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Consumer Bankruptcy Law and Practice: Listing of Provisions

Also available at www.irs.gov.

TABLE OF CONTENTS

Part 5—Collecting Process

Chapter 15—Financial Analysis

Section 1—Financial Analysis Handbook

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5.15.1.8 Allowable Expense Overview

5.15.1.9 National Standards

5.15.1.10 Local Standards

5.15.1.11 Other Expenses

5.15.1.12 Determining Individual Income

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Consumer Bankruptcy Law and Practice: 5.15.1.8 Allowable Expense Overview (07-24-2019)

1. Allowable expenses include those expenses that meet the necessary expense test. The necessary expense test is defined as expenses that are necessary to provide for a taxpayer’s and his or her family’s health and welfare and/or production of income. There are three types of allowable expenses:

• Allowable Living Expenses—based on National and Local Standards

• Other Necessary Expenses—expenses that meet the necessary expense test, and are normally allowed

Consumer Bankruptcy Law and Practice: 5.15.1.11 Other Expenses (11-22-2021)

1. Other expenses may be necessary or conditional. Other necessary expenses meet the necessary expense test and normally are allowed. The amount allowed must be reasonable considering the taxpayer's individual facts and circumstances. Other Conditional Expenses may not meet the necessary expense test, but may be allowable based on the circumstances of an individual case.

Consumer Bankruptcy Law and Practice: 5.15.1.12 Determining Individual Income (08-29-2018)

1. Generally all household income, including income that is exempt from tax on the Form 1040, will be used to determine the taxpayer’s ability to pay. Income earned by a taxpayer’s dependent child, claimed on the child’s Income Tax Return, would generally not be included in the taxpayer’s household income. However, if an independent adult child is living with the taxpayer and contributing to the household income used to pay living expenses, that adult child’s income may be included in a Shared Expense analysis.

Consumer Bankruptcy Law and Practice: A.2 Selected Provisions of Title 28 of the United States Code

Listing of Provisions

TITLE 28—JUDICIARY AND JUDICIAL PROCEDURE

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CHAPTER 6—BANKRUPTCY JUDGES

28 U.S.C. § 151. Designation of bankruptcy courts

28 U.S.C. § 152. Appointment of bankruptcy judges

28 U.S.C. § 153. Salaries; character of service

28 U.S.C. § 154. Division of business; chief judge

28 U.S.C. § 155. Temporary transfer of bankruptcy judges

28 U.S.C. § 156. Staff; expenses

28 U.S.C. § 157. Procedures

28 U.S.C. § 158. Appeals

Consumer Bankruptcy Law and Practice: A.3 Selected Provisions of Other Titles of the United States Code

Listing of Provisions

TITLE 18—CRIMES AND CRIMINAL PROCEDURE

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CHAPTER 9—BANKRUPTCY

18 U.S.C. § 151. Definition

18 U.S.C. § 152. Concealment of assets; false oaths and claims; bribery

18 U.S.C. § 153. Embezzlement against estate

18 U.S.C. § 154. Adverse interest and conduct of officers

18 U.S.C. § 155. Fee agreements in cases under title 11 and receiverships

18 U.S.C. § 156. Knowing disregard of bankruptcy law or rule

18 U.S.C. § 157. Bankruptcy fraud

Consumer Bankruptcy Law and Practice: 11.6 Using Chapter 13 to Deal with Secured Creditors

11.6.1 Modification of Secured Creditors’ Rights in Claims Not Secured Only by Real Estate That Is the Debtor’s Principal Residence11.6.1.1 Generally

Perhaps the greatest powers to affect the rights of secured creditors are found in the provisions of chapter 13. Bankruptcy Code section 1322 provides that the debtor’s plan may modify the rights of holders of most secured claims, other than some claims secured only by a security interest in real property that is the debtor’s principal residence.

Consumer Bankruptcy Law and Practice: 15.4.3.8.2.1 Loans related to government units and nonprofit institutions: § 523(a)(8)(A)(i)

The exception has had several different wordings and, as amended in 1990,528 covers an “educational benefit, overpayment or loan”529 that is “made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or a nonprofit institution.”530 This language covers most, if not all, student loans made or insured by nonprofit institutions or governmental units.

