The Bankruptcy Lawyers Blog

As you counsel your clients on a variety of bankruptcy issues, one question is bound to come up - whether or not a bankruptcy case can be filed on the same day the credit counseling course is completed. The one thing you must explain to your client is that the credit counseling course is a prerequisite to filing bankruptcy and failure to comply could definitely mean dismissal of the bankruptcy case.

While decided court cases have pointed out that Congress did not define the time frame for the "180-day  period preceding the date of filing," the majority of courts will look to Federal Bankruptcy Rule 9006(a) which excludes the day of filing when counting the 180 day period. So, as you advise your clients, keep this information in mind. It could assist you in avoiding a major issue later.

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When a client is preparing to file bankruptcy, one of the issues you must address is pre-bankruptcy exemption planning. The U.S. Appeals Court for the 8th Circuit has provided guidance in this area based on the In Re Addison decision (8th Cir. 2008). The 8th Circuit Court of Appeals ruled that Section 522(o) of the bankruptcy code allows pre-bankruptcy exemption planning in the manner that was allowed prior to the enactment of Section 522(o). The addition of Section 522(o) was a result of the 2005 Bankruptcy Reform Act.

Section 522(o) directs the bankruptcy court to reduce the debtor's homestead exemption by the amount of any non-exempt property the debtor may have transferred to the homestead. This transfer is  usually accomplished by paying down a mortgage. The key as to how the court views the transfer will turn on the determination as to whether the transfer was intended to hinder, to delay, or defraud creditors, and if the transfer occurred in the ten years prior to the bankruptcy.

The court in Addison held that no evidence existed that the debtor acted with intent to hinder, delay or defraud creditors, except that the debtor increased the amount of his exempt property and decreased the amount of his non-exempt property. This interpretation by the court means that case law existing prior to the enactment of section 522(0) remains good law and that the overall meaning of the phrase "hinder, delay or defraud" will  be determined under the particulars of the pre-existing case law.

The Addison case highlights court ideology that could provide helpful strategies as you work with your client to attain a workable bankruptcy exemption plan. To review the Addison decision in its entirety, visit the United States Court of Appeals, Eighth Circuit. Enter case number 07-2064/07-2727.

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In 2005, Chapter 15 of the United States Bankruptcy Code was enacted based upon the United Nations Commissions on International Trade Law (“UNCITRAL”) Model Law on Cross-Border Insolvency. Below is a brief overview of Chapter 15.

One purpose of Chapter 15 is to promote cooperation between courts of the United States, United States trustees, trustees, examiners, debtors, and debtors-in-possession and the courts and other competent authorities of foreign countries involved in cross border insolvency cases. See U.S.C. § 1501(a).

A case is commenced under Chapter 15 by filing a petition for recognition of a foreign proceeding under Section 1515.  According to 11 U.S.C. Section 1519, from the time the Chapter 15 petition is filed up until the time the court rules on the petition, the court may, at the request of the foreign representative, grant certain forms of provisional relief in order to protect the assets of the debtor or the interests of creditors, including “staying execution against the debtor’s assets” and “entrusting the administration of the debtor's assets located in the United States to the foreign representative or another person in order to protect and preserve the value of assets.

Section 1517 provides that a court “shall” enter an order recognizing a foreign proceeding if:  

• Such foreign proceeding for which recognition is sought is a foreign main proceeding or foreign nonmain proceeding as defined under Chapter 15;
• The foreign representative applying for recognition is a person or body; and
• The petition meets the requirements of Section 1515.

The goal of Chapter 15 is to balance the demands of domestic bankruptcy while reaching out for international cooperation. Chapter 15 may soon play a frequent and vital role in a global economy filled with recession issues.

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For practitioners handling foreclosure cases in Florida's 12th Judicial Circuit Court, changes in the circuit foreclosure procedures will be implemented on 12/01/08. The Administrative Orders and forms relating to the changes in foreclosure procedures are now in draft form and awaiting public comment.

You may access information concerning the pending changes on the 12th Judicial Circuit website.

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On June 6, 2008, the Administrative Office of Courts awarded a  bankruptcy noticing contract to BAE Systems Information  Technology Inc. (BAE). The contract became effective on October 1st. Just want does BAE offer to court customers? I'm glad you asked. According to Susan Thurston, Clerk of the Court for the U.S. Bankruptcy Court for the District of Rhode Island in Providence, key features of this contract include:

1) Improved Address Matching:  Data Quality XI will be employed by BAE to increase multi-stuffing efficiency, reduce costs and improve notice delivery.

