The Bankruptcy Lawyers Blog

Back when the credit card industry was pushing hard for a bill that eventually became the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), we challenged their assertions that a new bankruptcy law was needed to curtail "alleged" abuses of the system by individual debtors who were supposedly racking up debt just for the heck of it and then using bankruptcy as a get-out-of-a-jail -for-free card (as they wanted everyone to believe).

While BAPCPA made it more difficult to file bankruptcy by instituting a means test for Chapter 7 filers and stipulating mandatory credit counseling before filing bankruptcy and a debtor education course after filing but before receiving a discharge, it was clear to us then, as it is now, that this law was fundamentally flawed in its origins.

With this considered, a recent study by Erwin Chemerinsky of the University of California examines how  BAPCPA's language may also open up some important Constitutional issues, including whether:

• the First Amendment is violated by the law's requirements on the content of attorney advertising and its regulation of the advice that bankruptcy attorneys can give to their debtor clients?

• the Tenth Amendment or separation of powers is infringed upon by the law's regulation of attorney conduct?

• uniformity requirement or equal protection is violated by the means test?

• the right to privacy is violated by debtor disclosure requirements?

While the study doesn't go into providing answers to these questions, it rather takes the approach of asking whether such Constitutional issues may be raised as BAPCPA is examined in greater detail.

To read this study, "Constitutional Issues Posed in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005," click here.

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The Chicago Tribune ran an interesting article about attorney salaries last week.  Of course, the general public has a vision of attorneys as lining the walls with money--and maybe once upon a time many of us did, too.  In the 1980s, law was widely rumored to have the highest starting salary of any profession, and law schools quickly filled up with future professionals eager to partake of that benefit.

The reality, however, turned out to be very different for many attorneys, and one reason for that--and for the general misperception that a law degree is a ticket to easy street--is the gap between the highest earning attorneys and everyone else.

The Tribune article cites a study indicating that the bottom 3/4 of the legal profession has been steadily losing ground since 1975.  And "bottom" doesn't mean a whole heck of a lot when you're talking about 75%. That's most attorneys.  Of the roughly 44,000 graduating this year, about one-fifth is projected to earn "well into six figures" at their first jobs, while most will earn less than half of that.

There's good news, though.  One prevailing theory about the income gap in the law--and in many other fields--is that technology allows the "best of the best" a longer reach.  The high-powered among us can serve more clients as technology allows them to work more efficiently, and can reach a broader clientele as technology allows them to get in front of more people.

And that's true for all of us.

While the average attorney won't ever see the economies of scale that increase profits at the top level of the mega-firms to levels beyond the average wage-earner's comprehension or have a private jet at the ready to make it easier to serve clients around the world, improved technology does open up possibilities for all of us.

The explosive growth of the Internet and the increasing number of average citizens who seek information and services online has opened up a new and cost-effective means of expanding your marketing reach.  The ready availability of affordable case-management software , centralized sources for electronic delivery of your required documentation, and virtual assistants makes it manageable to handle a higher volume of cases.

If technology is, in fact, widening the income gap in the legal profession, perhaps it's only because the "bottom" 75% haven't fully taken advantage of those opportunities yet.

 

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The Chicago Tribune ran an interesting article about attorney salaries last week.  Of course, the general public has a vision of attorneys as lining the walls with money--and maybe once upon a time many of us did, too.  In the 1980s, law was widely rumored to have the highest starting salary of any profession, and law schools quickly filled up with future professionals eager to partake of that benefit.

The reality, however, turned out to be very different for many attorneys, and one reason for that--and for the general misperception that a law degree is a ticket to easy street--is the gap between the highest earning attorneys and everyone else.

The Tribune article cites a study indicating that the bottom 3/4 of the legal profession has been steadily losing ground since 1975.  And "bottom" doesn't mean a whole heck of a lot when you're talking about 75%. That's most attorneys.  Of the roughly 44,000 graduating this year, about one-fifth is projected to earn "well into six figures" at their first jobs, while most will earn less than half of that.

There's good news, though.  One prevailing theory about the income gap in the law--and in many other fields--is that technology allows the "best of the best" a longer reach.  The high-powered among us can serve more clients as technology allows them to work more efficiently, and can reach a broader clientele as technology allows them to get in front of more people.

And that's true for all of us.

While the average attorney won't ever see the economies of scale that increase profits at the top level of the mega-firms to levels beyond the average wage-earner's comprehension or have a private jet at the ready to make it easier to serve clients around the world, improved technology does open up possibilities for all of us.

The explosive growth of the Internet and the increasing number of average citizens who seek information and services online has opened up a new and cost-effective means of expanding your marketing reach.  The ready availability of affordable case-management software , centralized sources for electronic delivery of your required documentation, and virtual assistants makes it manageable to handle a higher volume of cases.

If technology is, in fact, widening the income gap in the legal profession, perhaps it's only because the "bottom" 75% haven't fully taken advantage of those opportunities yet.

 

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If you're in Las Vegas for the annual NACBA conference, stop by and visit the Start Fresh Today booth.  And, if you're not familiar with Start Fresh Today's products, sign up for a free debtor education course demo.  You can arrange an Internet-based or telephonic financial management course for your clients through Start Fresh Today, and purchase all of your due diligence products while you're there!

Demos will take place in the Murcia room of the JW Marriott on Thursday evening, October 25 at 7:00 p.m. and 8:00 p.m.  Each attendee will receive a free ticket to the Start Fresh Today / Total Bankruptcy fundraising party on Saturday evening and ten free tickets for raffles to take place during the party.

Whether or not you've got free tickets, join us for a good time and a great cause on Saturday night.  We'll be gathering at Nine Fine Irishmen from 8:00 to 11:00, and all proceeds will benefit the Clark County Pro Bono Project.  That's inside the New York – New York Hotel & Casino at 3790 Las Vegas Blvd. South.

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The documentation required for a consumer bankruptcy petitioner during an audit has created problems for clients and consumer bankruptcy attorneys since the process was instituted.  The standard document request letter required detailed records dating back six months--records that few debtors who have been in a state of financial distress and often operating on a cash basis are able to produce. 

Following NACBA President Henry Sommer's testimony before Congress on May 1, the U.S. Trustee Program determined that the standard documention previously required was not necessary in every audit, and revised the standard document request letter to exclude the requirement that debtors explain deposits and withdrawals of less than $500.  Such information may still be requested from an individual debtor if it is relevant in that particular bankruptcy case.