Consumer Bankruptcy Law and Practice: 15.4.3.8.2.2 Funds received as educational benefits, scholarships, or stipends; § 523(a)(8)(A)(ii)

The exception also applies to “an obligation to repay funds received as an educational benefit, scholarship, or stipend.”535 This language in subpart (A)(ii) is applicable to certain educational benefit grants involving funds received by the debtor or advanced on the debtor’s behalf.536 However, subpart (A)(ii) is not a “catch-all” provision designed to include every type of transaction that creates an educational benefit for a debtor.537 Important

Consumer Bankruptcy Law and Practice: 15.4.3.8.2.3 Private student loans; § 523(a)(8)(B)

The exception was broadened in 2005 to also include, in subpart (B), any other education loans from for-profit lenders if they are qualified education loans as defined in section 221(d)(1) of the Internal Revenue Code.541 The term “qualified education loan” is defined in section 221(d)(1) of the Internal Revenue Code to mean any indebtedness incurred by the taxpayer solely to pay qualified higher education expenses.542 Debtors who have incurred debt for education and other purposes may

Consumer Bankruptcy Law and Practice: 8.3.14 Proof of Insurance in Chapter 13 Cases

A debtor who is retaining personal property subject to a lease or securing a purchase money claim is required, within sixty days after the petition, to provide the lessor or creditor reasonable evidence of the maintenance of any required insurance coverage.169 Normally, such creditors or lessors already will know if insurance lapses, as they are named as loss payees in the policy. Only when insurance has lapsed will such evidence be important to creditors or lessors.

Consumer Bankruptcy Law and Practice: 8.3.15 Filing of Tax Returns with Taxing Authorities in Chapter 13 Cases

Chapter 13 debtors are required to file with the appropriate taxing authorities, by the day before the first scheduled section 341 meeting, all tax returns that the debtor was required to file for all taxable periods ending in the four years before the petition.171 If the debtor was not required to file a return for a particular tax year, no return need be filed for that year to meet this requirement. Presumably this provision applies only to returns that were not already filed, although it does not say so.

Consumer Bankruptcy Law and Practice: 8.3.16.1 Debtor Audits

The 2005 amendments added new provisions for audits to determine the accuracy, veracity, and completeness of debtors’ petitions, schedules, and other information required by sections 521 and 1322 of the Code.176 Most of the audits are conducted in random chapter 7 and chapter 13 cases, except that not less than one out of every 250 cases in each judicial district shall be selected for audit.177 There are to be other targeted audits of the schedules of income and expenses for those with unusually

Consumer Bankruptcy Law and Practice: 8.3.16.2 Rule 2004 Examinations

In rare instances in consumer cases, either before or after the meeting of creditors, the debtor may be ordered by the court to attend an additional examination. A creditor, the trustee, or any party in interest can seek an examination of the debtor (or any other entity) pursuant to Federal Rule of Bankruptcy Procedure 2004.

Consumer Bankruptcy Law and Practice: 8.4.1 Preparation

In many a routine chapter 7 bankruptcy, the only event of any real importance between filing and discharge is the meeting of creditors, sometimes colloquially called the “first meeting of creditors” or the “section 341(a) meeting” in honor of the relevant statutory provision. While it may pose occasional problems, this proceeding is usually routine and uneventful.

Consumer Bankruptcy Law and Practice: 8.4.5 Examination of Chapter 7 Debtors’ Awareness of Bankruptcy Information—Bankruptcy Information Sheet

In chapter 7 cases only, the trustee must orally examine the debtor to “ensure” that the debtor is aware of several things.213 The legislative history makes clear that the sole purpose of this examination is informational.214 Thus, there should be no consequences if the debtor expresses lack of awareness or confusion in the face of the trustee’s examination.

Consumer Bankruptcy Law and Practice: 8.5 Chapter 7 Cases—After the Meeting of Creditors

In the typical no-asset bankruptcy, there is little to be done between the meeting of creditors and the discharge. If the debtor has not yet completed the financial education course, that must be accomplished so that the certification of completion may be filed by sixty days after the first date set for the meeting of creditors. Proceedings commenced by the debtor, such as for lien avoidance or redemption, may be litigated, as well as proceedings concerning dischargeability of debts and other matters. Amendments to the schedules or statement of affairs may be necessary.