Consumer Bankruptcy Committee

ABI Committee News

Let Your ABI Membership Work for You!

The Consumer Committee is always working to enhance its services to its members. Thomas  R. Dominczyk of Maurice & Needleman PC recently began an enhanced service to the listserve community by culling the Collier Bankruptcy Case Update for cases of particular relevance to consumer practioners, which are compiled and posted to the listserve weekly. Click here to view past updates.

Members who become active in their committees enjoy greater visibility in the bankruptcy community. If you want to become more active in the Consumer Committee, consider volunteering for an open committee position or writing for the newsletter. There are many opportunities, and you can contact your committee chairs.

Take advantage of the committee's listserve, moderated by Caralyce M. Lassner of Dundon Scarletta & Lassner PLC. This invaluable resource is available to all committee members. Post your questions and get informed answers from your colleagues. The Consumer Bankruptcy Committee's listserve address is abi_consumer_bankruptcy@dizzy.abiworld.org. This year's Consumer Committee session at the Annual Spring Meeting was a result of suggestions made for the topic on the listserve!

ABI is pleased to announce the appointment of Alane Becket to Co-Chair of the Consumer Bankruptcy Committee. Ms. Becket is the Managing Partner at Becket & Lee, LLP in Malvern, Pa. and has been intimately involved with the committee for years. She joins Hon. C. Ray Mullins of the U.S. Bankruptcy Court (N.D.Ga.) in Atlanta as Co-Chair. Congratulations, Alane!

 

Case Update: Whether a Claimed Expense Qualifies as an Adjustment to the Means Test Expenses Due to "Special Circumstances"

The Bankruptcy Code specifically provides for adjustments of current monthly income or expenses due to "special circumstances," but in order to qualify, there must be "no reasonable alternative." The Code sets forth a test, placing the burden of proof on the debtor to determine if a requested adjustment qualifies as a special circumstance: "In order to establish special circumstances, the debtor shall be required to itemize each additional expense or adjustment to income; and to provide (1) documentation for such expense or adjustment to income and (2) a detailed explanation of the special circumstances that make such expenses or adjustment to income necessary and reasonable."

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Case Update: Whether Debtors May Deduct College Expenses for Adult Children

Bankruptcy courts addressing the issue of whether debtors may deduct college expenses for their adult children post-BAPCPA have found no statutory support for such deduction. The Bankruptcy Code allows deductions for some education expenses, but limits deductions for elementary and secondary education expenses. While the Code allows debtors to deduct expenses for contributions to family members, it is limited to elderly, chronically ill or disabled family members. College expenses for adult children do not fall into these statutory provisions and therefore are not supported under BAPCPA.

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Fifth Circuit Affirms the Power of the Bankruptcy Court to Render Monetary Judgment

The Fifth Circuit recently affirmed a district court decision that had affirmed a bankruptcy court's decision to adjudge a debt nondischargeable pursuant to 11 U.S.C. §523(a)(2)(B) in the individual chapter 7 case of the principal shareholder of an excavating company.[1] According to the lower court, in winning a subcontract for his company on the strength of materially false and intentionally deceptive financial statements, the individual was personally liable because, in violating §523(a)(2)(B), he was culpable either for acts of common-law fraud or as a corporate agent reachable by piercing the corporate veil.

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On Gunslingers, Presumptions and Burdens of Proof

There have been an increasing number of cases dealing with objections to assigned credit card debt. These cases are a bit like a showdown between gunfighters with bad aim; there is a lot of shooting, but no one hits anything. While a gunfight where no one gets shot is a good thing, the court must still decide whether to allow or disallow the claim even when there is little or no evidence introduced. As a result, rules on presumptions and burden of proof often dictate the result. 

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Case Summaries: Court Scrutiny of Attorney Representation

Courts are taking a close look at the relationship between attorney and client and imposing strict compliance with retainer agreements and ethical rules. The following cases show how both debtor and creditor attorneys are being held to the highest standards of professionalism and competence.

Debtor's Counsel Cannot Refuse Representation in Special Matter

Recently, the U.S. Bankruptcy Court for the Western District of New York, in a combined treatment of two chapter 7 cases involving the same trustee and debtor's attorney, penalized the attorney for delaying the cases and failing to comply with the  supplemental reporting requirements of Fed. R. Bankr. P. 2016(b).[1] The debtor's attorney refused to appear to defend against the trustee's motion for turnover of assets unless he was compensated by additional fees. After the trustee moved to force the attorney to disgorge his fees already received, the attorney appeared at the coincident hearing on both motions.  While the turnover issues were resolved and the clients satisfied, the fee issue was not.

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In Oklahoma, It's "All Er Nuthin'" [1]: Representation for Reaffirmation Required as a "Core Service"

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Attorney for Creditor/Movant Cannot Make Affirmations without Foundation

The U.S. Bankruptcy Court for the District of Idaho recently sustained a chapter 7 trustee's objection to a creditor's motion for relief from the automatic stay pursuant to 11 U.S.C. §362(d).[1] Under circumstances of serial assignment of an interest that are more the rule in real property mortgage lending than the exception, the court found that the movant failed to show its standing as the real party in interest, with a pecuniary interest or at least an actual stake in the outcome, able to press its cause. The court found that the movant, which styled itself as the "nominee," (or beneficiary) of the lender, could not show its standing because it acted solely in a representative capacity rather than for its own account. The only documentation provided with the motion failed to show that the movant held the note secured by the debtors' real property.

Read the full summary.