Many thanks to NACBA for fighting the battle on behalf of consumer bankruptcy attorneys and bankruptcy petitioners, and to the Trustees for responding.  After the past year and a half, it's a relief to see reason and common sense prevailing in the bankruptcy process, even in a small way.  Here's hoping that some of Sommer's other excellent points during that testimony are heard as well, and that we see consideration for similar adjustments to the required pre-filing documentation for low-income debtors and other daunting hurdles that discourage the very debtors most in need of bankruptcy.

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Although October 17, 2005 is the day that lives on in infamy in all of our minds, it was two years ago this month that BAPCPA was actually enacted.   The Commercial Law League of America's Bankruptcy Section conducted a survey within the bankruptcy industry--business bankruptcy practitioners, consumer bankruptcy practioners, judges, trustees, creditors representatives, and non-attorney professionals.

The data gathered, though unsurprising, shows some unfortunate trends:

• Most consumer practitioners surveyed increased their fees as a result of BAPCPA
• 1/3 of respondents shifted their client mixes as a result of BAPCPA--this, too, is heavily weighted toward consumer bankruptcy attorneys
• Some firms eliminated consumer debtor representation altogether, and some cut out all debtor representation
• 1/3 of respondents had eliminated pro bono representation as a result of BAPCPA
• More than 12% said pro bono representation had been reduced as a result of BAPCPA
• 17% of respondents (some debtor representatives and some representing creditors) said they would no longer handle reaffirmation agreements because of BAPCPA

Asked which consumer provision they would repeal if they could choose only one, 55% of respondents opted to knock out the means test.  Pre-filing credit counseling came in second, at about 20%.  Although 36% of respondents said reaffirmation agreements worked better before the amendments and 17% had opted out of participating in the reaffirmation process altogether, only 8% of respondents chose the reaffirmation provisions as their first choice for repeal.

The full article by Catherine Vance, with additional survey results, is available at the Bankruptcy Litigation Blog.

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Visit us at the NACBA conference in Philadelphia this weekend to find out how Start Fresh Today's one-stop-shop can help save bankruptcy practitioners time and money, or just to enjoy the company of your colleagues and contribute to a good cause!

Attend a Start Fresh Today demo session at 7:00 or 8:00 p.m. at the Marriott and get five free debtor education courses to use with your clients any time you want. 

Then, join us on Saturday evening for a party to benefit the Philadelphia County Consumer Bankruptcy Assistance Project.  Cocktails and traditional "Philly" food will be served from 8:30 to 11:30 at McGillin's Olde Ale House, 1310 Drury Street...just a short walk from the Marriott.

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Yesterday, the United States District Court for the District of Minnesota entered its final order in the Milavetz case, granting the plaintiff's motion for summary judgment and declaring that:

1.  Sections 526 (a) (4), 528 (a) (4) and 528 (b) (2) are unconstitutional, "as applied to attorneys in the District of Minnesota".

2.  Attorneys in the District of Minnesota are excluded from the term "debt relief agency" as defined in 11 U.S.C. section 101 (12A) and, as such, are not subject to any of the duties relating to BAPCPA defined debt relief agencies. 

The Minnesota law firm of Milavetz, Gallop & Milavetz, P.A., along with two unnamed prospective clients, was among the first to file Constitutional challenges to BACPA, commencing this case in November of 2005, just weeks after the new law took effect.  In December of 2006, the Court made extensive findings declaring various provisions of BAPCPA unConstitutional and unenforceable as applied to attorneys.  Nonetheless, the United States opposed plaintiff's motion for summary judgment at a hearing in February.

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At long last, the Administrative Office of the Courts yesterday released the fourth quarter and annual 2006 bankruptcy filing statistics; the headline on the Courts' press release reads, "Bankruptcy Filings Plunge in Calendar Year 2006".  Of course, the numbers and what they might mean are old news to most of us:  AACER information has been available for some time, and even related in an Associated Press story that gave us a solid indication of first quarter 2007 stats before the official sources gave us a peek at the end of 2006.

More importantly, though, the attempted apples-to-apples comparison between 2005 and 2006 is unrealistic and perhaps disingenuous.  Yes, there were more than 2 million non-business bankruptcy filings in 2005, and there were fewer than 600,000 in 2006.  But the reasons for that dramatic shift have been thoroughly studied, and the one thing most experts agree on is that they don't mean that the new law  "worked" and consumer bankruptcy filings have radically declined, never to rise again.

University of Illinois law professor Charles Tabb offered a detailed analysis in the ABI Journal this winter, and predicted filings rising to pre-BAPCPA levels, or close to them.  Henry Sommer, President of the National Association of Consumer Bankruptcy Attorneys (NACBA) has repeatedly pointed out both that the rush to file before the law changed in the fall of 2005 absorbed a large number of people who would otherwise have filed in 2006 (and unnaturally raised 2005 filings) and that many people are under the misapprehension that they are no longer able to file for Chapter 7 bankruptcy.

Quarterly filings, as always, tell a different story. 

Q1, 2006:  116,771
Q2, 2006:  155,833
Q3, 2006:  171,146
Q4, 2006:  177,599
Q1, 2007:  186,788 (from AACER data)

While proponents of BAPCPA may choose to compare the skewed data from the transitional years side by side as if there were no anomalies, the numbers themselves, broken down in just about any way that makes sense, tell us that there was a dramatic rush to file before the law changed, a dramatic drop-off in filings right after the law changed, and they've been climbing ever since.  In fact, a straight like-time to like-time comparison shows that first quarter 2007 filings are 59.9% higher than first quarter 2006 filings.

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Automatic adjustments to dollar amounts across several sections of the U.S. Bankruptcy Code will take effect on April 1, 2007, impacting Chapter 12 and Chapter 13 eligibility, maximum exemption values in certain categories, means test calculation, and more. 

The Memorandum detailing the specific changes is available online at Automatic Adjustment of Certain Dollar Amounts in the Bankruptcy Code and Official Bankruptcy Forms.

Several forms are being updated as a result of the changes including:

Official Form 1, Voluntary Petition
Official Form 6C, Schedule of Property Claimed as Exempt
Official Form 6E, Schedule of Creditors Holding Claims Entitled to Priority
Official Form 7, Statement of Financial Affairs
Official Form 10, Proof of Claim
Official Form 22A, Statement of Current Monthly Income and Means Test Calculation (Chapter 7)
Official Form 22C, Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income (Chapter 13)

The next scheduled automatic update to these dollar amounts will take effect on April 1, 2010.

