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Courts Interpret Brunner Too Harshly, Bankruptcy Judge Cecelia Morris Says

Submitted by ckanon@abi.org on
Observing that some courts have incorrectly interpreted the Brunner test to impose “punitive standards,” Chief Bankruptcy Judge Cecelia G. Morris of the Southern District of New York allowed a debtor to discharge more than $220,000 in student loans, even though the debtor had a law degree and was neither disabled nor unemployable, according to an analysis in today's Rochelle's Daily Wire. The debtor obtained loans to finance his undergraduate education and a law degree between the years 1993 and 2004. With interest, the original principal amount of $116,500 had grown to more than $220,000 when the debtor filed his chapter 7 petition and received a general discharge. The debtor’s means test listed about $37,500 in annual pre-tax income. His Schedules I and J showed monthly net income after taxes of about $2,500 and expenses of some $4,000, giving him negative current monthly income of about $1,500. Click here to read the analysis.
Article Tags
Consumer Bankruptcy
Consumer Debt
Discharge/Dischargeability
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Bankruptcy Code
105
523
524
1328
1329
362
Topics
Consumer Bankruptcy
Consumer Debt
Discharge/Dischargeability
Family/Divorce Issues

White House Contender Warren Proposes Bankruptcy Reform

Submitted by jhartgen@abi.org on

Democratic presidential contender Elizabeth Warren yesterday proposed making it easier for struggling American families to wipe away their debts by reforming the country’s personal bankruptcy laws, Reuters reported. The issue is of particular importance to Warren, a former law professor at Harvard University who spent decades studying why individuals and families file for bankruptcy in the United States. Warren’s plan calls for repealing much of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) that was backed by, among others, then-U.S. Senator Joe Biden, now one of Warren’s chief rivals for the Democratic presidential nomination. The legislation, which passed largely with Republican support and was favored by credit card companies, made it more difficult for individuals to clear debts through bankruptcy filings. Warren’s plan would streamline bankruptcy law by creating a single process and offering families far more flexibility in deciding how to discharge their debts. She would allow families in bankruptcy to set aside more money for basic needs, including rent and child care, and to avoid onerous legal fees. The 2005 bill also made it difficult to discharge student debt via bankruptcy, Warren said. The senator, who has also called for using higher taxes on the wealthy to erase student debt for millions of people, said she would reform the law to treat student debt like any other consumer debt in bankruptcy court.

Article Tags
Consumer Bankruptcy
Business Reorganization
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Total Bankruptcy Filings Register Slight Increase in Calendar Year 2019; First Year-Over-Year Increase in Eight Years

Submitted by jhartgen@abi.org on

After declining for eight consecutive years, total bankruptcy filings during calendar year 2019 (Jan. 1-Dec. 31) increased 0.28 percent from 2018, according to data provided by Epiq Systems, Inc. Total filings edged up to 757,497 in 2019 from 755,353 filings during calendar year 2018. Total consumer filings also increased to 718,553 nationwide for calendar year 2019 (Jan. 1-Dec. 31), 0.17 percent more than the 717,321 total filings during 2018. The 38,944 total commercial filings during calendar year 2019 increased 2.4 percent from the commercial filing total of 38,032 during calendar year 2018. The commercial chapter 11 filing total of 5,502 during calendar year 2019 represented a 0.36 percent increase from the 5,482 commercial chapter 11 filings in 2018.

Article Tags
Consumer Bankruptcy
Business Reorganization
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Journal Issue
Feb 2020
Bankruptcy Code
101
Bankruptcy Rule
Topic Tags
Legislation
Practice and Procedure
Consumer Bankruptcy
Consumer Debt
Small Business

Total Bankruptcy Filings Register Slight Increase in Calendar Year 2019; First Year-Over-Year Increase in Eight Years

Submitted by jhartgen@abi.org on

Alexandria, Va.— After declining for eight consecutive years, total bankruptcy filings during calendar year 2019 (Jan. 1-Dec. 31) increased 0.28 percent from 2018, according to data provided by Epiq Systems, Inc. Total filings edged up to 757,497 in 2019 from 755,353 filings during calendar year 2018. Total consumer filings also increased to 718,553 nationwide for calendar year 2019 (Jan. 1-Dec. 31), 0.17 percent more than the 717,321 total filings during 2018. The 38,944 total commercial filings during calendar year 2019 increased 2.4 percent from the commercial filing total of 38,032 during calendar year 2018. The commercial chapter 11 filing total of 5,502 during calendar year 2019 represented a 0.36 percent increase from the 5,482 commercial chapter 11 filings in 2018.

“Two developments in the coming year will improve access to the fresh start of bankruptcy for both struggling small businesses and households,” said ABI Executive Director Amy Quackenboss. “The Small Business Reorganization Act becomes effective next month to provide a better path for Main Street debtors to restructure their debts. Also, the courts, Congress and other stakeholders continue to consider the recommendations of ABI’s Commission on Consumer Bankruptcy to modernize the Bankruptcy Code for consumers wrestling with overwhelming debt loads.”

The “Small Business Reorganization Act of 2019” (SBRA; P.L. 116-54), signed into law on Aug. 23, 2019, by President Donald Trump, becomes effective February 19, 2020. SBRA adds a new subchapter V to chapter 11, providing a better path for small businesses to successfully restructure, reduce liquidations, save jobs and increase recoveries to creditors. ABI’s Commission on Consumer Bankruptcy issued its Final Report of recommendations in April 2019 to improve access to the consumer bankruptcy system. Click here to view the report.

Total bankruptcy filings for the month of December increased 2 percent to 53,030 in 2019 from the 52,059 filings in December 2018. The 50,160 total noncommercial filings for December also represented a 2 percent increase from the December 2018 noncommercial filing total of 49,096. The 2,870 total commercial filings in December 2019 represented a 3 percent decrease from the 2,963 total commercial filings during the same period in 2018. Commercial chapter 11 filings dropped 14 percent to 391 in December 2019 from the 456 commercial chapter 11 filings in December 2018.

The average nationwide per capita bankruptcy filing rate for calendar year 2019 (Jan. 1-December 31) increased slightly to 2.44 (total filings per 1,000 population) from the 2.43 rate during calendar year 2019. States with the highest per capita filing rates (total filings per 1,000 population) through 2019 were:

1. Alabama (5.62)

2. Tennessee (5.29)

3. Georgia (4.38)

4. Mississippi (4.19)

5. Illinois (3.71)

ABI has partnered with Epiq Systems, Inc. in order to provide the most current bankruptcy filing data for analysts, researchers and members of the news media. Epiq Systems is a leading provider of managed technology for the global legal profession. 

For further information about the statistics or additional requests, please contact ABI Public Affairs Officer John Hartgen at 703-894-5935 or jhartgen@abiworld.org.

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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 11,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abi.org. For additional conference information, visit http://www.abi.org/calendar-of-events.

Epiq Systems is a leading provider of managed technology for the global legal profession.  Epiq Systems offers innovative technology solutions for electronic discovery, document review, legal notification, claims administration and controlled disbursement of funds.  Epiq System’s clients include leading law firms, corporate legal departments, bankruptcy trustees, government agencies, mortgage processors, financial institutions, and other professional advisors who require innovative technology, responsive service and deep subject-matter expertise. For more information on Epiq Systems, Inc., please visit http://www.epiqsystems.com.

 

Article Tags
Consumer Bankruptcy
Business Reorganization
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