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The facts are simple. A debtor files for chapter 13 and proposes a plan, which is confirmed. The debtor makes payments pursuant to the terms of the plan but is unable to continue funding the plan a considerable time later. The case is converted to chapter 7, and on the date of conversion, the chapter 13 trustee is holding funds that were earmarked for creditors but have not been paid out. The trustee intends to disburse the accumulated funds to the creditors under the plan, but the debtor files a motion requesting that the trustee refund those funds. So who gets the money?
Many Americans are questioning the future solvency of the Social Security program and, although its severity is inconclusive, many doubt that they will receive Social Security payments, causing them to seek additional financial arrangements.
[1]Chapter 7 individual debtors with business debts and surplus income, beware! In Schlehuber v. Fremont Nat’l Bank & Trust Co. (In re Schlehuber),[2] the Eighth Circuit affirmed a Nebraska bankruptcy court’s order to convert an individual debtor’s chapter 7 case to chapter 11 — not under § 707(b), as commonly used in consumer cases with facts similar to Schlehuber — but under § 706(b). Section 706(b) states that “[o]n request of a party in interest and after notice and a hearing, the court may convert a case under this chapter to a case under chapter 11 of this title at any time.”[3]
[1]On June 12, Sens. Elizabeth Warren (D-Mass.) and Sheldon Whitehouse (D-R.I.) introduced S. 2471, the Medical Bankruptcy Fairness Act of 2014,[2] which would amend §§ 101, 104, 109, 521, 522, 523, 707 and 1325 of the Bankruptcy Code to create a new class of “medically distressed debtors.”
[1]The common belief that all student loans are protected from discharge in bankruptcy is based on a misunderstanding of 11 U.S.C. § 523(a)(8). Since 1990, bankruptcy courts have been misreading the statute to prevent any student debt that could be construed as providing educational benefits or advantages from discharge.
In many common nondischargeability claims, the plaintiff creditor must prove the debtor defendant’s intentional misconduct. A default judgment for an underlying breach of contract or tort is insufficient on its own to support nondischargeability. The creditor must put on specific evidence of the debtor’s intent.
Recent decisions from Michigan and Georgia have cast further confusion on the issue of exclusivity of “bankruptcy-specific” exemption statutes. Under 11 U.S.C. § 522(b), a debtor filing for bankruptcy is provided with two sources from which to claim property as exempt. The debtor may choose from those exemptions enumerated under 11 U.S.C.