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by Bankruptcy Attorney Richard J. Waple at Bankruptcy HQ

On February, 21, 2007, the United States Supreme Court issued an opinion holding that a debtor who files a chapter 7 bankruptcy in “bad-faith” does not have an absolute right to convert to a chapter 13 bankruptcy in an attempt to avoid the trustee gaining control of non-exempt assets. Marrama v. Citizens Bank of Massachusetts, et al.

Marrama originally filed a chapter 7 bankruptcy petition, but filed a motion to convert the case to a chapter 13 after the trustee discovered that Marrama had fraudulently concealed information about a property transfer seven months prior to the bankruptcy filing.  Marrama had transferred a piece of real estate into a trust that he was the beneficiary of.  On his bankruptcy petition, Marrama did not disclose the transfer and listed his interest in the trust as “0”.  It appears that his motion to convert was intended to stop the trustee from taking control of the property, which was not exempt in his chapter 7 proceeding.  Both the trustee and Citizens Bank filed objections to the conversion.

Marrama primarily relied on the argument that §706(a) of the Bankruptcy Code explicitly provides an absolute right to convert, with two exceptions; (1) A debtor may only convert once, and (2) a debtor must be eligible to be a debtor under the chapter he is attempting to convert to.   Marrama had not previously converted and was financially eligible for a chapter 13 bankruptcy after recently gaining employment, and argued that he had a right to convert his case even if it would be later dismissed or reconverted in the chapter 13.

The Court disagreed.  The majority opinion in the 5-4 ruling, delivered by Justice Stevens, held that  Marrama was not eligible to be a chapter 13 since the chapter 13 would have been dismissed under §1307, because Marrama acted in “bad-faith”.  The Court also referred to its broad authority to take action “to prevent an abuse of process” described in §105(a).   The Court affirmed appellate court’s decision to deny Marrama’s motion to convert.

The dissent, delivered by Justice Alito, argued that a plain reading of the Bankruptcy Code clearly indicates that a debtor has an absolute right to convert a case to another chapter absent the two specific exceptions set forth in §706, “bad-faith” not being one of them.   The dissent did not find anything “in §706(a) or any other provision of the Code [that] suggests that a bankruptcy judge has the discretion to override a debtor’s exercise of the §706(a) conversions right on a ground not set out in the Code”.  The dissent seems to indicate a belief that the majority ignored the clear provisions set forth in the Bankruptcy Code to make an what it considers an equitable holding, and argues that “whatever steps a bankruptcy court may take pursuant to §105(a) or its general equitable powers, a bankruptcy court cannot contravene the provisions of the Code.” This holding does not prohibit a conversion to a chapter 13 bankruptcy where the debtor has acted in “good-faith”, not previously converted, and is otherwise eligible to file for a chapter 13 bankruptcy under §109.

  

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Brad Botes, a successful consumer bankruptcy attorney from Birmingham, Alabama has announced his intent to return to his former position on the board of directors of the National Association of Consumer Bankruptcy Attorneys (NACBA). 

Originally elected to the NACBA Board in 2004, Brad relinquished his position in order to accept an appointment by the remaining board members to serve as the organization’s first full time Executive Director.  His declaration of candidacy states “NACBA’s Executive Director’s position now appears to be in able hands and I wish to return to the position I once held on the board”. 

Botes has been a member of NACBA since shortly after it was formed.  In addition to serving on the board and as executive director, he has also served as a state chair.  During his tenure on the board, NACBA’s membership increased by almost 200%.  He served during the tumultuous period leading up to and following the enactment of BACPA. Brad helped plan and participated as a speaker in the special educational programs NACBA held during 2005 to help consumer debtor attorneys adapt to the new laws provisions.

Prior to serving as NACBA’s Executive Director, Botes helped build his firm, Bond & Botes, P.C., into one of the top debtor’s practices in the country.  The firm has offices in Alabama, Florida, Tennessee and Mississippi and represents thousands of consumers annually.  Brad has lectured on various bankruptcy topics to local and national gatherings of bankruptcy attorneys, trustees and judges.

I know Brad to be a knowledgeable, motivated leader who has a keen understanding of what it takes to meet the challenges faced by consumer bankruptcy lawyers.  NACBA’s membership will be well served by returning him to the organization’s Board of Directors.

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With the annual convention less than two months away and a panel session on Attorney's Fees in the works, NACBA is updating its earlier survey results with regard to local fee practices.  Please take a moment to complete the NACBA Survey

Log in with the same user name and password that you use on the NACBA website.  If you practice in more than one Division, please complete a survey for each Division, and please make sure to respond to the survey by March 16, 2007.

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The National Consumer Bankruptcy Project--the people who most recently brought us the hard data tying approximately 50% of consumer bankruptcy filings to medical problems--has people back in the field with an even more ambitious goal.  For the first time, the project is reaching for a national sample. 

As consumer bankruptcy attorneys, I'm sure that we're all aware of the value of the data collected and studied by the Consumer Bankruptcy Project, and the impact in particular of Harvard Law Professor Elizabeth Warren, who has appeared both before Congress and in the mainstream media voicing the realities of the financial crisis facing the average American today and the economic forces driving everyday people into bankruptcy.

If  any of your consumer bankruptcy clients receive the Consumer Bankruptcy Project questionnaire, please encourage them to participate in the survey.

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The U.S. Bankruptcy Court for the Southern District of Florida entered a ruling on a new twist in the ongoing battle over the characterization of bankruptcy attorneys as Debt Relief Agencies.  The court, like several before it, held that debtor’s counsel was not a debt relief agency under the statute, and that the application of sections 526-528 to consumer bankruptcy attorneys was unconstitutional.

The Reyes court, though, was presented with a new twist on the issue.  In Reyes, the bankruptcy attorney was providing pro bono services.  Along with her petition, debtor filed a motion requesting a declaration or clarification that her attorney was not a debt relief agency under 11 U.S.C.S. 101 (12A).  The facts demonstrated that counsel had not accepted and would not accept payment from debtor, but that hours expended would be applied to fulfill the bankruptcy attorney’s annual pro bono requirement.

