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Bankruptcy Basics: B. Calculation of CMI

Although Chapters 7, 11, and 13 use CMI for different purposes, the basic computation is the same in each. As defined in § 101(10A), CMI is the monthly average of certain income that the debtor (and in a joint case, the debtor’s spouse) received in the six calendar months before the bankruptcy filing.

Bankruptcy Basics: C. The means test deductions from current monthly income

The means test operates by deducting from CMI defined allowances for living expenses and payment of secured and priority debt, leaving disposable income presumptively available to pay unsecured non-priority debt. These deductions from CMI are set out in the Code at § 707(b)(2)(A)(ii)–(iv). The forms for Chapter 7 and Chapter 13 have similar sections (Parts V and IV, respectively) for calculating these deductions. The calculations are divided into subparts reflecting three different kinds of allowed deductions.

1. Deductions under IRS standards

Bankruptcy Basics: About the Form

In every case a disclosure of fees paid to the debtor’s attorney must be filed. 11 U.S.C. § 329; Fed. R. Bankr. P. 2016(b). Director’s Form B 2030, though not an Official Form, has been promulgated by the Administrative Office of the United States Courts to fulfill this requirement. The purpose of this form is to allow the court and the United States trustee, who also must receive a copy, to monitor fees and to make sure they are reasonable.

Bankruptcy Basics: Annotations to Completed Sample Form 2030

1. In every case a disclosure of fees paid to the debtor’s attorney must be filed. 11 U.S.C. § 329; Fed. R. Bankr. P. 2016(b). Director’s Form B 2030, though not an Official Form, has been promulgated by the Administrative Office of the United States Courts to fulfill this requirement. The purpose of this form is to allow the court and the United States trustee, who also must receive a copy, to monitor fees and to make sure they are reasonable.

Bankruptcy Basics: Retainer Agreement

The attorney should provide the debtor with a plain-English written retainer agreement in every case, setting forth the duties and obligations of the attorney and the client, no later than the time when the initial fee payment is made or, if the petition is filed before payment of a fee, prior to the petition being filed. The agreement should clearly state the attorney’s fees and terms of payment, as well as, in general terms, the scope of services that are covered and not covered by the fees stated.

Bankruptcy Basics: Preparing the Schedules and Statements

An attorney preparing the schedules and statements required in a consumer bankruptcy case must set forth the required information in a way that is as clear and accurate as possible given the practical limitations on the information that can be gathered. These limitations arise from a lack of all the relevant contracts and other documents, debtors’ inability to give precise information with respect to many facts, the costs of obtaining precise information, and the general uncertainties and instabilities in debtors’ financial situations.

Bankruptcy Basics: Aid 5 Best Practices for Document Production Requests by Trustees in Consumer Bankruptcy Cases

Shortly after the effective date of BAPCPA, the United States Trustee Program (“USTP”) reviewed its document production requirements and decided that USTP staff would not routinely request from debtors any documentation that is not otherwise required by the Bankruptcy Code (“Code”) or Federal Rules of Bankruptcy Procedure (“Rules”). The USTP similarly notified chapter 7 and chapter 13 trustees that we did not require them to collect additional documents without a specific need for additional information.

Fair Debt Collection: 10.1 Introduction

This chapter discusses the specific requirements the Fair Debt Collection Practices Act (FDCPA) imposes on debt collectors under 15 U.S.C. §§ 1692h, 1692i, and 1692j. FDCPA § 1692h addresses the application of payments when a consumer owes multiple debts to a debt collector. FDCPA § 1692i defines the acceptable venues where lawsuits can be filed to collect a debt.

Fair Debt Collection: 10.3.1 Text of FDCPA § 1692i, Legislative History, and Regulations

(a) Any debt collector who brings any legal action on a debt against any consumer shall—

(1) in the case of an action to enforce an interest in real property securing the consumer’s obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or

(2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity—

Fair Debt Collection: 16.2.4.4.1 Introduction

Deceptive debt collection tactics have been the subject of frequent decisions under state debt collection statutes. Courts often draw on the standards developed under the Federal Trade Commission Act, the Fair Debt Collection Practices Act, and UDAP statutes when applying these provisions.264

Fair Debt Collection: 10.3.2 Where Suit Can Be Filed

This section prohibits a debt collector, including attorney debt collectors, from taking legal action to collect a consumer obligation in a “judicial district or similar legal entity” other than where the consumer resides or signed the contract14 or, in the case of real estate, where the property is located.15 This section is built upon an approach adopted by the FTC and the courts prior to the FDCPA’s enactment.16

Fair Debt Collection: 16.2.4.4.6 Wrongful garnishment

Knowingly garnishing an account containing only exempt Social Security benefits violates the Iowa Fair Debt Collection Practices Act and the unconscionable debt collection provision of the Iowa Consumer Credit Code.309 Garnishing a servicemember’s bank account without filing the affidavit required by the Servicemembers Civil Relief Act violated the Washington Collection Agency Act.310 A bank’s freezing of a customer’s account to force them to pay their consumer debt to another bank may be a stat

Fair Debt Collection: 1.3.5.2.3 Compensation for collection agencies and individual collectors

The Consumer Financial Protection Bureau’s survey of large credit card issuers found that contingency fees that allow third-party collection agencies to retain a percentage of what they recover were the most common payment structure.279 The average contingency fee was 15.7% in 2020, with a range of 9.5 to 23% with higher fees awarded for accounts that are believed to be more difficult to collect.280 Most issuers also reported paying performance-based incentives.

Fair Debt Collection: 10.4.1 Flat-Rate and Other Collectors Covered

The text of FDCPA § 1692j says:

Furnishing certain deceptive forms. (a) It is unlawful to design, compile, and furnish any form knowing that such form would be used to create the false belief in a consumer that a person other than the creditor of such consumer is participating in the collection of or in an attempt to collect a debt such consumer allegedly owes such creditor, when in fact such person is not so participating.

Fair Debt Collection: 10.4.2 Extent of Participation in the Collection Process

Federal courts have wrestled with the issue of when a flat-rate relationship with a collector triggers liability for a creditor through FDCPA §§ 1692a(6) or 1692j. In Nielsen v. Dickerson, the court found a collection firm liable under FDCPA § 1692j when it furnished a form letter that gave the consumer the false impression that the firm was meaningfully involved in the case.76 Similarly, in Sokolski v.