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November 21, 2007

Proposed Change to Bankruptcy Rules 8002 - re Time to File Notice of Appeal

This is from the US Courts website.  My personal view is that 10 days is too short. 

Request for Comment on Bankruptcy Rule 8002: Due by February 15, 2008

In August 2007, the Rules Committees published for public comment proposed amendments to the Appellate, Bankruptcy, Civil, and Criminal Rules governing the computation of time under the rules. Among other things, Bankruptcy Rule 8002 is proposed to be amended to set 14 days as the deadline for filing a notice of appeal from a judgment, order, or decree in a bankruptcy case.  The Advisory Committee on Bankruptcy Rules invites public comment on whether the proposed extension from 10 to 14 days would cause any material disruption in bankruptcy practice.  Comment is also invited on whether the deadline should be extended to 30 days, making it consistent with the 30-day general civil appellate deadline imposed by Federal Rule of Appellate Procedure 4(a)(1).  Comments on both issues can be submitted electronically. 

Comments should be submitted by February 15, 2008.

November 21, 2007 in Legislation | Permalink | Comments (0) | TrackBack

November 20, 2007

Bankruptcy Filings Up

For the third quarter ended September 30, 2007, bankruptcy filings increased 4% over the previous quarter and 28% over the same quarter a year ago. 

You can get all the facts and figures on the court website

November 20, 2007 in Bankruptcy Statistics | Permalink | Comments (0) | TrackBack

November 18, 2007

9th Circuit BAP Rules on Chapter 13 Plan Payments

Pak v. eCast Settlement Corporation (In re Pak)  ---- B.R. ----  (9th Cir. BAP  November, 2007)

Issue:  Must the court confirm a chapter 13 plan when the plan proposes to pay the B22 disposable income for the applicable commitment period even though the debtor is actually able to pay considerably more?            

Holding:  No. 

Judge Leslie Tchaikovsky
Dunn, Carroll, P, Klein
Opinion by Dunn  (Klein concurring)

The debtor’s income for the six months prior to filing was zero for four months, because he was unemployed, and $8,600 per month for the two months prepetition because he found a good job.  His current monthly income (“CMI”) was therefore about one-third of his actual monthly income on the petition date.  The debtor filed a chapter 7 petition on October 30, 2005, i.e., post-BAPCPA, and the UST filed a 707(b) motion which was granted.  He then converted to chapter 13.  His I and J net income was $990 per month.  He proposed a $300 plan for 36 months which was apparently his CMI less his monthly expenses.  The bankruptcy court denied confirmation of the plan and dismissed the case. 

The BAP affirmed.   The “statutory battleground” is Section 1325(b)(1)(B) which provides that the plan must “as of the effective date of the plan,” pay in “all of the debtor’s projected disposable income to be received in the applicable commitment period.”  Disposable income is defined in Section 1325(b)(2) as the debtor’s “current monthly income . . . less amounts reasonably necessary for the debtor’s maintenance and support . . .”  Current monthly income is defined in Section 101(10A) as the actual income received by the debtor during the six calendar months prepetition.  The debtor argued, of course, that the starting point is the defined CMI and not the actual income set forth on Schedule I. 

The BAP pointed out at the outset that BAPCPA did not change the language in 1325(b)(1)(B) that the plan must pay the debtor’s “projected disposable income.”  It “changed the determination of ‘disposable income’” in 1325(b)(2) by adding definitional terms.  BAPCPA also did not change 1322(a)(1) that the plan pay in “future earnings or other future income.”  The BAP said use of the word “projected” to modify “disposable income” “does not fit neatly into the mindless ‘multiplier’ as the ‘plain meaning’ decisions would suggest.”  This is because projected disposable income is not defined and the term “projected” is “essentially forward looking.”  Its use is consistent with the requirement that the projected disposable income be applied “as of the effective date of the plan” which logically is the date of confirmation of the plan.  Congress intended BAPCPA to force debtors to “make a good-faith effort to repay as much as they can afford.” 

This analysis helps those whose income in the previous six months has decreased.  Using the last six months may make it impossible to get a plan confirmed if the income has gone down.  “It makes no sense to interpret ‘projected disposable income,’ governing debtor’s future payments under their chapter 13 plans, as cast in stone by their pre-bankruptcy history, without any opportunity for the trustee, creditors or the debtor to offer rebutting evidence as to changed income circumstances before the effective date of the plan.”    

The BAP finally pointed out that if projected disposable income definition is cast in stone, “plan modifications would be prohibited” because there would never be “changed circumstances.” 

In Klein’s concurrence, he agrees with the majority but said he prefers to affirm “on a different theory.”  “The basic premises of Section 1306(a) and 1322(a)(1) [is] that chapter 13 plans are funded by future income that really exists and [the means test argument here] runs counter to the only thing that appears to be unambiguous about the 2005 consumer amendments to the Bankruptcy Code: the policy that more debtors should be diverted from chapter 7 liquidation to chapter 13 repayment plans.”  The “rigid analysis offends the policy.”  He agreed that a fixed projected disposable income would essentially prevent modifications to plans.  He also points out that he does not think this debtor proposed the plan in good faith since he can clearly pay more.  “It is credible to argue that the debtor’s plan is an intentionally passive-aggressive, ‘gotcha’ response to the straightjacket that was nominally imposed by the 2005 amendments.  While to some it smacks of delicious irony, there is a point of degree at which a debtor’s proposed chapter 13 plan that can move into the realm of overreaching that it is lacking in ‘good faith.’”             

November 18, 2007 in 9th Circuit Briefs | Permalink | Comments (0) | TrackBack