Official Bankruptcy Rule Changes Effective December 1, 2017

Rule 1001: “These rules should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.

Rule 1006: requires that an individual debtor’s petition must be accepted for filing so long as the debtor submits a signed application to pay the filing fee in installments. Rule 1017 (b) (1) allows for a dismissal of the case for the failure to pay any installment of the filing fee only “after a hearing on notice to the debtor and the trustee.”

Rule 1015(b): Husband and wife is replaced with spouses.

Rule 3015 and 3015.1(NEW): Requires use of an appropriate official form for chapter 13 plans. Objections to plan confirmation are to be made at least 7 days before the date set for confirmation hearing, and valuation of a secured claim is binding on the holder of the claim.

Rule 2002: notice of time to object to confirmation of Chapter 13 plan is 21 days, notice of confirmation hearing is 28 days.

Rule 3002: Holder of secured claim must file proof of claim to have an allowed secured claim. Bar date in Chapter 12 and 13 cases is 70 days, with an additional 50 days for mortgage holders to provide supplemental documents. The court may extend the time to file proof of claim for insufficient notice.

Rule 3007: Service of claim objection on most claimants is by mailing notice to the person listed on the proof of claim. Rule 7004 governs service on depository institutions.

Rule 3012: Request to value in the Chapter 13 Plan governed by Rule 7004(b), and service for claim objections and motions to value are governed by Rules 3007(a) and 9014(b).

Rule 4003: Lien avoidance can proceed under the chapter 13 plan, or by motion.

Rule 5009: Debtor can obtain an order declaring that a secured claim has been satisfied, and lien released under the terms of the Chapter 13 Plan.

Rule 7001: Rule 3012 valuation and lien avoidance do not require an adversary proceeding.

Rule 9009: The rule allows deviations from an Official Form if permitted by the national instructions for the form in addition to those deviations permitted by the Bankruptcy Rules or the form itself. It also allows “minor changes not affecting wording or the order of presenting information” on a form.

Florida's Constitution Revision Commission Proposed Changes

Florida’s Constitution Revision Commission meets every 20 years to propose changes to the state constitution.  The Commission has met and has finalized proposed amendments. For a brief description of the 103 proposals that could appear on the ballot in November 2018, click the link below:

http://www.sun-sentinel.com/news/politics/florida-politics-blog/fl-reg-constitution-revision-commission-final-proposals-20171120-story.html

How To Pick a Bankruptcy Attorney

 I, along with all bankruptcy attorneys in Northeast Florida, receive calls on a regular basis asking what our fees are for filing bankruptcy.  I suspect these people essentially don't know what they don't know.  If the caller is planning on filing bankruptcy, he or she is asking the wrong question. 

Bobby Wilbert, a bankruptcy attorney in Jacksonville, Florida, recently posted a link on his website to a concise blog page I thought was very good concerning picking an attorney, posted by Cathy Moran.  She relates the hiring of a bankruptcy attorney to picking a coach, not calling around for the cheapest price or looking for the attorney that shows up first in search results on the internet.  The link to the article is 

https://www.bankruptcyinbrief.com/selecting/

Debtor Wins Discharge of Student Loan Debt

Think the private loan you have for education is an educational loan?  You may want to have an attorney review it after a recent decision.

Yolande E. Essangui v. SLF V-2015 Trust, et al., Adversary No.16-00201,
Main case 16-12984

The issue before the Court is whether a private loan extended for educational purposes is dischargeable in a debtor’s chapter 7 case. There are three (3) subsections addressing educational debt that is excepted from discharge.  Apparently the argument was centered on which of the 3 sections is applicable in determining the loans dischargeability.  Based on the facts of this case, the Court held that the private student loan at issue is not an educational benefit, as it did not qualify for federal student loan assistance.  The Court entered an Order granting the debtor’s motion for summary judgment and denying the defendant’s motion for summary judgment.