 Interestingly, the U.S. Trustee’s response suggested that the motion should be denied as unnecessary, and suggested that the plain language of the statute made it clear that debtor’s counsel did not fall within the statutory definition.  The court agreed with the UST that the language was clear, but not that clarification was unnecessary, citing the possibility that pro bono representation would be chilled by the risk of “branding the pro bono contributor a debt relief agency”.

The questions presented by the parties were limited to whether sections 526-528 were applicable to a bankruptcy attorney who received no payment or other valuable consideration for the assistance, and whether attribution of the hours to fulfill a pro bono requirement constituted “other valuable consideration”, but the court expanded the questions, pointing out that these issues necessarily presumed the constitutionality of sections 526-528 and their applicability to consumer bankruptcy attorneys.  Thus, the court addressed those issues before reaching the questions presented by the parties.

Like several other courts around the country, the Reyes court determined that the application of sections 526-528 to debtor attorneys would be unconstitutional, but then referenced the doctrine of avoidance and backed up to determine the case on other grounds.  With reference to several rulings in other jurisdictions, the Reyes court determined that Congress did not intend the definition of debt relief agency to apply to consumer bankruptcy attorneys, with this language:

 

Should we assume that Congress was mean-spirited and intended sections 526, 527 and 528 to provide a chilling effect on lawyers’ willingness to represent persons who have suffered financial misfortune, in most cases through no fault of their own, because of lack of health insurance, loss of employment or other tragedy?  Or should we assume that Congress was trying to provide “consumer protection,” as the title of BAPCPA suggests?  The Court believes the title says it all.

 

The court went on to say that even if the application of sections 526-528 to consumer bankruptcy attorneys was both intended and constitutional, pro bono services as described in this case would not fall within the definition.  The court focused on the use of the phrase “in return for” in determining that, although the application of the pro bono hours to fulfill a requirement might benefit the attorney, the statutory language clearly implied an exchange, wherein the debt relief agency received consideration from the debtor in return for assistance rendered.  Finally, the court determined that the fulfillment of the pro bono requirement, since it had no monetary, marketable, saleable, or pecuniary value, could not in itself constitute valuable consideration.

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The 15th Annual NACBA Convention is slated for April 19-22 in Philadelphia, and today (Friday, February 16) is the last day for members to take advantage of the early registration discount. 

To register at the discounted rate, register online or fax your registration today.  You'll find the on-line registration form in the right-side tool bar on the NACBA home page.

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Below is a question about debtor attorney fees from a pending workers comp claim from one of our readers.  Please share your insights and experiences!

As a fairly experienced workers’ comp. attorney and a relative "newbie" as a bankruptcy practitioner (2 years), I have a question regarding debtor attorney fees. Obviously aware of Bethea and related decisions on the issue, would the courts be receptive to a fee agreement allowing debtor attorney fees to be paid out of a client’s future workers’ compensation settlement, assuming the client has an open w/c claim at the time of the Petition being filed? Such an agreement would also include language waiving the attorney fee lien for the debtor if attorney is unable to achieve a settlement in the w/c claim. Essentially, the attorney would maintain a lien on exempt proceeds.

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Earlier this month BusinessWeek  wrote about Max Gardner's Bankruptcy Boot Camp, and last week the Wall Street Journal devoted an article to Max's mission as well.  It's not a surprise that Max's bankruptcy boot camp is getting so much attention.  People are fed up with the bogus fees and questionable practices employed by many credit and collection companies, and the rapidly rising foreclosure rates across the country have turned a spotlight on the predatory lending practices--and the smaller, but still costly violations--within the mortgage industry.

Consumer bankruptcy attorneys who complete Max's Bankruptcy Boot Camp leave with new tools for effecting real change and fighting the problem at its roots, rather than being limited to obtaining a bankruptcy discharge for their clients and moving on.  And, of course, the ability to identify and target these violations means a significant increase in fees.

The first boot camp just took place in August, but Max's most recent newsletter is already full of dramatic success stories from graduates.

2007 Bankruptcy Boot Camp Schedule

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Back in October, I wrote about my experience at Max Gardner's Bankruptcy Boot Camp.  I said then that, despite years of consumer bankruptcy experience, I'd found Gardner's Boot Camp an eye-opening experience.  Now, fortunately, Max is opening eyes beyond the circle of experienced bankruptcy attorneys.  BusinessWeek subheaded it's January 15 article on the Boot Camp "How one man is training an army of lawyers to fight predatory lenders". 

As of the BusinessWeek interview, 82 bankruptcy attorneys had completed Gardner's Bankruptcy Boot Camp, and some are reporting remarkable results. 

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In the November ABI Journal , Part I of Professor Charles Tabb's examination of consumer bankruptcy trends examined filing rates and the Chapter 7 / Chapter 13 balance.  In Part II this month, Professor Tabb makes a clear prediction:  Filing rates probably will soon return to the range of pre-BAPCPA levels.  Tabb doesn't expect, however, that those rates will continue to climb.  That's because his research shows a clear correlation between the level of revolving consumer debt (primarily credit card debt) and bankruptcy filings, and the revolving credit market seems to be largely saturated.

Tabb's analysis is full of interesting details, including the fact that the correlation of bankruptcy filings with revolving debt as a whole is much stronger than the correlation between bankruptcy filings and delinquencies, or between bankruptcy filings and debt-to-income ratios.  Overall debt correlates with bankruptcy filings, but not as closely as revolving debt.  The bottom line:  the level of credit card debt in America appears to be the clearest predictor of the bankruptcy filing rate.  Based on that correlation, we can expect filings to climb back to pre-BAPCPA levels in the near future.

For all its interesting data, the article is as worthy of a read for Tabb's delivery of stunning information such as "The evidence shows that debtors file bankruptcy in very predictable numbers, depending not on what the bankruptcy law provides, but on how burdened they are with debt."  This, Tabb suggests, shouldn't have come as a surprise to Congress.  Of course, those members of Congress who spearheaded the 2005 bankruptcy reforms have shown themselves to be quite easily surprised by the obvious.  Bob Lawless talks about a recent example--one that would be entertaining if real federal legislation hadn't sprung from this kind of ignorance--on the Credit Slips blog:  Senator Grassley Struggles to Understand the Means Testing Forms

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The Fifth Circuit recently entertained the pressing issue of a consumer’s debt right to maintain his cable television service after he filed bankruptcy.  Although the issue may not seem particularly momentous, consumer debtors often pose this question to their bankruptcy attorneys. 

