Skip to main content

Search

Consumer Bankruptcy Law and Practice: 3.5.2 Liquidation of Nonexempt Property; “Carve-Out” Agreements

If the estate has more than nominal assets, they must be turned over to the trustee at or after the creditors meeting.151 Usually, the debtor is offered the option of paying their value to the trustee instead.152 If the trustee declines to abandon property, it ordinarily becomes the trustee’s responsibility to pay costs of maintaining the property and insuring it.153 The trustee then collects any other property of the estate that is neither exempt

Consumer Bankruptcy Law and Practice: 3.5.3 Filing and Allowance of Claims

While the nonexempt assets of the estate are being liquidated, the trustee receives and evaluates all claims filed by creditors, objecting to them if they are improper.164 Unless an objection is filed, a proof of claim in proper form is deemed allowed.165 Any objections filed commence contested matters under Rule 9014166 and are ruled upon by the court.

Consumer Bankruptcy Law and Practice: 3.5.4 Distribution of Property to Creditors

After the estate has been liquidated and the amounts of the claims have been determined, the trustee is in a position to make distributions of the estate’s property to creditors. The distribution to creditors is carried out according to priority rules in the Bankruptcy Code, which serve to effectuate various policy decisions of the drafters regarding which creditors should be paid first. Distributions to creditors are generally known as “dividends.”

Consumer Bankruptcy Law and Practice: 9.6.4 Contempt Remedies

In addition to remedies under section 362(k), the debtor also has remedies for violation of the automatic stay as contempt of a court order.344 The legislative history of section 362(k) (formerly designated as section 362(h)) makes clear that Congress was granting an additional remedy to debtors beyond those already in existence.345 Neither remedy may be available, however, if it was unclear whether an act was barred by the stay.346

Consumer Bankruptcy Law and Practice: 15.5.1.5 Enforcing the Discharge Injunction

Violation of the discharge injunction is usually contempt, punishable by awards of damages, including emotional distress and punitive damages in certain cases, and attorney fees.807 However, an award of damages and other relief against a governmental unit will be limited by section 106(a).808 If the violation is asserted against the Internal Revenue Service, the debtor may have to exhaust administrative remedies prior to seeking judicial relief.809

Consumer Bankruptcy Law and Practice: 15.5.1.5 Enforcing the Discharge Injunction

Violation of the discharge injunction is usually contempt, punishable by awards of damages, including emotional distress and punitive damages in certain cases, and attorney fees.807 However, an award of damages and other relief against a governmental unit will be limited by section 106(a).808 If the violation is asserted against the Internal Revenue Service, the debtor may have to exhaust administrative remedies prior to seeking judicial relief.809

Consumer Bankruptcy Law and Practice: 18.7.4.1 Generally

When a chapter 11 case is filed, the debtor ordinarily remains in control of the business as a “debtor in possession.”559 Section 1104(a), however, authorizes the court in some circumstances to appoint a trustee to take over and manage the debtor’s affairs.560 This provision gives consumers powerful leverage against businesses that are mismanaged after filing under chapter 11.

Consumer Bankruptcy Law and Practice: 18.7.12 Special Provisions Applicable to Small Business Bankruptcies

The 2005 amendments established new procedures and modified some existing standards applicable to chapter 11 cases involving small businesses.711 Debtors who meet the statutory definition of a “small business” can no longer opt out of coverage under the small business provisions.712 The amendments establish expedited proceedings in certain areas and mandate new reporting requirements at various stages of the case.

Consumer Bankruptcy Law and Practice: 18.7.15.3.2 Right to intervene

Section 1109(b) states that “[a] party in interest . . . may raise and may appear and be heard on any issue in a case under this chapter.”838 Creditors, such as employees with wage or benefit claims, are specifically authorized under section 1109 to be heard.839 A more difficult question is whether non-creditor employees, laid-off employees and representatives of the local community have a sufficient interest to justify intervention.

Consumer Bankruptcy Law and Practice: 18.5.1 Overview

Unsecured creditors without priority claims are in the worst position of all creditors in a bankruptcy proceeding. Only in the rarest instance will they receive the full amount of their claim. In most chapter 7 cases, they will receive nothing. Without aggressive advocacy, this may be true even if the consumer creditors were victims of egregious fraud.183

Consumer Bankruptcy Law and Practice: 18.5.4.2.3a The bankruptcy court’s entry of judgment for unliquidated claims

If the debt owed to the consumer is unliquidated, the bankruptcy court may have jurisdiction not only to find the debt nondischargeable, but also to liquidate the debt and enter judgment.355 For example, the bankruptcy court may enter a judgment for the creditor on a UDAP claim at the same time it declares the debt nondischargeable as arising from the debtor’s fraudulent conduct under section 523(a)(2) or misappropriation of funds under section 523(a)(6).356 There are limited instances when a sp

Consumer Bankruptcy Law and Practice: 18.5.4.2.3a The bankruptcy court’s entry of judgment for unliquidated claims

If the debt owed to the consumer is unliquidated, the bankruptcy court may have jurisdiction not only to find the debt nondischargeable, but also to liquidate the debt and enter judgment.355 For example, the bankruptcy court may enter a judgment for the creditor on a UDAP claim at the same time it declares the debt nondischargeable as arising from the debtor’s fraudulent conduct under section 523(a)(2) or misappropriation of funds under section 523(a)(6).356 There are limited instances when a sp

Consumer Bankruptcy Law and Practice: 18.5.4.2.3a The bankruptcy court’s entry of judgment for unliquidated claims

If the debt owed to the consumer is unliquidated, the bankruptcy court may have jurisdiction not only to find the debt nondischargeable, but also to liquidate the debt and enter judgment.355 For example, the bankruptcy court may enter a judgment for the creditor on a UDAP claim at the same time it declares the debt nondischargeable as arising from the debtor’s fraudulent conduct under section 523(a)(2) or misappropriation of funds under section 523(a)(6).356 There are limited instances when a sp

Consumer Bankruptcy Law and Practice: 17.1.4.1 Generally

An attorney who undertakes representation of farmers in financial difficulty should become familiar with some of the unique aspects of farm finance. Historically, farms have benefited from special laws that reflect Americans’ support for family farms, and farm finance exemplifies this support. For example, state law should be consulted as there may be special protections that are available to farmers that face foreclosure.47

Consumer Bankruptcy Law and Practice: 3.2.1.5 Credit Counseling Briefing Requirement

The 2005 amendments to the Code added a new eligibility requirement for all individual debtors, with very limited exceptions. Section 109(h) provides that a debtor shall not be eligible for relief if the debtor has not received, within 180 days before the petition, a briefing from an approved nonprofit budget and credit counseling agency.46 In addition, section 521(b) requires an individual debtor to file a certificate from the approved counseling agency stating that the debtor has received the briefing.