Student Loan Debt Holders Could Be In Trouble

I recently received an email from Bobby Wilbert's Facebook account referencing private student loan debts, and how the holders of these debts could be in trouble.  Student loans have been bundled and sold. 

Remember the mortgage loan crisis. 

The following article addresses an impending similar crisis for private student loan holders:

http://www.dailynews.com/opinion/20170722/student-loan-bundlers-scheme-blowing-up-in-their-faces-james-poulos

11th Circuit Upholds Use Of Means Test In Converted Cases from Chapter 13 To Chapter 7

The 11^th Circuit Court of Appeals recently decided Stratton C. Pollitzer, vs. Guy G. Gebhardt, which upheld the use of the means test in a converted case from Chapter 13 to Chapter 7 under §707(b).  Although the bankruptcy code does not state the means test is to be used in a converted case, it does not deny its usage, and the 11th Circuit concluded it was congresses intent for it to be used.  

The case can be viewed in its entirety at http://media.ca11.uscourts.gov/opinions/pub/files/201611506.pdf

Midland Funding LLC v. Johnson: OK to file Proof of Claim on Time Barred Debt

Today, May 15, 2017, the Supreme Court of the United States decided Midland Funding, LLC v. Johnson, 581 U.S. ___ (2017).

Holding: The filing of a proof of claim that is obviously time barred is not a false, deceptive, misleading, unfair or unconscionable debt-collection practice within the meaning of the Fair Debt Collection Practices Act.

Midland Funding filed a proof of claim in Johnson’s Chapter 13 bankruptcy case. It asserted that Johnson owed Midland debt on a credit card. The last time any charge appeared on Johnson’s account was more than 10 years ago. The relevant statute of limitations under Alabama law is six years. Johnson objected to the claim, and the Bankruptcy Court disallowed it.

Johnson sued Midland, claiming that its filing a proof of claim on an obviously time-barred debt was “false,” “deceptive,” “misleading,” “unconscionable,” and “unfair” within the meaning of the Fair Debt Collection Practices Act, 15 U. S. C. §§1692e, 1692f. The District Court held that the Act did not apply and dismissed the suit. The Eleventh Circuit reversed. The Supreme Court reversed, holding the filing of a proof of claim on a time barred debt is not a false, deceptive, misleading, unfair or unconscionable debt collection within the meaning of the Fair Debt Collection Practices Act.

While the decision has not been published yet, the Syllabus containing the decision can be viewed at https://www.supremecourt.gov/opinions/16pdf/16-348_h315.pdf

Bankruptcy Fees Likely to Increase in 2017

According to President Trump's budget proposal, the filing for bankruptcy would likely cost more.

The budget includes a provision that would raise an additional $150 million in 2017 through higher filing fees. The budget aims to generate an additional $150 million in 2017, and $289 million in 2018, in addition to the $138 million already generated.

Although it is too early to know which filing fees will increase, the increased fees would go to the Department of Justice's United States Trustee Program. The Trustees oversee bankruptcy filings.
Currently, the filing fee for Chapter 7 bankruptcy, the most common type of petition, is $335. Other filing fees range from $310 for Chapter 13 to $1,717 for Chapters 9, 11 and 15. Additional costs come from attorney's fees and required financial counseling.

It will be interesting to see if anyone challenges the fee on the basis of restricting access to the Courts. Should this pass, it will be interesting to see how much of an increase in filing of fee waiver applications.

So, what are the fees now?  Let's take a look.

According to President Trump's budget proposal, the filing for bankruptcy would likely cost more.
The budget includes a provision that would raise an additional $150 million in 2017 through higher filing fees. The budget aims to generate an additional $150 million in 2017, and $289 million in 2018, in addition to the $138 million already generated.
Although it is too early to know which filing fees will increase, the increased fees would go to the Department of Justice's United States Trustee Program. The Trustees oversee bankruptcy filings.
Currently, the filing fee for Chapter 7 bankruptcy, the most common type of petition, is $335. Other filing fees range from $310 for Chapter 13 to $1,717 for Chapters 9, 11 and 15. Additional costs come from attorney's fees and required financial counseling.
It will be interesting to see if anyone challenges the fee on the basis of restricting access to the Courts. Should this pass, it will be interesting to see the increase in the filing of fee waiver applications.
So, how much does it currently cost to file Let's take a look.