In In re Darby,  No. 05-20931 (5th Cir. Nov. 14, 2006),  a Chapter 13 debtor tried to use the Bankruptcy Code to require the local cable television company to continue providing service.  After the debtor filed bankruptcy, the cable provider disconnected his service. The debtor then invoked Bankruptcy Code § 366, which states that a utility may not "alter, refuse, or discontinue service" solely because of the commencement of a bankruptcy case. That same section also provides that the utility can refuse to continue service unless the debtor gives adequate assurance of future payment.

The word “utility” as it is used in section 366 is not defined in the bankruptcy code.  The court then looked to the House Judiciary Report and Senate Report on the provision.  The report provides that section 366 gives debtors protection from a cut-off of service by the utility because of a bankruptcy filing.  The report goes on to state that “this section is intended to cover utilities that have some special position with respect to the debtor, such as an electric company, gas supplier, or telephone company that is a monopoly in the area so that the debtor cannot easily obtain comparable service from another utility.”   

In applying this language, the court reasoned that the necessity of the service underlies this provision.  The court held that the necessity of the service is what creates the “special” relationship between the debtor and the utility referenced in the Congressional report.  The court concluded that cable television is not a necessity.  The debtor testified that cable television is only a convenience, not a necessity.  Accordingly, the court held that cable service is not a utility covered by section 366 of the Bankruptcy Code.

Bob Lawless at The Credit Slips Blog discusses this case in detail and offers an interesting analysis as to why the court got it right, but for the wrong reason.

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After the Minnesota Court in Milavetz ruled that strict scrutiny must apply to the restrictions on attorney advice contained in BAPCPA's section 526(a)(4), the court turned its attention to the advertising disclosure requirements. 

Noting that the statute regulates not merely deceptive advertising but truthful advertising as well, the court determined that the regulations could stand only if

1) the regulation directly advances a
2) substantial government interest, and is
3) narrowly drawn.

The court found that section 528's advertising requirements failed to advance the government's purported substantial interest and were not narrowly drawn.  While the government advanced the theory that, without these disclosures, advertising might be confusing, the court determined that the public was more likely to be confused by the use of the "Congressionally-invented" term than by its absence.  In fact, the court suggested, the very merging of attorneys and non-attorneys, with their differing roles in the bankruptcy process, under the designation "Debt Relief Agency" was itself likely to confuse the public.

Having fully discussed and ruled on the Constitutionality of the advice restrictions and advertising requirements as applied to attorneys, the court turned to the issue of the designation of attorneys as debt relief agencies, and determined that attorneys did not fall within the statutory definition of "Debt Relief Agency".  We'll discuss that piece of the ruling in a future post.  Meanwhile, a number of bloggers are discussing the growing list of rulings on the Constitutionality of BAPCPA, including the  Cleveland  Law Library Weblog and this extensive review at the Georgia Bankruptcy Law Blog.

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The very day that BAPCPA took effect, Judge Lamar W. Davis, Jr., Chief Bankruptcy Judge for the Southern District of Georgia, entered a sua sponte ruling that attorneys practicing in his court were not Debt Relief Agencies under the provisions of BAPCPA.  Just two weeks later, another Georgia Judge declined to rule on a petition for a similar ruling, determining that there was no “case or controversy” before the Court.

Those disparate decisions kicked off a battle over the applicability of BAPCPA’s Debt Relief Agency provisions to attorneys and the Constitutionality of those restrictions, and that battle is still raging in Bankruptcy Courts and District Courts across the country.

Last week’s ruling in Milavetz, Gallop & Milavetz, P.A., et al v. United States of America may be the most comprehensive ruling to date on the Debt Relief Agency provisions of BAPCPA as they apply (or don’t) to bankruptcy attorneys.

First, the Court determined that strict scrutiny applied to the restrictions on attorney advice contained in 526(a)(4).  Just a few weeks earlier, the U.S. District Court for the District of Connecticut had declared the same provisions unconstitutional, but had avoided the question of the appropriate standard of review by determining that the outcome was the same under either test. 

The Minnesota Court, however, determined that 626(a)(4) amounted to a content-based regulation of attorney speech, and as such was subject to strict scrutiny.  Thus, the provision could stand only if it was narrowly tailored to achieve a compelling state interest.  The Court determined that section 526(a)(4) failed the first prong of that test.  Even if the Court accepted the compelling interests asserted by the government (protecting creditors and protecting debtors from attorneys who might lead them into abusive practices), the restrictions limited speech more than was necessary to accomplish those purposes because they prohibited advice that was wholly legal and might be in the best interests of the client.

The Court went on to discuss and rule on the issues of BAPCPA’s section 528 advertising requirements and the applicability of the Debt Relief Agency provisions to attorneys in general; those discussions will be the subject of additional posts later this week.

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University of Illinois Law Professor Bob Lawless had a lot of worthwhile things to say before the U.S. Senate this week, but his opening line pretty much says it all: 

"Although the new law was called the Bankruptcy Abuse Prevention and Consumer Protection Act or BAPCPA, it addressed abuses that did not exist and protected the credit industry instead of consumers."

Lawless's account of his Washington experience began today on the Credit Slips blog, and he's promised more specifics to come.  The full text of his testimony is available here:  BAPCPA Testimony of Professor Robert Lawless.

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The National Association of Consumer Bankruptcy Attorneys (NACBA) issued a press release yesterday calling the Republican witness line-up for the last minute hearings on the 2005 Bankruptcy reforms "the financial world equivalent of the Flat Earth Society." 

NACBA President Henry Sommer went on to say that "No credible person in the field seriously disputs the fact that the bankruptcy law changes have been a spectacular flop."

NACBA rightly points out that the financial services industry lobbied hard on the idea that bankruptcy abuses were costing the average American money, and that our cost of doing business would decline with the reforms.  Just two weeks ago, Steve Bartlett, President of Financial Services Roundtable, was quoted as saying the reforms were good for consumers, creditors, and the national economy.  Where, NACBA wants to know, are those declining fees and interest rates?

If there's anyone on the witness slate with even lower credibility than Bartlett, it must surely be Todd Zywicki, the law professor at George Mason University School of Law who suggested that the bankruptcy law was perfectly drafted.  Overlooking for the moment the three successful Constitutional challenges to the law thus far, NACBA points out a few minor flaws in the way this perfectly drafted statute has played out:

1.  A NACBA study of credit counseling agencies serving clients during the first few months after the law took effect indicated that credit counseling agencies had found 97% of pre-bankruptcy clients to be unable to repay any debts.