2) Single Mailing to Joint Debtors: Duplicate notices to joint debtors will be eliminated for joint debtors with the same address.

3) Complete Online Electronic/ Preferred Mailing Address Registration: Under the new contract,  complete online sign-up for creditor registration of preferred e-mail and/or U.S. mail addresses will be available.

4) Desktop Notice Management System: In January of 2010, an optional desktop notice management system for notice recipients will be offered to retrieve and store EBN notices transmitted through the E- mail Link service.

5) Online Notice Recipient Surveys: BAE is also charged with the task of providing online surveys at the EBN and National Creditor Registration Service websites.

6. National Change of Address: To help improve notice delivery and reduce the amount of returned mail, BAE will use the U.S. Postal Service National Change of Address database for print mailing and address creation through CM/ECF and PACER systems.

7) Alert and Web Page for Correcting/Maintaining Addresses:  BAE will send messages to notice recipients alerting them to errors in the addresses provided for them in the  case mailing list. The recipient will then be able to correct its address by accessing a new Web page provided by the BNC for correcting and maintaining addresses.

8) Bypass List to Debtor's Attorney via E-mail: Instead of printing the bypass list, the BNC will send the list to the debtor's attorney by e-mail. Under the current system, when the BNC is unable to deliver a notice to an intended recipient due to an address deficiency, a bypass list is mailed to the debtor's attorney.

9) Certificate of Notice to Include Notice of E-Filing Recipient Information: Once the CM/ECF is enhanced, the BNC will add a section to the end of the current Certificate of Notice, which will display the CM/ECF Notice of Electronic Filing information as received from the court. The luxury of this will result in all noticing and delivery information being included in one document for easier verification and follow-up.

If you would like to learn more about the impending changes or to register for EBN or NCRS, go to:

http://www.ebnuscourts.com/ and https://www.ncrsuscourts.com/.

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As of November 4, 2008, the people of the United States of America have clearly spoken by voting for change in electing Barack Obama as the new Commander-in-Chief. The American Bankruptcy Institute (ABI)reports that change will be a key factor in reforms that the Obama administration will make to the current Bankruptcy Code. According to ABI, President-Elect Obama plans to reform the Bankruptcy Code so that homeowners will be able to modify mortgages in Chapter 13 proceedings and offer additional assistance to disaster victims, members of the military, and other groups. For many working and middle-class families, January 20, 2009 cannot come soon enough.

You can read more concerning the bankruptcy reforms and other key issues on Obama's website.

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Prior to the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) in 2005, appeals from judgments, orders or decrees issued by bankruptcy courts were heard by a district court or a bankruptcy appellate panel (BAP). Under the current rules of bankruptcy law, all that has changed. Now, you may appeal directly to the circuit court if certain requirements are met. If you are considering filing a direct appeal in circuit court, here are the things you should know.

Three is the Magic Number. If you obtained a judgment, decree, or order from one of the following venues, then you may file a direct appeal in the circuit court:

• Bankruptcy Court
• District Court
• Bankruptcy Appellate Panel

The next step is to properly certify your claim in a two-step certification process. The first certification of the direct appeal to the circuit court must be given by the lower court. Then, the circuit court of appeals must authorize the certification. Further information on the certification process can be found in 28 U.S.C. Section 158(d)(2).

Location, Location, Location. One key thing to remember is that the certification request must be filed where the case is currently pending. However, once the  appeal is properly docketed in the district court or the bankruptcy appellate panel, the certification must be made in that particular court venue.

Time is of the Essence. Your request for certification must be filed in the lower court within 60 days after the original judgment, decree, or order is entered.

Gain Permission from the Circuit Court. After the lower court certifies the appeal, you must file a petition with the proper circuit court to authorize the appeal. Make sure that your request contains enough information to allow the court to decide if a direct appeal is proper.

The Show Must Go On. Your request for a direct appeal does not stay any of the proceedings in bankruptcy court, the district court, or the bankruptcy appellate panel, unless the lower court or the court of appeals specifically issues a stay pending appeal.

While there are a few hurdles to jump when filing the direct appeal to the circuit court, there are also some advantages. Being able to skip appellate review by a district court will save your client time and money. This can be particularly important when your client is already having cash flow issues.  Your knowledge and expertise in executing the direct appeal fast track approach will definitely bring an expeditious resolution to your client's case. So, take a bow.

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