New Petition Filing Fees (as of 3/18/2017)
Chapter 7 Voluntary or Involuntary
$ 335.00 [$245 filing fee + $75 administrative fee + $15 trustee surcharge]

Chapter 9
$1,717.00 [$1167 filing fee + $550 administrative fee]

Chapter 11 Voluntary or Involuntary
$1,717.00 [$1167 filing fee + $550 administrative fee]

Chapter 12
$ 275.00 [$200 filing fee + $75 administrative fee]

Chapter 13
$ 310.00 [$235 filing fee + $75 administrative fee]

Chapter 15
$1,717.00 [$1167 filing fee + $550 administrative fee]

Bankruptcy: An Effective Social Policy That Reduces Stress, Live Longer

Over the past 15 years or so, people have come into my office to file bankruptcy for many different reasons.  While no 2 bankruptcies are the same, they generally wind up falling into one of two distinctive categories: financial or debt relief, and relief for medical reasons.

While the first of these 2 categories may seem obvious, as that is what is disseminated through the various news agencies, the other is rarely, if ever, mentioned.  Financial or debt relief is obvious, and is centered around the construction, and reconstruction, of the bankruptcy code, its rules, and most case law, while the two are actually inextricably intertwined.  The other being medical, does not appear to have been contemplated  by congress.

There are two forces at work here.  The first is on the debt collection side.  They are either trying to collect on money lent to the debtor, or collecting on moneys owed to the creditor for some other reason, such as a judgment.  The creditor simply wants to be paid moneys owed to them, and when the debt is beyond a debtor's means of being able to pay, the debtor is forced to look at other means of relief, such as bankruptcy.

The other construct being medical, is almost exclusively from the debtor's side.  Collection efforts are initiated with little regard to a particular debtor's circumstances.  A debtor may have medical bills resulting from heart or blood pressure issues, or the debtor may have unresolved mental issues.  The tactics used by debt collectors push people to resort to legal remedies, including bankruptcy, to reduce stress, lower blood pressure, and conform mentally with doctor's recommendations.

According to a paper released by the National Bureau of Economic Research, "economists Will Dobbie and Jae Song examine 500,000 bankruptcy filings in the United States to measure the effect of bankruptcy laws on consumers. They found that the bankruptcy code is an incredibly effective social insurance policy. According to their findings, getting approved for Chapter 13 bankruptcy protection 'increases annual earnings by $5,562, decreases five-year mortality by 1.2 percentage points, and decreases five-year foreclosure rates by 19.1 percentage points.'"

"The paper's authors argue that bankruptcy protection helps workers earn more by removing the disincentive to work resulting from creditors garnishing worker's paychecks. If a person's wages are garnished to the point that it didn't pay to continue working, they often decide to stop working altogether.

The study also found that bankruptcy also helps people live longer, due likely to the fact that dealing with debt problems, rather then letting them fester, significantly reduces stress. Chapter 13 bankruptcy also allows people to stay in their homes because it is designed specifically to allow borrowers to avoid foreclosure."

To read the complete article, see bankruptcy-law-inequality-income

Lee Ann Bennett Appointed To Administrative Office of US Courts

Congratulations to Lee Ann Bennett in her appointment by Supreme Court Chief Justice John G. Roberts, Jr. as the new deputy director of the Administrative Office of the U.S. Courts.  Bennett will serve as deputy to AO Director James C. Duff.  On behalf of the bankruptcy attorneys that practice in the Middle District of Florida, Jacksonville Division, we thank her for a job well done, and wish her much success in her new job.


For more information, see

http://www.uscourts.gov/news/2017/02/23/new-ao-deputy-director-named