2.  More than 75% of consumer bankruptcy attorneys indicated that the time involving in preparing a bankruptcy petition had increased by 50% or more.

3. The U.S. Bankruptcy Court for the Northern District of New York reluctantly concluded that creditors be priorized over tithing in bankruptcy.  Leading sponsors of the reform were quick to say they'd never intended that outcome, and legislation was quickly drafted to correct it...but that legislation has not been enacted.

Full NACBA Press Release

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The 9^th Circuit Court of Appeals recognized that bankruptcy courts have the “power to establish a presumptive ‘reasonable value’ for legal fees in consumer bankruptcies.”

 In In re Eliapo, 298 B. R. 392, 397 (9th Cir. BAP 2003), the 9^th Circuit reviewed a judgment awarding the debtor’s attorney a portion of his requested fees in a consumer bankruptcy case.  The court affirmed in part and reversed in part holding that: 1) the bankruptcy court's use of the presumptive no-look guideline fees for routine Chapter 13 cases was consistent with 11 U.S.C. section 330; 2) the court's criterion for awarding additional fees beyond the presumptive no-look fees was proper under section 330; and 3) a failure to hold a hearing on the application for additional fees violated Bankruptcy Rule 2017(b).

 The court began its analysis by looking to 11 U.S.C. Section 330 which provides that the reasonableness of an award of attorney’s fees turns on the “nature, the extent, and the value of such services taking into account all relevant factors, including

 

A)    the time spent on such services;

B)     the rates charged for all services;

C)    whether the services were necessary…or beneficial at the time at which the service was rendered…;

D)    whether the services were performed within a reasonable amount of time commensurate with the complexity, importance, and nature of the problem, issue or task addressed; and

E)     whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title.

 
Although not relevant to this pre-reform case, BAPCPA has added another factor to the list of considerations.  The court shall now consider whether the attorney is board certified or otherwise has demonstrated skill and experience in the bankruptcy filed.  See 11 USC section 330(a)(3)(A)-(E).

 Against this statutory backdrop the court examined the Local Rules adopted by the bankruptcy judges of the Northern District of California.  Many bankruptcy courts adopt guidelines for establishing presumptively reasonable fees.  In holding that reliance on presumptive fee guideleines for routine services in Chapter 13 is consistent with section 330, the court noted that presumptive fees in a no-look application:

·        saves attorney time;

·        encourages efficient use of attorney time by providing fair compensation to efficient attorneys and preventing inefficient attorneys from passing on the cost of their inefficiency;

·        saves time that the bankruptcy court would have to spend examining detailed fee applications.

 
The court went on to examine the standard for awarding additional fees beyond the presumptive fees.  The bankruptcy court noted that the debtor’s attorney billed over $2200.00 for “basic services.” The guidelines provide that the maximum fee is $1400.00 for the basic case, absent extraordinary circumstances.  Debtor’s counsel in this case did not demonstrate “atypical” or “out-of-the-ordinary” circumstances.  He resolved two Trustee objections based on ordinary, matter of course problems that bankruptcy practitioners face on a regular basis.  Given this, the court concluded that the bankruptcy court’s standard for awarding additional fees beyond the basic case was appropriate and in keeping with 11 USC Section 330.

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On December 4 and 5, noted consumer bankruptcy attorney and author Morgan King will present a two-day Bankruptcy Academy seminar in San Francisco.  The seminar will cover dischargeability of taxes in bankruptcy, including handling tax discharges under Chapter 13 following the death of the "super-discharge" and common traps relating to tolling look-back periods and extensions of filing deadlines.

The seminar will also address new pitfalls and requirements under BAPCPA, developing case law under BAPCPA, protecting your fees in bankruptcy cases and marketing your bankruptcy practice.  You can register for seminar at BankruptcyMedia.

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The U.S. District Court for the District of Connecticut joined two earlier courts in declaring that the provisions of 11 U.S.C. section 526(a)(4) limiting the attorneys ability to advise bankruptcy clients or prospective clients to take on additional debt unconstitutional.

The Trustee moved for dismissal, hoping that the Court would follow the Eastern District of Pennsylvania in determining that in the absence of a threat to enforce the provisions against the plaintiff, there was no "injury in fact" and thus, no standing.  However, the Connecticut Court held that the chilling effect on the attorney's speech was sufficient to constitute an injury in fact.

The Court went on to hold that the provisions of 536(a)(4) were facially unconstitutional.  Because the Court determined that the provisions were unconstitutional under either strict scrutiny or the more lenient Gentile test, the more lenient standard was applied.  The Court determined that the provision is overbroad and "restricts attorney speech beyond what is 'narrow and necessary' to further the governmental interest.  This decision, like the two similar previous decisions in Oregon and Texas, relied heavily on the determination that the provision, as written, prohibited attorneys from advising their clients to take certain actions that were perfectly legal and potentially prudent.

Prior Rulings on the Constitutionality of BAPCPA:

Hersh v. United States (N.D. Tex. 2006)
Olsen v. Gonzales (D. Or. 2006)
Geisenberger v. Gonzales (D. Pa. 2006)

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Last week, I attended Max Gardner's Bankruptcy Boot Camp in North Carolina. Max packed an incredible amount of information into those four days, and the whole experience was informative, educational, and interesting. And, of course, the opportunity to combine business with four days in the mountains doesn't come along every day. But for all the peaceful surroundings, interesting company and value-packed presentations, I came away from the boot camp a bit disturbed.

After 13 years as a consumer bankruptcy attorney, I'm certainly not naive about the practices of the lending industry. Even so, it was an eye-opening experience. The degree to which the banking industry is bleeding the average American through unnecessary and inflated fees, collection of discharged debts, and other unsavory practices is mind-boggling. And it isn't just our clients these banks are feeding off; you and I are paying these fees too. In many cases, we're even paying interest on them.

Between these trumped up fees and the collection of discharged and outdated debts, the banking industry is stealing billions of dollars from Americans every year, and most of us aren't even aware of it.

For more information, check out the most recent Bankruptcy Boot Camp Newsletter.

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In a case where a non-filing spouse generates income, the BAPCPA income analysis can get complicated, in a hurry. The income analysis provided by the labyrinthine bankruptcy amendments of 2005 is far from settled. However, a bankruptcy judge in Florida has qualified the amount of the non-filing spouse's income that must used to calculate the Chapter 13 debtor's current monthly income.

