bill. Many
members and the chairs had attended the Legislative Committee meeting
earlier that morning and heard from Congressional staffers. The
Committee's actions for 2002-3 depend upon the enactment of the pending
Reform Bill. The members were advised that should the Reform Bill become
law this year, the Committee would solicit their help in educational
projects on the new law. It is contemplated that this Committee would be
actively involved in teaching the changes in the law to Committee
members, who in turn would be active in legal education on a regional
and local level. If it becomes law, the Committee's co-chair Judge
Wedoff will immediately update his summary of the law's changes and
impacts for the ABI website and other publications.
Following a
discussion of the Reform Bill's status, the Committee's education
program was presented by ABI Member, Judge Jennie D. Latta of the
Western District of Tennessee, who reviewed recent decisions under Code
sections 523(a)(2) and (a)(6), as well as implications of section
523(a)(3). The discussion included active participation by the chairs
and vice chairs of the Committee, as well as many questions and comments
from attendees.
2001 Winter Leadership
Conference
The committee
presented a four-part educational program. First, Judge Wedoff presented
a very brief report on the status of the bankruptcy reform legislation
and encouraged attendance at the Legislative Committee for a detailed
treatment of the subject. Second, Dennis Dow gave an overview of the
impact of the Gramm-Leach-Bliley Act (dealing with privacy of fiancial
information) on consumer bankruptcy practice. Third, Russ Reyolds, from
the San Diego bankruptcy clerk's office, gave a demonstration (with live
connection) of that court's electronic filing system. Finally, Tom
Yerbich discussed practical issues involved in the transition to
electronic filing. There was lively discussion of all of the
non-legislative issues.
2001 Annual Spring
Meeting
The Consumer
Bankruptcy Committee meeting focused on the means test in the pending
Bankruptcy Reform Act. Co-chair Judge Wedoff provided an example of
joint chapter 7 debtors that would be subject to the test, and, in going
through the application of the test and its related Internal Revenue
Service standards, the discussion pointed out numerous areas of
potential litigation for both creditors and debtors. Based on an
assumption that the pending legislation will be enacted this year, the
committee members were urged to become involved in educating
practitioners about the new law.
2000 Winter Leadership
Conference
The Consumer
Committee meeting included the following: (1) a brief update on the
status of the pending legislation, with a cautious prediction that it
was unlikely to be enacted into law this term; (2) a thorough discussion
of cramdown in Chapter 13 in the aftermath of the Supreme Court's Rash
decision; and (3) a brief talk by Professor Rafi Efrat on comparative
consumer bankruptcy laws and their social/legal environments (with the
thesis that a more liberal discharge is appropriate where the social
support system is less extensive).
2000 Annual Spring
Meeting
The Consumer
Bankruptcy Committee met at 8:00 a.m. on Sunday, April 30, 2000, with an
excellent attendance. The session was chaired by Judge William Houston
Brown, of the Western District of Tenn.; Kent V. Snyder, of Portland,
Ore.; and Thomas A. Lee III, of Malvern, Pa. The program, which
qualified for continuing legal education credit, with ample written
material to support it, consisted of the following
presentations:
Judge Elizabeth
Perris of the District of Oregon led a discussion of reaffirmation and
redemption practices and problems. The new recommended reaffirmation
form issued by the Administrative Office of the U.S. Courts was
examined, as were the variations in practice concerning reaffirmation
hearings.
Judge Eugene
Wedoff of the Northern District of Illinois, co-chair of the committee,
was unable to attend this year's annual meeting; however, Judge Wedoff's
video presentation of tenancy by entirety property interests, prepared
by the Federal Judicial Center, was shown and a discussion of entireties
issues followed.
The committee did
not discuss the pending legislation in depth, since many members had
attended the Legislation Committeeºs session on April
29.
1999 Winter Leadership
Conference
Since the status
of the passage of bankruptcy reform legislation is still somewhat
uncertain, the Legislation and Consumer Bankruptcy Committees thought
that a joint presentation discussion the various versions of the
legislation would be helpful. Consequently, Bankruptcy Judges William H.
Brown (W.D. Tenn.), Eugene Wedoff (N.D. Ill.), Wesley Steen (S.D. Texas)
and David W. Houston III (N.D. Miss.) jointly presided over an open
forum discussion of H.R. 833, the bankruptcy reform bill that passed the
U.S. House of Representatives on May 5, 1999, and S. 625, which is
currently pending in the U.S. Senate. As a part of the program, chapter
13 Trustee Henry Hildebrand (M.D. Tenn.) discussed the results of a
study undertaken through the auspices of the National Association of
Chapter 13 Trustees concerning the impact of the reform legislation on
bankruptcy filings. The first part of the bifurcated presentation
focused on the likelihood of the passage of reform legislation,
particularly on recent developments in the Senate. Judge Houston
reported that Senate Majority Leader Trent Lott (R-Miss.) had filed a
petition for cloture to curtail debate on S. 625 just prior to the
congressional recess. The petition is returnable to Jan. 25, 2000, the
second day after the Senate reconvenes. The success of the cloture
petition will, in large part, be dependent on negotiations and
compromises reached by Republicans and Democrats who are interested in
this legislation, either directly or tangentially.
One of the
principal issues of concern in the reform legislation is the concept of
"needs-based bankruptcy," or "means testing." Judge Wedoff discussed the
differences in the respective approaches to means testing taken by the
House and Senate. A critical component of means testing is the use of
Internal Revenue Service guidelines to calculate a debtor's reasonable
living expenses. Although the stated purpose of the reform legislation
is to compel more debtors to file chapter 13 bankruptcies as opposed to
chapter 7 liquidations, the second segment of the presentation focused
on some of the modifications to chapter 13 that would be considered
disincentives to file under that chapter. The discussion focused on (a)
the "anti-cramdown" provisions that would be applicable to debts secured
by automobiles and other personal property; (b) the expanded exceptions
to dischargeability that would be incorporated into chapter 13; (c) the
treatment that would be required for alimony and support obligations,
particularly as conditions of confirmation and discharge; (d) credit
counseling as a condition of bankruptcy eligibility, and debt management
education as a condition of discharge; and (e) the expanded role
required of panel and standing trustees in monitoring debtor
eligibility.
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