A bankruptcy judge did not have the discretion to confirm a Chapter 13 plan that failed to comply with the Bankruptcy Code's "hanging paragraph," the 6th Circuit has ruled in affirming a decision denying confirmation. Under 11 U.S.C. [section]1325(a), a Chapter 13 debtor who still owes money on an automobile may elect to keep the vehicle and "bifurcate" the creditor's fully secured claim into a secured portion, representing the present value of the vehicle, and an unsecured portion. However, the Bankruptcy Abuse Prevention and Consumer Protection Act added a "hanging paragraph" to [section]1325. The hanging paragraph has generally been interpreted to prohibit bifurcation with respect to a vehicle purchased by the debtor within 910 days of filing for bankruptcy.
General Motors Acceptance Corp. (GMAC) asked the U.S. Bankruptcy Court for the Western District of New York to consider a retail installment contract as an executory contract, in reviewing a Chapter 13 plan in In re: Joseph D. Godsey, Jr. The district's chief bankruptcy judge, Judge John C. Ninfo, II, denied the creditor's objection to the Chapter 13 plan, finding no basis in law to classify GMAC's standard financing contract as executory to have the bankruptcy stay lifted. The court confirmed the debtor's plan to pay the replacement value of the vehicle in question, plus interest as determined by the court. Any balance on the loan would be treated as an unsecured claim.
A confirmed Chapter 13 plan may be modified after a refinancing or home sale in some cases, the 4th Circuit has ruled in two consolidated cases. The debtors in the first case objected to the Chapter 13 trustee's request that $64,365 from their refinancing be paid to the trustee to allow for the payment of all claims at a rate of 100 percent. A bankruptcy judge denied the trustee's request.
The Chapter 7 Plan is an alternative to the Chapter 13 Debt Consolidation Plan. If you cannot afford the lower, interest-free monthly payment with the Chapter 13 Debt Consolidation Plan, for example because of a job loss or inability to work because of an illness or injury then we look at the Chapter 7 Plan for you. The basic purpose of the Chapter 7 Plan is to legally eliminate all of your bills and allow you to Get A Financial Fresh Start.(TM) A Chapter 7 Plan is for individuals and small businesses wishing to eliminate all their debt who cannot afford to pay the lower, interest-free monthly payment under the Chapter 13 Debt Consolidation Plan. Mr. [Ruben E. Vasquez, Esq] is also a frequent author and speaker at consumer bankruptcy seminars. He has authored and spoken on: debtors' att...
Married debtors were not entitled to a drastic reduction in their monthly payment obligations under their confirmed bankruptcy plan when one of them lost a second job, the 8th has ruled in affirming judgment. The debtors were obligated to pay the bankruptcy trustee $1,890 per month for a period of 60 months under the terms of a Chapter 13 plan. Their monthly payment was based on a monthly disposable income that included $2,700 in Social Security benefits, even though the Bankruptcy Code generally excludes Social Security income from a debtor's required payments in a Chapter 13 plan.
The second part in a series of special reports summarizes the significant judicial developments affecting asset-based lending in 2004-2005. In Till v. SCS Credit Corp (2004), the Supreme Court held that the interest rate to be ascribed to a "cram down" installment payment provided for in a chapter 13 plan was the "formula rate," defined as the prime rate to be enhanced by a risk factor typically ranging from 1% to 3%. In United Airlines Inc v. US Bank N. A. (2005), the US Court of Appeals for the Seventh Circuit rendered a very significant decision protecting creditor interests in aircraft equipment. In JP Morgan Chase Bank v. Altos Hornos De Mex S. A . de C. V. (2004), the US District Court for the Southern District of New York held that proceeds of receivables held in a bank account i...
A Chapter 13 above-median debtor need not propose a payment plan with a 5-year "commitment period" where her projected disposable income turned out to be a negative number, the 9th Circuit has ruled. The trustee objected to confirmation of the plan because of its method of calculating the debtor's "projected disposable income" and its 3-year commitment period. The debtor argued that her "projected disposable income" under 11 U.S.C. [section]1325(b)(5) was properly calculated by multiplying her disposable income out over the "applicable commitment period.
This article grapples with the various proposed bills and urges the adoption of a more lenient statutory provision for chapter 13 debtors, while offering flexible solutions for those borrowers specifically affected by subprime mortgage lending. Part I provides background information about the subprime mortgage market, the interplay between foreclosure law and bankruptcy law, and the chapter 13 plan confirmation process. Part II discusses the adverse effects that the subprime mortgage crisis has had on other sectors of American society. Part III addresses the legislative history and Congressional intent behind Section 1322(b)(2) and the antimodification provision located therein. Part IV examines the Supreme Court's only decision interpreting Section 1 322(b)(2), as well as the lower cou...
A Chapter 13 plan that in essence only ensured the payment of attorney and trustee fees should not have been automatically rejected as having been filed in "bad faith," the 1st Circuit has ruled in reversing judgment. The debtor could not pay his legal fees at the time he retained his bankruptcy attorney. Instead, his attorney agreed to receive payment over time under the debtor's Chapter 13 plan. Accordingly, the debtor's bankruptcy plan called for the debtor to pay into the bankruptcy estate $100 per month for 36 months for a total of $3,600. Of that amount, only about $300 would be available for distribution to general creditors. Of the remainder, the debtor's attorney would receive $2,900 for his legal services and the trustee would receive $400 for his professional fee.
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