In In re Quarterman, 2006 WL 1234902 (Bkrtcy.M.D.Fla.,2006), the court held that under the "disposable income" test as modified by BAPCPA, the monthly income of a debtor's non-filing spouse must be included in determining current monthly income (CMI), only to the extent that the non-filing spouse contributes his/her income to pay the household expenses of the debtor.

The court began its analysis by noting that Congress amended the definition of disposable income, in section 1325(b)(2), to state that disposable income means "current monthly income" received by the debtors...less amounts reasonably necessary to be expended for the maintenance and support of the debtor and debtor's dependants. Section 101(10)(A) defines CMI as "the average monthly income from all sources that the debtor receives (or in a joint case the debtor and the debtor's spouse receive) without regard to whether such income is taxable...derived during the six month period" prior to filing the bankruptcy petition. The court went on to say that part B of Section 101(10A) provides that CMI also "includes any amount paid by any entity other than the debtor (or in a joint case the debtor and the debtor's spouse), on a regular basis for the household expenses of the debtor..."

The Court ruled under BAPCPA that in calculating a debtor's disposable income for Chapter 13 confirmation tests, it is necessary to start with the debtor's current monthly income, which is the debtor's average (gross) monthly income for the previous six months, plus amounts others, i.e. the debtor's non-filing spouse in a single case, regularly contributed to household expenses of the debtor or the debtor's dependants, less other (non-applicable) exclusions, and reduce from it the following amounts: (1) income that is included in current monthly income that was not "received" by the debtor; (2) "amounts reasonably necessary to be expended" by the debtor, whether under § 1325(b)(2)(A) and (B) or section 707(b); (3) "child support payments, foster care payments, or disability payments for a dependant child --- to the extent reasonably necessary to be expended for such child"; (4) amounts required to repay a loan described in section 362(b)(19) (loans from qualified plans); and (5) amounts withheld from wages or received by employers as contributions to employee retirement plans.

Stay tuned, this issue will continue to be argued far and wide throughout the bankruptcy community. As with all poorly drafted legislation, BAPCPA creates more questions than answers.

*A NACBA member in Maryland is preparing to challenge the local trustees' practice of including all income of the non-filing spouse, and would be interested in hearing how that income is treated in other areas. Please share your local experiences with us!

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The Ninth Circuit in Hebbring v. U.S. Trustee, (9/11/06 04-16539), a pre BAPCPA case, ruled that a debtor may contribute to a retirement plan and not run afoul of the substantial abuse provisions of 707(b) of the Bankruptcy Code. The court upheld the bankruptcy court's determination that the thirty-three year old debtor's petition in this matter showing an annual income of $49,000.00, $11,124.00 in consumer credit card debt and monthly retirement contributions of approximately $300.00, constituted substantial abuse under section 707(b).

However, the court went on to say that the Bankruptcy Code does not, per se, disallow voluntary contributions to a retirement plan as a reasonably necessary expense in calculating a debtor's disposable income, but rather requires courts to examine the totality of the debtor's circumstances on a case-by-case basis to determine whether retirement contributions are a reasonably necessary expense for that debtor.

When determining whether a petition constitutes substantial abuse under Chapter 7, the court ought to "examine the totality of the circumstances, focusing principally on whether the debtor will have sufficient future disposable income to fund a Chapter 13 plan that would pay a substantial portion of his unsecured debt." Although the Third and Sixth Circuits have employed a per se rule that voluntary retirement contributions are never a reasonable expense, the Ninth Circuit found no evidence that Congress intended a per se rule against retirement contributions.

The Ninth Circuit has consistently found that section 707(b) does not create a "bright line test" for substantial abuse, but "commits the question of what constitutes substantial abuse to the discretion of the bankruptcy judges within the context of the Code." The court outlined several factors to consider when making this determination, including:

-The debtor's age, income, and overall budget;
-Expected date of retirement;
-Existing retirement savings and amount of contributions;
-The likelihood that stopping contributions will jeopardize the debtor's fresh start by forcing debtor make up lost contributions after emerging from bankruptcy;
-The needs of the debtor's dependents.

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George W. Bush memorably opined at the BAPCPA signing ceremony that "under the new law, Americans who have the ability to pay will be required to pay back at least a portion of their debts." Well, Mr. President, the courts are divided on the accuracy of your conclusion.

In In re Rotunda, the US Bankruptcy Court for the Northern District of New York, overruled the Chapter 13 trustee's objection and confirmed a Chapter 13 plan based on CMI as determined by Form B22C, and not on the debtor's actual disposable income provided on the bankruptcy schedules.

The debtor's Amended Chapter 13 plan proposed to pay $800.00 for the first 4 months and $1200.00 per month for the remaining 56 months of their plan. The trustee objected claiming that the plan failed to provide all of the Debtor's "disposable income" to the payment of unsecured creditors pursuant to section 1325 (b)(1)(B).

The debtor's monthly income as provided on Form B22C was $5674.02, annualized at the rate of $68,088.00 which is over the applicable median income. Accordingly, the debtor's income was subject to the BAPCPA means test. After applying the IRS deductions and additional allowed expense deductions, the debtor's monthly "disposable income" under section 1325 (b)(2) was $157.77.

Schedules I & J stand in sharp relief to the disposable income under section 1325(b)(2). Schedules I & J provided a monthly net surplus of $3299.03. The schedules, unlike Form B22C, included the debtor's social security income. The Trustee argued that the court ought to examine Schedules I & J to determine the amount of income "projected" to be available for distribution to the unsecured creditors. The Court disagreed.

The issue boils down to whether a debtor's "projected disposable monthly income," which must be devoted to a Chapter 13 plan, is the same thing as the "disposable income" calculated based on the current monthly income.

The court held that CMI under Form B22C controls the Chapter 13 plan payments to be made to unsecured creditors. The Court parsed the statutory language and determined that "instead of using a figure based on income and expenses that existed at the time the debtor completed his/her schedules...Congress opted to use an average of a debtor's income over the six months prepetition in calculating CMI..." The court went to say that CMI, which forms the bases for calculating "disposable income" as provided in section 1325(b)(2) is defined as "the average monthly income from all sources that the debtor receives without regard to whether such income is taxable, derived during the six month period" prior to filing. BAPCPA expressly excludes social security benefits from CMI.

Section 1325(b)(1)(B) references "projected disposable income" and the BAPCPA amendments define "disposable income." The court reasoned that section 1325(b)(2) "goes on to explain what was being projected, namely, CMI received by the debtor...to the extent reasonably necessary to be expended...." The court does not agree that the projected disposable income must refer to the surplus on Schedules I & J. The court concluded that "projecting disposable income based on an average of six months' income after certain deductions and payment on secured and priority claims is no less realistic than the figures in Schedules I & J for proposing a feasible plan."

In a final parting shot, the court acknowledged that the discretion to review "the reasonableness of a debtor's expenses in calculating disposable has been curtailed, in some instances, by the new provisions that allow, whether or not intentionally, a debtor to propose a plan which provides zero payments to unsecured creditors despite having the financial wherewithal to make some payments to them." The court goes on to say that if this was not Congress' intent, then it is up Congress to resolve the situation.

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Three cases decided in different jurisdictions in August allowed bankruptcy trustees to avoid mortgages because of imperfections in execution or recording.

The Bankruptcy Court for the Eastern District of Kentucky ruled in In re Helvey that a mortgage wherein the notary acknowledgment did not show the borrower's name, name of county, or date of acknowledgment failed to provide constructive notice to the trustee as a hypothetical bona fide purchaser as of the date of the commencement of the bankruptcy case.

The U.S. District Court for the Northern District of Indiana upheld a similar ruling in In re Stubbs, despite Indiana statutes creating a presumption of compliance and dictating that a properly recorded document provides constructive notice of its contents. In Stubbs, the notary acknowledgment failed to show the borrower's name.

In re Bross involved a mortgage document that was unsigned. Although the document bore the borrower's initials in numerous fields and was accompanied by signed riders, the Bankruptcy Court and the U.S. District Court for the Southern District of Ohio ruled that the requirement that the mortgage be executed was not satisfied and allowed the trustee to avoid the mortgage.

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The U.S. District Court for the Northern District of Texas ruled today that section 526(a)(4)'s restriction on legal advise violates the attorney's First Amendment Rights.

In Hersch v. United States of America, et al., the court rejected the attorney plaintiff's contention that the debt relief agency provisions of BAPCPA were not applicable to attorneys, stating that the plain language of the statute and the legislative history, combined with Congress's failure to include attorneys in the explicitly listed exceptions, outweighed any minor inconsistencies within the statute.

However, the court went on to state that section 526(a)(4) was not sufficiently narrow. The court pointed out that there are situations in which it may be both lawful and advisable for a client to incur additional debt in "contemplation" of bankruptcy, and that section 526(a)(4) thus "prevents lawyers from giving clients their best advice."

The court dismissed the plaintiff's other claims, finding that section 527 did not unconstitutionally compel speech because, although the attorney's first amendment rights were implicated, the government had advanced a sufficiently compelling interest and the provision did not unduly burden either the attorney-client relationship or the ability of a client to seek bankruptcy.

Finally, the court dismissed the 5th amendment right to counsel claim for lack of standing.

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The New Orleans NACBA Conference was a resounding success--professionally and socially. Photographs of both are posted on the Start Fresh Today website.

Last year's changes to the bankruptcy law provided fertile ground for panel discussions, including the Means Test (moderated by Henry Somer), Chapter 13 issues (moderated by Ike Shulman)and U.S. Trustee Trends re the 707(b) "totality of circumstances" review.

In addition to the hundreds of consumer bankruptcy attorney participants, Judges, Trustees, and even the stray creditor's attorney shared insights.

The Katrina Impact bus tour raised $2800 for the Pro Bono Project and also netted the project a dozen new volunteers. Special thanks to those who offered to contribute pro bono services:

Richard A. Scholes
Martin A. Berger
Bruce Kaufmann
Lee Perlman
Bruce C. Barry
Stacy Clinton
Peter A. Orville
Alexander B. Wathen
John F. Sommerstein
Nina M. Parker
Henry Sefcovic
Mark Goldman
Candy Marshall

In addition, we had the opportunity to give the local economy a boost, and local businesses made it clear that they were happy and grateful to have our business at this tough time. It was great to be able to make a difference in so many different ways while enriching our own professional practices.

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The NACBA conference in New Orleans is well under way, with sunny weather, about 1100 participants, and many more exhibitors, staff, and other attendees.

The Start Fresh Today seminars on Thursday evening were a great success, with nearly 100 attorneys attending the three sessions. The Katrina Impact Bus Tour to benefit the Pro Bono Project is scheduled for 3:30 p.m. today, at the conclusion of conference activities. Please don't forget to make a donation to this worthwhile effort.

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Start Fresh Today will offer three free demonstrations at the New Orleans NACBA Conference on Thursday, May 20. Bankruptcy attorneys interested in learning how to use StartFreshToday.com as a "one-stop-shop" for all BAPCPA needs can register for one of the three sessions, which will take place at 6:00, 7:00 and 8:00 p.m. in the Galleria of the Marriott Hotel.

Each attendee will receive a free ticket for the Katrina Impact Bus Tour on Saturday afternoon. All proceeds from the bus tour will benefit the Pro Bono Project. Please consider a generous donation to help the victims of this terrible disaster and to support our New Orleans colleagues who are striving to meet the needs of those most impacted even while rebuilding their own lives and legal practices.

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For all Chapter 7 and Chapter 13 cases filed on or after April 9, 2006, total fees will increase to:

Chapter 7: $299
(Statutory Filing Fee of $245, Administrative Fee of $39, and Case Trustee Fee of $15)

Chapter 13: $274
(Statutory Filing Fee of $235 and $39 Administrative Fee)

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Two recent cases from the Western District of Pennsylvania clarify the distinction between the pre-filing credit counseling requirement and the pre-discharge "financial management course." In In re Granada and In re Skarbek, the court ruled on identical issues: in both cases, the debtor had completed credit counseling prior to filing and later submitted "Debtor's Certification of Completion of Instructional Course Concerning Personal Financial Management," referencing the pre-filing counseling.

In both cases, the court ruled that the financial management course requirement had not been met and directed the debtor to comlete a course on financial management and file an amended certification. In so ruling, the court specifically stated, "The credit counseling requirement must be completed prior to the bankruptcy filing in order for an individual to be eligible to file a bankruptcy petition. The financial management course must be completed 'after filing the petition.'"

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